I spent 3 days of Christmas in bed feeling sorry for myself with a tummy bug. As I wandered in and out of sleep I was determined not to stop the 24/7/365 service that councils expect from us so I turned by attention to some comments made by Laurel and Hardy on reserves and balances and more surprisingly by Minister Bob Neill about an investment by Newham. I know Bob didn’t really want to do this but was made to by Laurel and Hardy.
“How can we get the truth out on matters such as these”, I thought. “Are they just schoolboy howlers or is really the fact that Ministers do not know what they are talking about?” Then I had my brain wave. I had read that DCLG has appointed a new none exec director for commerce – Sara Weller. This is one seriously clever and skilled lady. The head of Argos with a string of other business activities in her CV no-one should know more than she does about money, business efficiency and how to get real value for money.
So I have asked her to look at these two things and have offered the help of councils to her in so doing. Either Ministers have got it right and the sector has it wrong – in which case we must change what we are doing. OR we have it right and Ministers have it wrong in which case we must ensure that they are properly educated so that crass decisions do not affect the work of councils.
I have yet to get a reply to my last two letters to Mr Shapps – I hope that I have more success with this one which I append below for you to consider.
Lead None-Executive Director,
30th December 2010
Dear Ms Weller,
Firstly let me congratulate you on your appointment as the lead None Executive Board member at DCLG. DCLG should be an important Ministry spending, as it does, about 25% of the terrestrial spend of the UK government within England on a massive range of vitally needed services.
I know that the major role of a none-exec in any business is to continually provide ‘reality checks’ for those who work fully inside the ‘business’. I would like to suggest to you that the Local Government Association, which represents all but two councils in England as well as a range of other bodies, could work with you effectively to help you do this. Although we have not yet formally discussed this I am confident that I speak on behalf of all the Leadership of the LGA when I say we would very much like to meet with you at some time to discuss how this could be achieved.
In the meantime I believe that there is an urgent need for your services. It is clear that at the most senior political levels within DCLG there is little understanding of how business works. Councils are businesses and must be run in a business like way albeit that they are not there to make a profit and its customers are also its shareholders.
Let me give you two examples where I feel you might urgently apply a reality check to statements made by Ministers which are undermining the credibility of DCLG:
- Ministers Pickles and Shapps clearly have no idea of what reserves and balances are. They have both made a series of statements recently which criticise the amount that councils hold and give the impression that we have lots of ‘free’ money which could be used to keep council taxes down. Whilst I cannot guarantee the position in all councils I know that this is definitely not the case for the vast majority of councils. We keep reserves because:
a) We hold them in trust for a range of people, bodies and in particular schools. So whilst it is in our reserves it is not actually ours.
b) We hold them because we have acquired them for legal reasons and specific purposes. This could include for example S106 payments which can only be used for specific purposes
c) We hold them because we have particular claims coming up for pensions or single status agreements which would massively distort our service provision if they had to be met in a single year
d) We are deliberately assembling sums of money for large development projects and again need large amounts in a particular year which we need to save up for.
My experience tells me that all that we have ‘free’ are the levels that we are required to keep by the District Audit service – a departmental body of DCLG.
- Minister Neill recently made an astonishing attack on Newham Council. As I understand it Newham have moved from 26 old and often decaying buildings, which would have needed some investment, into one purpose built HQ. This has enabled to them to save such a large amount of money on the revenue account by increased efficiency that they will pay off the capital sum in about 8 years. This seems a rate of return that those of us who work in the private sector would happily consider it a good investment and an excellent use of money. Instead Mr. Neill, acting on instructions from Mr. Pickles, attacked this move and said it was a waste of money.
Most of us believe that investing to save, in the way that Newham have done, is an important way for us to deal with the significant problems of public sector finance faced by both central and local government.
I could give you many more examples such as these but will leave you with these two examples which I would ask you to investigate on our behalf.
I don’t know whether these comments by Ministers are ‘school boy howlers’ which are affecting the decision making process within DCLG or simply an attempt to move responsibility for the serious cuts in services which councils are having to make away from the government. I don’t suppose that I ever will but you could find out the truth.
If Newham’s spend is not the good use of money that we think it is then the sector really does need to know so that we can use all our money better. If reserves are not being held responsibly (and invested responsibly in the short term) then we need to know so that we can look again at our asset management strategies. If however councils like Newham and the sector generally are acting to use money effectively then that should dictate what Ministers both do and say.
If you do decide to raise these issues at the DCLG Board I can assure you that councils would be delighted to provide you with all the information that you need to enable a high level conversation to take place within DCLG.
Once again welcome to ‘our world’. I look forward to meeting with you soon.
Leader, LGA Liberal Democrats