‘Keep Taxes Low! Sell the Family Silver!’ The Road To Bankruptcy

Henry VIII looted monasteries because he wanted their wealth for his aspirations by the 17th century Britain was impoverished once more causing civil wars.1 Between 1700 and 1900 British vast wealth came from exploiting the Empire. This was spent between 1914-8 and 1939-45 on two world wars. In the 1980s Britain’s wealth came from North Sea oil. Margaret Thatcher squandered this on war and defence spending.2,3 She followed this by selling national industrial assets, which were sold in, ‘Everything Must Go,’ sales.

Thatcher’s self-serving reason was ‘efficiency’. She included social housing in her off-loading of public assets. This turbo-charged the housing crisis of the 2000s. Her economic policies ended in 2013 with the Royal Mail privatisation.4

George Osborne’s fig-leaf was Austerity. By out-sourcing tax increases to local government he maintained the illusion that Conservatives are a Low Taxation party. The current (2023-4) Council tax permissions illustrate this graphically. Havering can increase tax by 3%, for local purposes. This can be increased by two percentage points to help pay for social care.5 Social care is a mandatory, demand-led service and very expensive.

Osborne, and successive Conservative Chancellors, out-sourced tax increases to local government to dodge bad publicity. However, the golden goose will die when well-run councils, like Havering, are bankrupted.6

Beginning with Henry VIII, Britain has had successive governments believing sound financial management is optional. Boris Johnson’s economic policy was, ‘Having my cake and eating it.’ All very amusing when a child says it but when a prime minister acts on that premise? Britain’s economically illiterate governments continue to impoverish the nation.

Notes

1 a) a parliamentary civil war 1629-40, b) three civil wars 1641-49, c) regime change 1649-60, d) another regime change, 1660-88, e) invasion/civil war 1688, f) yet another regime change 1688-1714. The 17th century was very unstable.

2 The Ricardian Curse, Margaret Thatcher and North Sea Oil | Odeboyz’s Blog (oedeboyz.com)

3 The British Army’s Global Delusions | Odeboyz’s Blog (oedeboyz.com)

4 Ironically the Royal Mail was established by the Tudors in 1516.

5 This a 67% increase on the basic, government approved council tax figure. 67%!

6 The UK councils facing potential ‘bankruptcy’ as coronavirus pandemic takes huge toll on public finances | National (inyourarea.co.uk) and also Local authority financial sustainability and the section 114 regime – GOV.UK (www.gov.uk)

Havering and the Budget: Council Tax 2023-4

If the Government is serious about raising money to pay for social care, as well as level up the country, it could increase revenues from council tax without putting an extra burden on the less well off, by overhauling the bands used to calculate it.1

Conservative governments have wrecked Havering’s finances since 2010. Funding has been slashed as has the ability of the council to replace lost revenue through increasing council tax. The 2022 budget statement allows councils to increase council tax by 3% plus 2% for social care responsibilities. This decision may result in Havering becoming bankrupt.2

The facts

In 2010-11, band D council tax was £1505. If this had increased by inflation, the 2022-23 council tax would have been £2123.94, it’s actually £1970.97.3 The shortfall is £152.97 for band D houses in Havering, which is 10.16%. Owners of band H houses have benefitted massively from this policy.4 Havering council is losing huge amounts of revenue because Conservatives like to ‘keep taxes low’.

‘Keeping taxes low’ has been popular since 2010. But the chickens are coming home to roost. Conservatives want something for nothing. And the result is their policy will bankrupt Havering and wreck our society.

Very challenging decisions will be made by Ray Morgon’s cabinet because the government obliges Havering to ‘balance the books’. He can’t ‘print’ money to sort out Havering’s problem unlike the government. Statutory care services will be degraded along with other services like the weekly bin collection.

The Road to Bankruptcy

  • The amount collected in Council Tax for 2022-3 was £176.185m.5 If this had been increased by inflation, since 2010, revenue would be £17.9 million more this year.

Shortfall £17.9 million

  • If the £70 million government grant of 2010 had been increased by inflation it would be worth £77.12 million. Havering received £1.5 million for the 2022-3 financial year.

Shortfall £76.62 million

Total Shortfall for 2022-3: £93.52 million

The entire budget programme of cuts, efficiencies, job losses and service degradation are a direct result of Conservative policies since 2010. Morgon’s four year savings programme of £70 million is less than a single year of revenue shortfall caused by government policies.

Notes

1 Comment: ‘A council tax rise (done right) might not be a terrible thing’ (msn.com)

2 Havering’s Overview and Scrutiny Board, 13th October 2022 – Politics in Havering See this for an analysis of the budget Autumn Budget: Council tax could rise above £2,000 per year for the first time | ITV News

3 2010-11 24 February 2010 Council (Council Tax) Agenda.pdf (havering.gov.uk) £1505 council tax if growing with inflation, as calculated by the Bank of England, means that in 2022-3 that figure should have grown to £2123.94. Search results | The London Borough Of Havering £1970.97 2022-3

4 Havering Council Tax: Is It Too Low? – Politics in Havering

5 10 – Appendix G – Council Tax statement.pdf (havering.gov.uk)

Havering’s Register of Interests: The Cabinet

Filling in the Register is a legal obligation and yet Havering’s councillors struggle. Havering’s councillors have professional assistance but seem disinclined to use it. The Cabinet are elite councillors so it’s very important they’re open to scrutiny. Question One is stupid simple and is routinely not answered, ignored, or misunderstood.1

Q1 “Prescribed Description: Any employment, office, trade, profession or vocation carried on for profit or gain.”

Cabinet members receive £35,000, which qualifies, “for profit or gain.” Surprisingly none of Havering’s cabinet members think so. There are other anomalies, which will be revealed in this survey.

Keith Darvill’s1 entry says he’s a self-employed consultant. He doesn’t remark he’s a cabinet member.

Gillian Ford’s entry says she’s an Associate of Shared Service Architecture Ltd. She doesn’t say she’s deputy leader of the Council on £37,500. She’s also a member of the Local Government Association’s2 City Regions committee earning £8,908

Oscar Ford ignores the fact he’s a cabinet member despite it being a substantial supplement to his pensions.

Paul McGeary’s entry says he’s Head of Estates, NELFT without adding he’s a cabinet member.

Paul Middleton owns Essex PC Fix without adding he’s a cabinet member

Ray Morgon’s entry says that he’s a “Full-time councillor”. That understates his actual position as Leader of the Council on £50,000

Barry Mugglestone answered ‘None’ for Question One. As a cabinet member he earns £700 pw

Christopher Wilkins agreed with Barry and answered ‘None’. He’s a cabinet member and a landlord (Q4).

Cabinet members earn more than many Havering Council employees who work full-time. If they can’t understand “profit or gain” what else can’t they understand?

Graham Williamson I couldn’t access his entry.

Notes

1 For Keith Darvill see Councillor details – Councillor Keith Darvill | The London Borough Of Havering All the other named councillors have identical access points.

2 Keith Darvill, Ray Morgon and Michael White are also on this association but aren’t paid. For paid members see SRAs September 2022 (local.gov.uk)

Havering’s Overview and Scrutiny Board, 13th October 2022

There was a stench of despair in Havering’s discussions about the 2023-4 budget.1 The public consultation process will fail because residents don’t understand council budgets. They also think this budget is rearranging deckchairs on the Titanic.

Beginning with George Osborne’s Age of Austerity, 2010, local government has been starved of funds. His insane ‘policy’ was compounded with zero Council Tax increases followed by inflation ‘caps’. Havering’s lost a minimum of £70m annually since 2010 not including the ‘lost’ revenue from actual inflation increases.

The decline in funding has been accompanied by increased  responsibilities in Children and Adult services. These services consume 70% of the budget, making an inexorable push towards a Section 114 notice which means decision making is put in the hands of the government.2 Havering’s CEO was bleakly frank about this possibility. He said current section 114 notices applied to imprudent, badly managed councils but future notices would hit well run councils like Havering, which had run out of resources.3 In brief, Conservative government policies are bankrupting local government.

The council will lobby MPs and ministers. The CEO held out little hope but he’d work hard to get Levelling-Up money.

Addendum: How councillors reacted

Gerry O’Sullivan drew contributions from every councillor. Questions ranged from the abrupt, Mandy Anderson, (@21 minutes)4 to windbag, Philip Ruck (@50 minutes). Philip asked the killer section 114 question, eliciting the important CEO response. David Taylor’s (@71 minutes) dog-whistle questions didn’t get the preferred answers. Damian White worked hard as ‘lead’ opposition councillor. The others seemed over-whelmed by the complexity of it all.

Notes

1 Annotator Player (sonicfoundry.com)

2 CP524_financial_sustainability_Oct_2021.pdf (publishing.service.gov.uk)

3 Hear the comment @ 55 minutes

4 This is when she began speaking

Havering’s Cabinet: A First Assessment

The cabinet complained about government under-funding,1 which is like sailors hating the sea. There was no discussion about the energy crisis, home-working and office accommodation, staffing and retention, interest rates and ways of dealing with any of this in 2023.

Chris Wilkins: (began2) He spoke repetitiously and occasionally lost his place. He neither highlighted pertinent issues nor contextualised them. He offered counsels of despair.

He hasn’t discovered he’s a policy maker.

Gillian Ford: (20 minutes) She leads the principal cost centre, Adult Services. Her brief comments included an anecdote about a quadrupling of staff for a care issue. Typical? Probably not – just pre-emptive shroud waving.

Her remarks were inadequate. Cabinet needed insights on her principal revenue vampire: staffing costs. (pro rata cuts would be £6.5 million of the £19 million needed)

Keith Darvill: (21) Keith didn’t comment on his budget, preferring waffle. Flooding is a significant problem but can costs be subsumed into current budgets? Ambitions needed outlining especially if involving capital and ‘Invest to Save’.

Keith’s speech needed preparing up front.

Ray Morgon: (24) Ray’s interventions gave momentum to the debate. He claimed that if the public understood that 70% of the Council’s revenue went on statutory services, they’d accept a deteriorating environment. Laughably, he thought Conservative MPs would lobby for more funding.

Graham Williamson: (32) His speech included the phrase ‘Perfect Storm’ to describe financial pressures. He was stoical about losing popularity when cuts bite. He worried about the Council losing control to Commissioners on the balanced budget issue.

The best speech of the night.

Barry Mugglestone: (42) He spoke about increasing car parking charges which, surprisingly, isn’t an increase at all – it’s a return to pre-pandemic charges. So that’s all right then.

He read his speech, which other cabinet members should copy.

Oscar Ford astonishingly didn’t speak. He’s lead member for Children’s Services, which destroys everyone else’s budget. Nothing! Not even, ‘Thank you’. (pro rata cuts would be £6.5 million of the £19 million needed)

Paul Middleton: (1:02) He ought to be aware that his budget is likely to be savaged. He supported the budget propositions as being responsible.

Addendum: Government funding 2010-2022

Government funding has declined from £70 million to £1.5 million. This decline began with George Osborne in 2010. If the £70 million had increased with inflation it would have become £96.4 million. The real shortfall is £94.9 million. Conservative governments have increased taxation by outsourcing it to local authorities. Havering’s two Conservative MPs have been the cheer leaders of this policy.

Inflation calculator | Bank of England

Notes

1 Cabinet meeting 28th September 2022

2  Annotator Player (sonicfoundry.com) Times when they begin speaking, are in brackets

Havering’s Cabinet Meeting, 28th September 2022

Boris Johnson’s economic philosophy was straightforward: I want my cake and I want to eat it.1 Ray Morgon’s Cabinet would do this too if it wasn’t fantasy. Havering once had a substantial government grant but Osborne’s Age of Austerity programme ended that.2 Havering’s budget is apparently balanced but this is achieved by ‘smoke and mirrors’. Damian White’s March budget is a classic example.3 400 redundancies were penciled in, without any loss of services. A claim made with a straight face.

Local government finance is boring until the bills arrive. (Most people used to pay energy bills without bursting into tears. Not anymore.) Since 2010, Havering’s government grant has evaporated from £70 million to £1.5 million. Havering hasn’t been allowed to increase Council Tax to fill the revenue gap. The inevitable decline in public services has accelerated and will continue.

‘Low hanging fruit’ will be picked. This means school crossing personnel, park gates left unlocked, fortnightly bin collections, library hours cut, swimming pool hours reduced for example. HRA’s sacred cow is street care but it might take a hit under the pressures.4

Setting Council Tax for 2023-4 will be hideous. The council is crippled by financing Adult and Children’s services, which are statutory.5 Will Kwasi Kwarteng cap Council Tax increases? Realistically 10% is needed but the Conservative government might find this politically unacceptable.

The government imposes duties on Havering council and denies the resources to fulfil them.

Notes

1 For Brexit it worked out this way Post-Brexit trade: UK having its cake and eating it, says Boris Johnson – BBC News On a personal basis he ‘paid’ for gold wallpaper and then got a dupe to actually pay Boris Johnson’s Wallpapergate: Leaked £200,000 estimate reveals flat renovation plan included £7,000 rug and £3,675 trolley | The Independent

2 Budget 2010: Pain now, more pain later in austerity plan | Budget | The Guardian

3 Agenda for Council on Wednesday, 2nd March, 2022, 7.30 pm | The London Borough Of Havering

4 ibid  HRA councillors voted to reduced councillor allowances to pump money into street care in a pitiful example of ‘gesture’ politics.

5 Chris Wilkins led the debate. He floundered through a repetitious presentation. He weaved in and out of ‘pressures’ like a ship drifting without power. And the elephant in the room – the size of the Council Tax increase – wasn’t hinted at. Heroically Ray said that they should lobby the two Conservative MPs to see if they’d vote against the government. See Annotator Player (sonicfoundry.com) for the debate. Wilkins speaks for the first 20 minutes

Havering’s 2022 Election: an Unexpected Outcome

Local politics is a cult with a tiny number of activists.1 As a result, local politics relies heavily on these people to finance it, the most important of whom are councillors along with their families and friends. Any significant downturn in their financial status immediately effects their local party.

The 2022 election was a disaster for Romford Conservatives because they were defeated after 20 lucrative years. Damian White and his cabinet lost tens of thousands of pounds in allowances each. Other Conservatives lost smaller, but significant, amounts. Hundreds of thousands of pounds in allowances no longer flow to the Conservatives.2 Romford’s Conservative councillors suffered a lifestyle changing event in May, 2022.3 This reduced their enthusiasm for financing the party.

On the other side of the coin Ray Morgon’s HRA4 have finance they’ve never had before. HRA is a federation which doesn’t have the costs of a political party. Their 2022 poster campaign did, however, indicate a direction of travel. So, it’s possible HRA will become a borough political party. HRA’s junior partner, Labour, have had an increase in councillor allowances with two cabinet posts. This should improve their campaigning.

These unexpected financial consequences could reshape Havering’s political landscape. The Conservatives are starved of money, which could expose them to the mercy of wealthy backers. Another scenario is activists will promote hobby-horses, which might end up being extremism of one kind or another.

Notes

1 John and Philippa Crowder; Oscar and Gillian Ford; Dilip and Nisha Patel. These three families are an extreme example of the cult-like atmosphere. Oscar and Gillian are the most powerful husband/wife politicians since Arthur and Margaret Latham in the 1990s.

2 Romford councillors pick up the basic £10,412 p.a (£239,476 in total so they aren’t entirely bereft and may have a bit left over to contribute towards the party – if they want.)

3 Due to Damian’s pot-of-gold policy virtually every Conservative has lost at least £3,000 per year.

4 HRA = Havering Residents Association

Havering Council Tax Meeting, 2nd March 2022

Setting a council tax is a statutory duty. It was dispiriting watching a debate dominated by trivia. The Mayor didn’t realise that he’s expected to terminate out-of-order speeches. Trivia degenerated into drivel.

The single highlight was Roger Ramsey (@ 2 hours 12 minutes in the webcast). Calm, measured and magisterial, he noted irrelevance with a weary acceptance. His focus was the demand-led Adult Social Care. That budget literally can’t be controlled. It’s a statutory obligation. Children’s services are also demand-led with huge expenditure for personalized transport during the pandemic. Massive shortfalls in government funding were highlighted. This was described as a Stealth Tax (Ray Morgon: (@ 50 minutes).

Damian White (@ 25 mins) is turning into a Socialist. He worried about the cost-of-living crisis, environmental funding, the stigma of Food Banks, and substandard KS3 achievements in schools. 400 job losses which will, amazingly, improve service delivery was used as an example of tough decisions. The government’s £150 reduction of Council Tax for bands A-D was welcomed. Belatedly he recognised that Special Responsibility Allowances (SRA) mattered in an election year and offered half-baked proposals.

Keith Darvill (@1 hour 35) talked of a perfect storm of increases in Rent, Council Tax, National Insurance and inflation, especially energy costs. Ray Morgon actually made a policy proposal. Savings from reducing SRAs would go to street cleaning. There was a lot of expectations on productivity gains from digital working. This was rubbished by David Durant (@ 3 hours 31) who discussed cyber-terrorism. Another policy proposal was by Jeff Tucker (@ 1 hour 53) who wanted fewer councillors (18) because officers made all the decisions anyway. He also proposed himself as Leader as he had ‘the most brains’.

Graham Williamson (@ 2:32) said savings on SRAs were irrelevant, being gesture politics. Gillian Ford (@2:41) did a tour d’horizon which included refugees, Green Flags in parks and Food Banks. I hoped for more.1

Conclusion

Jeff Tucker is absolutely right that there are too many councillors. This meeting was a disgrace and should be used as a training programme for the incoming Mayor so they understand their role in chairing a meeting. Roger Ramsey is retiring and someone needs to step up and fill his shoes as ‘the only grown-up in the room’.

Webcast

Annotator Player (sonicfoundry.com)

Note

1 Other speakers: Martin Goode, Chris Wilkins, Ciaran White, John Tyler, Robert Benham, Darren Wise, Bob Perry, Joshua Chapman, Graham Williamson, Reg Whitney, Ron Ower, Viddy Persaud and Dilip Patel. There may have been others but my webcast failed at 3 hours 42 and so I missed the last hour.

Havering’s Children and Learning Overview and Scrutiny Committee, 30th September, 2021

This is an appalling committee. Judith Holt, the chair, is hapless. Her fellow councillors drift along, sleepily ignorant of what scrutiny might mean. Item 7 Schools Quality Assurance demanded intellectual curiosity.1 Officers didn’t do much ducking-and-diving to escape embarrassment as the committee didn’t lay a finger on them.

Havering’s primary sector is good, unlike the secondary academies but councillors weren’t interested. The chair didn’t provide a steer to officers about expectations and so that’s what they got. No discussion about the fragile academy sector which is systematically under-achieving. A feeble protest from the chair was brushed aside.

Four academies are failing,2 but the officers won’t name names. A lay member asked about St Edwards and was fobbed off.

Academies are unaccountable, arrogant businesses.3

Hall Mead is a high achieving academy. Examining their statistics shows Pupil Premium student outcomes are weak.4 They receive £166,000 for vulnerable students, which doesn’t level-up achievement. Hall Mead fails these students in exactly the way that the other 17 academies do. Draconian discipline codes and an obsession on school uniform is a failed strategy. Perhaps they should try something else?

Because this committee is pathetic, crucial issues like Item 7 escape scrutiny. It’s obvious the council’s policy is to avoid damaging the reputations of academies. Or, to put it another way, they prefer that children receive an inferior education. In secret.

Notes

1 From 1 hour 5 minutes to the end. The presentation lasts until 1:16. Councillors Misir, Lawal, Carol Smith, Durdin and Whitney. Gillian Ford bogs herself down in petty detail. The committee relies entirely on lay members for scrutiny.

2 See Havering’s Academies’ GCSE Results, 2021 – Politics in Havering

3 The Loxford Trust runs Abbs Cross Academy amongst others. The CEO gets £260,000 p.a. Loxford 2020ACCSWIZ.cvw (loxfordtrust.s3.amazonaws.com) p70 The Harris Trust has many schools with one in Rainham. It has four staff earning between £200,000 and £460,000. 1222_H0147_Signed accounts 2020_Buzz.pdf (harrisfederation.s3.amazonaws.com) p49

4 Hall Mead School – GOV.UK – Find and compare schools in England (compare-school-performance.service.gov.uk) The statistics are buried in the summary but can be found at Disadvantaged children.

Havering’s Environment Overview and Scrutiny Committee, 21st July, 2021

Havering’s councillors are getting livelier. All five councillors, who were present, spoke. The energetic Darren Wise and Michael Deon Burton made five contributions each. Michael tends to be more conversational than Darren but, let’s not quibble. Darren set the Gold Standard. His first query cited a page reference (p39: appendix ‘A’ if you’re interested). There were also contributions from councillors Carole Beth and Matt Sutton along with the Chair, which is sort-of-obligatory so isn’t noteworthy. Nic Dodin was absent and I don’t think he was missed.

Item 7 was interesting. The funding of LBH’s traffic schemes turns out to be complex. There haven’t been any schemes completed since May because of funding issues with Transport for London. They in their turn can’t approve anything because the funding stream from the government has dried up. So LBH have green lighted injury reduction schemes and they can’t commence. Darren was disappointed that his pet scheme in Cambourne Avenue has failed at this funding hurdle. Interestingly no-one complained about this new wave Austerity programme which has been introduced by stealth.

There was a similar sub-text to the Rainham Creek item, Item 8. On this occasion it was the Environment Agency who haven’t coughed up. There will be a Topic Group on this issue, which will start after contractors have costed the clean up and remediation works. The wider point about flooding in the borough was touched on by the Chair, Carole, who described her personal experiences of flooding, and Darren.

Zoom continues its challenge. I don’t understand why senior officers were presenting items from home and in one case from her garden. The presentation of supporting documents was abysmal. Surely if councillors can attend in person so can officers.

Note

For the agenda see (Public Pack)Agenda Document for Environment Overview & Scrutiny Sub-Committee, 21/07/2021 19:00 (havering.gov.uk)