“I believe in miracles….” Hot Chocolate (1975)1
The meeting began with Chris Wilkins, the cabinet member for finance, reading a document which he didn’t appear to have written (1:26).2 Very sensibly, HRA don’t use Chris as their main man during financial discussions.
The discussion was brutal.
Ray Morgon set his stall out. The government review of Havering’s finance is vital to his strategy. The Fair Funding Review (1:31) is the miracle which will stave off Havering’s financial catastrophe. The Chief Executive (1:46) said that he wouldn’t consider requesting a council tax increase beyond 4.99% because Havering’s problems weren’t caused by decision-making in Havering. This reflects HRA’s policy.
The director of Finance expressed caution. She was ‘very concerned’ about the long-term sustainability of Havering (1:34). Keith Darvill (1:32) probed forensically, discovering that the interest on the capitalisation programme hasn’t been paid. This means debt accelerates each year through the joys of compound interest. The director said that the conversation will be ‘very different’ in 2028 if nothing changes.
“…if you have debt, compounding of the interest you owe can make it increasingly difficult to pay off.”3
Capitalisation Funding for day-to-day expenditure is insanity.
The Chief Executive (1:31) said after his meeting with the minister there would be no change in government policy concerning debt repayments.
HRA is hoping the government will back down first and won’t enforce the debt. HRA is engaging in a form of “Can’t pay, Won’t pay.”4 Havering is depending on safety in numbers. They’re hoping that along with the 18 other councils which are being buried alive in debt, they will have to be rescued.
Notes
1 The lyrics aren’t about local government finance. But are great fun. Read them. Relive the 70s! i believe in miracles hot chocolate lyrics – Search
2 Annotator Player All times refer to this webcast
3 The Power of Compound Interest: Calculations and Examples
4 This is a Marxist play, 1974, by the Italian Dario Fo which is a satire on consumer resistance to high prices. Can’t Pay? Won’t Pay! – Wikipedia
Politics in Havering 