Friday, January 29, 2010

Money, money, money...

A very interesting meeting, last night's Yardley Constituency Committee. So interesting that Cllr Paul Tilsley spent most of his time working through the emails on his Blackberry, although I'm sure that he was keeping an ear on the discussions. Perhaps he was booking a few anaesthetic-free dental appointments with underperforming council officers.

First up was the financial situation across the constituency. The councillors sat there, impassive and silent, while an officer ran through the report, which was a pile of bad news. This bad news actually dates from last September, as the data has - apparently - not been available until now. Quite how anyone is supposed to manage the constituency without current financial data is entirely beyond me and I simply don't believe that these figures weren't available earlier. The quarter 2 data apparently indicates a forecast overspend at year end (that's the end of March 2010) of £564,000, but this seriously understates the position, because the budget reconciliation is based upon 'efficiencies' of £364,000 being delivered by the end of the year. Given that at the end of September, a grand total of £0 had been delivered and that the councillors failed to deliver £118,000 in 2008/09, the signs aren't good. This means that the true end of year forecast position is likely to be somewhere north of £920,000 - an overspend against locally managed services of some 20%.

I did ask - just as I did at the last financial reporting session - for some details about how these savings are to be achieved, but no answer was forthcoming, either from the officer or his elected masters, who left him to struggle bravely, supporting him by remaining silent and impassive. Some of this overspend has been gifted to Yardley from the centre, as no allowance was made for the costs of retrospective appeals against the outcome of the Pay and Grading exercise. Cllr Whorwood tried to shift the blame for these costs by saying that it would have been cheaper if done earlier, but this ignores the simple facts that the process was flawed and some additional costs should have been factored in from the start. Basic business practice would dictate that, but such was the confidence in the process from the very top that it was thought unnecessary. In any case, only a small part of the overspend relates to Pay and Grading.

The only information available is that £177,000 has apparently been earmarked for recovery against 'general efficiencies.' However, only £52,000 has actually been saved and that is 'not fully in place.' The remaining £125,000 is classified as 'one off savings in place for 2009/10', but it is actually coming from the 'Constituency Investment Fund.' That sounds like a good idea - we need some investment in our constituency, but I suspect that this grand name is actually a cover for the use of central council reserves to try to cover up the failures of the Regressive Partnership. A similar funding solution has been employed in Hall Green, where the Liberal Democrats in charge face swingeing cuts to try and cover a deficit of £1.8 million - comprised of a history of years of overspending and failure to meet savings targets. The short version is that this £125k isn't an efficiency saving, but seems to be an additional chunk of funding from the centre that has been dressed up to look like efficiency.

There are also problems incurred through the 'Customer First' scheme, which is running late and has therefore failed to deliver the forecast savings within this year, so these will have to be found from somewhere else. It isn't clear who is to blame for this delay or whether any of those costs can be contractually recovered, but Yardley will pay the price in the immediate term.

And there is more. The officer presenting the budget tonight let slip that the, as yet unpublished, figures for the third quarter actually show a further deterioration in performance. I wonder if we'll get those before the end of the financial year? Given that the district auditor has been very critical of the council and has refused to sign off the 2008/09 accounts in time for the deadline last September, I doubt that we'll see quarter three before the end of the financial year.
Perhaps Tilsley should start his 'bad cop' meetings rather closer to home.

Further afield, it seems that major savings within the Business Transformation programme are predicated on the commercial property market picking up and returning to pre-2008 levels within two years.

Plans to sell off surplus offices and raise £49.7 million towards the project have been put on hold following the slump in the commercial property market.But city council analysts expect the bulk of sales to go through by 2012/3 and have included the full amount in their forecasts for the future Business Transformation savings. In the meantime, the shortfall in income is being plugged by high-cost borrowing.According to the latest figures, the council was expected to raise £38 million this year and £7.2 million next. But it will now only reach £2.5 million this year before seeing a rise to £8.8 million next and £36.6 million the year after. Council deputy leader Paul Tilsley, the man heading up the Business Transformation scheme, admitted the authority was assuming the market would return to its pre-recession levels

That may happen, but it is unrealistically optimistic to provide a medium term budget on such a basis.

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