Tag: inflation

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%.5 Havering’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 Budget: Between a Rock and Hard Place

Havering’s administration is delusional. They refuse to accept that government underfunding of Havering is policy. The government is in perma-turmoil and their policies are too.1 The administration ignores all the evidence and asks MPs to assist. It’s as if Havering’s MPs are an unknown.2

On consecutive nights, government underfunding was demonstrated.3,4 On the 7th February, officers used many slides showing the iniquities of Outer London’s funding formula. Havering is hardest hit because of our peculiar demographics.

Gillian Ford is a fan of lobbying despite knowing the funding formula hasn’t changed since 2013.5 Oscar Ford focused on demographic changes in Havering with costs associated with increasing the numbers of children.6 Lobbying won’t change anything. Paul McGeary said rents only increased by 7% instead of 13.6% because of government intervention. A government decision to reduce rent increases from 13.6% to 7% was for Housing Benefits7 reasons not to help tenants during the cost-of-living crisis.

The council should lobby to increase the council tax cap.8 An increase to 10% would mean Havering avoiding bankruptcy in 2026. Lobbying to avoid bankruptcy would embarrass the government. It’s high-risk but death by a 1,000 government generated cuts is worse. Government will blame Havering whatever decisions are made. Why not take the battle to the government and pillory them for capricious incompetence?

Notes

1 Three Prime Ministers and four Chancellors of the Exchequer

2 Julia Lopez is a minister and wont bite the hand that feeds her. Andrew Rosindell’s a veteran MP who always supports the government on financial matters.

3 Overview and Scrutiny Board meeting 7th February 2023 Annotator Player (sonicfoundry.com)

4 Cabinet meeting 8th February 2023 Annotator Player (sonicfoundry.com)

5 Go to 38-43 mins where she cites two organisations, which, allegedly, have influence

6 Go to 45 minutes. He says the government is “incapable”. This implies he knows the government is incompetent insofar as they don’t understand their own policy.

7 At 9 minutes

8 Four bankrupt councils have increased their council tax by 10%+. They were all bankrupted by searching for additional revenue to pay for statutory services through commercial activities. They all failed