Havering’s Impending Bankruptcy: The Road to Disaster (part two)

Margaret Thatcher’s prime ministership ended after introducing the Poll Tax for council financing. Every property was charged the same amount. A one-bedroom flat was taxed like a mansion. It provoked riots and she lost support in her party.

Panic-stricken, the Conservative government introduced Council Tax. Eight bands, loosely based on 1991¹ evaluations, remain to this day. These valuation bands are supposed to reflect house prices across the country.

The intention was that bands would be reviewed every five years. This would have captured changes in real time. Political cowardice prevented revaluations happening. Winners are happy and losers scream blue murder with obvious electoral consequences. London’s 73 MPs absolutely opposed re-establishing the link between property values and council tax. London’s house prices had rocketed and they didn’t want council tax to double as a consequence.

In Havering, Band D house prices in Rainham have increased eight times since 1991.²The earliest statement of council tax bands are for 1993-4 when band D was set at £535.³ For 2023-4, Band D is £2,088 – four times more.

Havering’s council tax would double if it was a property tax.

Havering’s road to disaster began in 1991. A panic-stricken Conservative government tried to rescue themselves after Margaret Thatcher. They made disastrous decisions, which have lasted 32 years. Havering’s 2023-4 budget raised £149m from council tax.⁴ This should have been a minimum of £300 million. And more if upward revaluations are included.

Havering is a victim of national politics.

Notes

1 How domestic properties are assessed for Council Tax bands – GOV.UK (www.gov.uk)

2 House Prices in Guysfield Drive, Rainham, Havering, London, RM13 (rightmove.co.uk)

3 Previous years’ bands | Council Tax bands and bills | The London Borough Of Havering

4 Decision – The 23/24 Council Budget setting report and 2023-2027 Medium Term Financial Strategy | The London Borough Of Havering

Havering’s Impending Bankruptcy: The Road to Disaster (part one)

Havering’s Strategy Director Kathy Freeman stated: “We are very close to issuing a section 114, [bankruptcy] even six months away from this happening. Our average resources cannot meet the financial requirements.¹

In 2010 Conservative chancellor, George Osborne,² (see addendum) began his attack on local government. Without profiling the financial needs of local government, he capped Council Tax increases to zero%.

Instantly, he demonstrated he didn’t understand two fundamental fiscal principles;

The corrosive impact of inflation
The corrosive impact of the compounding of inflation.

Osborne’s decision was based on ‘something for nothing’.⁴ He talked of ‘waste’ and ‘inefficiencies’ to confuse the electorate. Simultaneously, additional duties and responsibilities were imposed on councils.

Since 2010, British inflation has been 46.88%.⁵Havering’s stand still council tax should have increased at the same pace. In 2010-11 a band D was £1,505. This year, 2023-4, it’s £2,088.13. Inflation linked council tax would have brought the figure to £2,210.56. Havering is minus £122.43 per band D house. There are 107,798 houses in Havering and band D is the average. Osborne’s misunderstanding about inflation has cost Havering approximately £14 million annually.

But the Conservative chancellors weren’t finished with their attack on local government. They reduced government funding. In 2010, Havering received £70 million. In 2023-4, it was £2.9 million. A real reduction of £100 million per year.

The cost of Conservative policies, 2010-23, for Havering is £119 million per year. This is why Havering will probably go bankrupt.

Addendum: Conservative chancellors 2010-23 (their university degree in brackets)

George Osborne (History)
Philip Hammond (Philosophy, politics and economics)
Sajid Javid (Economics and politics)
Rishi Sunak (Philosophy, politics and economics)
Nadhim Zahawi (Chemical engineering)
Kwasi Kwartang (Classics and history)
Jeremy Hunt (Philosophy, politics and economics)

Notes

1 Havering Council balancing on the brink of bankruptcy-A ‘114’ could be issued within months. – The Havering Daily

2 Osborne was educated at private schools: George Osborne – Wikipedia

3 Council funding for taxi trips for Havering school children with special needs to cease (taxi-point.co.uk) “….reimbursement for fuel or a trip via ride-hailing service Uber would cost approximately £30 per day….disabled children will experience changes, ‘appropriate measures’ will be taken to ensure their needs are appropriately addressed.” The human cost of bankruptcy. The weakest and most vulnerable suffer first

4 The 2016 Brexit referendum ‘battle-bus’ is identical with the false claim that leaving the EU would ‘free up’ £350m a week for the NHS.

5 Inflation calculator | Bank of England

Havering’s Overview and Scrutiny Board: 30th March, 2023

The Overview and Scrutiny Board is Havering’s principal scrutiny committee. It has twelve members and ten attended this meeting. (Non-attendees were cllrs Summers and Damian White.)¹

Item 6, Corporate Risk Register, analysed risks to the budget. (Addendum One) Every risk is rated ‘high’.² The minutes of the ‘discussion’ are shocking.³ There was virtually nothing said about this ultra-specific report. Worse, the viability of the mitigation of risks was unchallenged. Proposed mitigation included wishful thinking…lobbying government. (Addendum Two)

Members discussed ULEZ’s effects on some care workers, which isn’t a Corporate Risk and wasn’t in the report. The existential bombshell below was in the report and was ignored.
“Difficulty in identification of further efficiencies and savings following a decade [actually 13 years] of Austerity and increased demand following the COVID pandemic.”
Translated: LBH can’t mitigate risk because the Conservative Austerity programme has destroyed the resilience of the council.

The budget is at ‘High Risk’ of failure. Gerry O’Sullivan should summon Chris Wilkins, LBH’s finance Tsar, to discuss his mitigation proposals. The O/S Board meeting with Wilkins will be an important building block in proactive scrutiny.

Addendum One: High risk factors for the 2023-24 budget

Financial Resilience – Inability to deliver a balanced budget as a result of:

Inadequate Government Funding
Rising Demographic pressures and/or increased complexity of Social Care
Rapidly increasing inflation
Cost of Living Crisis
Delay or non-achievement of planned MTFS savings
Inability to forecast due to uncertainty over medium term Government Funding
Uncertainty regarding timing of future Government funding reforms including introduction of the care cap (currently no sooner than October 2025), whilst being required by government to move towards the median cost of care.
Difficulty in identification of further efficiencies and savings following a decade of Austerity and increased demand following the COVID pandemic
Government changes in policy e.g. changes to Home Office refugee dispersal

Addendum Two: Mitigation of the risks to the 2023-24 budget

Early diagnosis of the financial gap to allow time for actions to be put in place including new savings proposals.

– Lobby the Government at every available opportunity to put the case for both lack of Funding for local government generally and more specifically how Havering is disadvantaged from the current distribution formula. (my emphasis)

– Work with national lobbying groups such as the LGA and London Councils to put the case for more funding to the Government. (my emphasis)

– The Council has developed over £30m of savings proposals (over 4 years) which are being consulted on to reduce the financial gap which will be monitored for delivery.

– The Council continues to review its structure to develop a new target operating model which both aligns with current service priorities but also delivers savings and efficiencies.

– The Council is in the process of reviewing the Capital Programme to ensure that all schemes continue to be viable (see regeneration section of this risk register for further details).

– The Council has developed action plans to mitigate and reduce the in-year overspend including:

All overspends reviewed and challenged to identify any non-recurrent spend which could be funded from reserves · All use of consultancy reviewed by senior management

Appendix 1: Source: HAV00005 p31

Notes

1 For enquiries on this agenda please contact (havering.gov.uk) Cllr Ruck is the vice-chair he attended the meeting via Zoom, which wasn’t noted in the minutes.

2 See p28 for details of categories of risk.

3 For enquiries on this agenda please contact (havering.gov.uk) Minutes para 39

Havering’s Parking Permit Horror Show

In the Romford Recorder, 28^th April 2023, there was a headline about the doubling of the price of parking permits. Leadership hopefuls, Keith Prince and David Taylor, attended the photo opportunity. They smelt blood. They were right, there was a cock-up.

David Taylor has discovered the importance of political homework. He’d attended the Overview and Scrutiny meeting and nothing was said about doubling the price of parking permits. The following day they were doubled with, “…the agreement of the chairman.” Gillian Ford said, without irony, that, “…we instigated an inquiry.” That is: an inquiry into her own budget.

Football fans sing, “You Don’t Know What You’re Doing” at referees. If the public had been at the cabinet meeting, it would have been appropriate.

David Taylor was right. Cabinet didn’t know every aspect of their own budget. But the explanation of the cock-up is interesting.¹ Ray Morgon said it wasn’t his fault. “We are still looking at how this happened….” This translates as, “The officers run the council and tell us what’s happening afterwards.”

What’s interesting is the invisible Chris Wilkins.² He’s chair of finance. The revenue increase must have been discussed with him and he didn’t alert Morgon. This is remiss.

Officers aren’t politicians and are insensitive to the political implications of their proposals. Decision-making by officers is disastrous.

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Havering’s Cabinet Meeting, 3 May 2023

As usual the meeting was dreary.³ Apart from Martin Goode asking detailed questions nothing happened.

David Taylor should have asked about the cost of the parking permit ‘U’ turn. If he had asked he’d have found out it was £250,000 or ten teacher assistants.

Notes

1 Havering Council reverses doubling of parking permit prices | Romford Recorder

2 Wilkins spent the entire cabinet meeting glued to his iPad, which gives a terrible impression, after what happened in the house of commons.

3 Webcast Annotator Player (sonicfoundry.com)

Havering’s Cabinet ‘debates’ CCTV: 8th March, 2023

The estimated cost of this Upgrade and CCTV Relocation Proposal is £2.423m, to be funded from Capital and CIL monies.¹

As a minimum, a ‘debate’ about spending £5 million capital and £500,000+ revenue should include a discussion of effectiveness. Councillors were unaware there were questions to ask. They seemed equally unaware that officers had noted CCTV isn’t a legal obligation. The decision was made without considering the economics and effectiveness of CCTV.

HRA are obsessed with street care, so would £500,000 revenue help enhance meeting residents’ desire for clean and smooth pavements? What about £5M capital?² The three minute ‘debate’³ that was devoted to this critical issue is less than a new bike shed would get. But then they understand bike sheds. Don’t they? None of the economic points relating to an efficient use of council funds were mentioned. It was rubber stamped.

The Summary statement says CCTV makes, “Havering a safer place.”⁴The question is whether it will improve the current situation. Is there evidence CCTV makes a difference to levels of crime? Item 7, points 2-8,⁵is silent on whether CCTV successfully fights crime.

The CCTV programme is very expensive.^6,7 It is additional to £300,000+ pa for Havering’s five funded police officers.

Summary point 7 says, “…an effective and reliable CCTV system plays an essential part in assisting the Council to fulfil its duties under the Crime & Disorder Act 1998, which requires local authorities to work with the police and other partners to prevent and reduce crime and disorder”.⁴(my emphasis)

The police don’t think CCTV is that great.

“Overall, use of CCTV makes for a small, but statistically significant, reduction in crime, but this generalisation needs to be tempered by careful attention to (a) the type of crime being addressed and (b) the setting of the CCTV intervention. CCTV is more effective when directed at reducing theft of and from vehicles, while it has no impact on levels of violent crime.”⁸(my emphasis)

Havering’s CCTV has been superseded by 1,000s of private CCTV systems and 10s of 1,000s of smart phones. This cabinet ‘debate’ was abysmal.

Notes

1 (Public Pack)Agenda Document for Cabinet, 08/03/2023 19:30 (havering.gov.uk) Item 5

2 The 2023 Capital programme is interesting and demonstrates that £5M is significant Appendix 1 – Existing Capital Programme Detail.pdf (havering.gov.uk) The £5M just about doubles the road resurfacing budget from £6M to £11M. This would reduce the costs to residents paying for damaged vehicles.

3 Go to minutes 1-4 for the ‘debate’ Annotator Player (sonicfoundry.com) See also Report detail p21 para 9:1

3 p14

4 pp14-5

5 p17 para 2:7 main report £500,000 revenue

6 p18 para 6:3 main report £5,000,000 capital

7 p15 See Crime and Disorder Act 1998 (legislation.gov.uk) There is no obligation to fund surveillance equipment. This is noted at p20 para 8:1 There is, however, a duty to have a Crime and Disorder committee which Havering doesn’t have. Para 5:1c (a)

8 http://library.college.police.uk/docs/what-works/What-works-briefing-effects-of-CCTV-2013.pdf p2

Havering Council: The Budget Meeting: 1st March, 2023

Everyone knows Romford Conservatives are a nest of vipers but usually they attack each other in private. David Taylor’s leadership bid was as subtle as a train crash and Keith Prince repudiated it by voting against Conservative budget propositions.¹ HRA’s men wore green ties as a bonding exercise. Seven maiden speeches were an important step towards a more mature council.

Chris Wilkins needs a speechwriter to avoid whining.² Constant worried glances at the council screens punctuated his flow with pauses. HRA are delusional about lobbying. They expect Havering’s MPs to help. Chris finds Julia Lopez disappointing. Shock horror.

David Taylor praised the HRA/Labour budget, offering minor tweaks.³ His principal point was that his budget proposals showed LEADERSHIP! David is negotiating to be a coalition partner, to replace Labour, but hasn’t cleared it with Keith Prince.

Keith Darvill did a political job. He sees the destruction of Havering’s finances by government under-investment as crippling. He said the entire country is suffering identically. Government policy has reduced growth and national wealth. (0:55)

Martin Goode (1:01) isn’t loved by HRA members who heckled him. Apart from an excellent Captain Mainwaring⁴ impression, this was a familiar jog-trot through well-known prejudices… debt, pessimism, conspiracy theories.

General debate – Maiden speeches

Philip Ruck (1:22) He was nervous and a few witty reminisces calmed him down. It was a stellar performance in the circumstances.

Matt Stanton’s (1:32) speech was a tour de force. He surveyed the political and economic scene adding an interesting flair to it.

Mandy Anderson (1:35) spoke of ‘degraded finances’, an interesting phrase. She spoke darkly about finance for the ULEZ challenge.

Kathy Tumilty (1:40) praised Overview and Scrutiny and wondered why the Conservatives hadn’t provided a full roster of members.

Frankie Walker (1:46) is passionate about statistics and shared this with the meeting. Her statistics damned the government, which Conservatives didn’t like.

Jane Keane (2:02) upset Michael White who displayed a thin skin for the first time in his life.

James Glass (2:08) praised Conservative councils who are paying for the ULEZ challenge, which means Havering benefits for nothing.

David and Ray Morgon rounded off with banalities.

Notes

1 For the webcast, where all the timings refer, go to Annotator Player (sonicfoundry.com) Go to 1 hour 42 m (1:42) for Keith Prince’s announcement. Normally rebellion is punished by loss of the whip but was ‘agreed’ because ex-Leader Michael White joined him.

2 In this case about Westminster council (0:24) For budget detail got to Challenging budget still sees investment in roads, homes, schools, police and free parking | The London Borough Of Havering

3 The proposals for councillor allowances reduces council tax from 4.99% to 4.79% for example.

4 Dad’s Army (TV Series 1968–1977) – Full Cast & Crew – IMDb

Havering’s Budget and Rishi Sunak: 2023

Havering’s lobbying of government is the triumph of hope over experience. Underfunding is government policy and is non-negotiable. Havering’s Chief Executive said some ministers treated him as if he was a ‘naughty school boy’ (@ 23minutes).¹Naughty like Oliver Twist was ‘naughty’.

Havering’s government grant: 2010 = £70 million

Havering’s government grant: 2023 = £1.9 million

Havering’s outcome:…………….: 2023 = Minus £68.1 million

The Bank of England calculates inflation for 2010-22 at 41.7%²

Therefore 2010’s £70 million in 2022 £££s is £99.18 million

Havering’s real 2023 shortfall is £97.28 million

Rishi’s policies rely on people not understanding maths³

…………………………………………………………………………………………………………..

Cabinet Meeting: 14^th December 2022

The meeting had a budget item. Councillors are listed in speaking order. (Starting @ 14 minutes)

Chris Wilkins: Chris doesn’t understand strategy or analysis. His jog-trot through ‘highlights’ was unhelpful.

Gillian Ford: She injected passion into her speech and cares.

Oscar Ford: He gave a very competent review of an OFSTED report. Unfortunately, the prevailing counsel of despair continued.

Graham Williamson: He was woefully unprepared for a budget meeting.

Keith Darvill: A brief brilliant intervention about the impact of decision-making by the government. His political point was welcome.

Ray Morgon: He’s self-depreciating and as Leader needs to be positive. Cabinet members should be warned about being unacceptably casual.

Paul McGeary, Paul Middleton and Barry Mugglestone: All three were mute.

Notes

1 Annotator Player (sonicfoundry.com)

2 Inflation calculator | Bank of England

3 So it’s surprising that he’s keen that everyone studies maths until 18 Rishi Sunak wants all pupils to study maths to age 18 – BBC News

Havering Council Meeting, 23rd November, 2022: Question Time

Resident Association councillors used to ask questions about potholes and such like. Osman Dervish would smile sweetly, pat them on the head and say, ‘Well done’. Drivel, but everyone felt better. Now the roles are reversed. The question is, ‘How well are Conservatives doing?’

The first question was by Keith Prince.¹ His question (Q1) was about ULEZ.² He knows opening questions are routine with the supplementary question being the killer. Cunning politicians put cabinet members³ in a tough spot and score a triumph. I thought Keith would be classy.

Unfortunately, the blind were leading the blind. Barry Mugglestone hadn’t read the ULEZ proposals and thinks, wrongly, it’s about climate change. Even worse he thinks it’s a tax. Barry was reading a prepared answer from officers, who also haven’t read the proposals, or have, and Barry didn’t accept their answer. It’s beyond stupid to misunderstand ULEZ’s purpose, which is, “To help clean up London’s air…” ⁴

Furthermore “…ULEZ is central to the Mayor of London’s plans to improve Londoners’ health. It will clean up the city’s toxic air, which leads to the early deaths of thousands of people every year.”⁵ (my emphasis)

Keith isn’t guilty of misunderstanding. He’s playing politics. On this occasion he ranted about taxation, which he knows isn’t true.⁶ He then made progress. He said if people driving 18 year old bangers are charged £12.50 a day for destroying people’s health, Havering’s businesses will collapse. Keith doesn’t have a grip on economic realities.

The principal purpose of ULEZ is saving lives in Havering.

Addendum: Question allocation

If the Administration believe that ULEZ is about climate change why wasn’t it given to Climate Change cabinet member Keith Darvill to answer?

Notes

1 Council questions.pdf (havering.gov.uk)

2 Ultra Low Emission Zone – Transport for London (tfl.gov.uk)

3 Barry Mugglestone. Annotator Player (sonicfoundry.com) Got to 29 minutes in

4 Ultra Low Emission Zone – Transport for London (tfl.gov.uk)

5 Havering, ULEZ and Public Health – Politics in Havering About 3 people a week die in Havering from air pollution

6 Because he knows what taxation means.

‘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 17^th 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 17^th 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.⁴Havering 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)