A few weeks ago Cllr Scott Ainslie, Lambeth’s only Green party councilor, said the council had adopted a “siege mentality”.
Lambeth’s problem is that they don’t want to answer questions which might leave them open to the slightest form of criticism. And when they do it usually starts with a rant about Government cutbacks – as Cllr McGlone did with his in absentia written reply at the full council meeting at Elm Green school, Elmcourt Road, West Norwood on October 19th:Cllr Louise Nathanson (Cons, Clapham Common)
To: Deputy Leader (Investment and Partnerships) – Councillor Paul McGlone
In the recent National Audit Office report which looked at the financial sustainability of local authorities it was found that the cost of servicing debts accounts for a significant share of revenue spending in local authorities, and this is likely to increase. Can the council please set out what measures it is taking to reduce the hundreds of millions of pounds of debt that it has accumulated, and that continues to take funds away from much needed public services?
It’s refreshing to know that Cllr Nathanson is concerned about taking funds away from much needed public services, though it does jar with her support for the huge cuts that Lambeth has faced to its budget.
The loans the council now manages were originally taken out between 1992 and 2006. Since 2006, after taking over from a Tory-Lib Dem coalition that had dramatically increased the debt of the council, this administration has effectively managed its finances to use our own cash balances rather than taking on external debt, and worked hard to reduce the historic burden of high debt in the borough.
The information on the council’s borrowing is reported annually in the statement of accounts and as part of the council’s budget report. The Treasury management strategy adopted by the council incorporates a debt management strategy that reflects the council’s potential need to borrow to finance its capital expenditure plans. The council has an agreed set of prudential indicators and limits to provide a control framework for capital investment and treasury management decisions and include borrowing boundary and the authorised limit to its external debt. This investment in capital allows us to fund much needed improvements for our neighbourhoods, like our record investment in highways and pavements, investment in our parks and open spaces and new libraries and leisure centres in the borough.
What Cllr McGlone should have started with was his point that:
” this administration has effectively managed its finances to use our own cash balances rather than taking on external debt, and worked hard to reduce the historic burden of high debt in the borough.”
He could have then highlighted how Lambeth, under the current Labour administration, haven’t been borrowing.
One of the problems Lambeth face – or refuse to face – is that anything they say or do is coming under huge public scrutiny from reasonably-minded people who are fed up to the back teeth with their antics and their Tory cutbacks mantra ( “Tory cutbacks, Tory cutbacks” – to the tune of Hare Krishna).
Did Lambeth council really expect people to believe that the borough’s funding problems had been “dramatically increased” by a Conservative / Liberal Democrat coalition?
Their “Tory cutbacks” mantra has now extended onto the Love Lambeth website, the new home of the council’s official press releases where you will find said press releases intertwined with contributions from various council departments.
So a post from the CLIP team headed: (That’s Co-operative Local Investment Plan not Crew List Index Project) headed: “Consultation on local priorities in the Norwood area” (posted 2nd December 2016) begins:
“Since 2010 the Government has cut the money it gives the Council by 56 per cent. “This is the biggest financial challenge Lambeth has ever faced, and it comes at a time of high demand for our key services.”
And a press release from the communications team headed: “Changes to public health services” dated 1st December, 2016 begins:
“The grant we receive from central government has been reducing since 2015/16 and will, by the end of the 2019/20 financial year, have been reduced by over £5m. “This cut from central Government comes at a time when the population of the borough is growing and health needs and rates of certain diseases are increasing.”
Now read on……….
SO HOW MUCH DO LAMBETH RATEPAYERS PAY TOWARDS COUNCIL DEBT CHARGES?
Back in September News From Crystal Palace emailed all five council press offices in the area – Bromley, Croydon, Lambeth, Southwark and Lewisham – asking about a report from Debt Resistance UK.*
This report said that, on average across London, of every £1 people pay in council tax, 23 pence is going on interest debt charges.
News From Crystal Palace asked all five councils: “If the average London borough is spending 23p in every pound of council tax income on servicing interest debt repayments, please could you say how many pence in every pound of council tax income – if any – are (your borough) spending on servicing debt repayments?.
A copy of the email also went to the relevant councillor responsible for finance in each of the five boroughs.
Bromley, Southwark and (surprisingly) Lewisham all came back with a reply, Lambeth and Croydon didn’t.
In Southwark, 3p to 4p goes towards servicing council debt, in Lewisham it’s 11p. In Bromley – nothing.
In our resulting story* Southwark council’s cabinet member for finance Cllr Fiona Colley told News From Crystal Palace: “Southwark manage their council tax accounts and council rent accounts separately.
“Anything that ‘s related to our council housing is financially managed entirely separately from anything else.
“For the majority of the debt the council has, which is £463 million, £371 million of that is debt that was money that was borrowed to build and manage council homes.
“The cost of servicing that debt comes from council tenants.
“We get considerably more in rent than we get in council tax.
“The important thing is not one penny of council tax goes towards servicing that debt in Southwark.
“3p to 4p in every pound of council tax goes towards servicing debt and it’s about 12p of every pound of rent goes towards paying off the interest on the historic debts – monies borrowed to build estates we’ve built.”
In Lambeth it now transpires the amount which Lambeth ratepayers are paying to service debt charges is 5.3p in the pound.
The debt charge for 2015/16 was £23 million and the council tax receipts for the same period totalled £99.9 million.This is equivalent to 23 pence per pound of council tax. But £17.2m of the debt charge is associated with loans for the Housing Revenue Account and is therefore funded from the HRA.
The General Fund element of the debt charge is £5.8 million, which is equivalent to 5.8pence per pound of council tax income.
Whether that means council tenants are paying 17.7p in the pound or not (compared to about 12p in Southwark) remains to be seen….
*“COUNCILS SPENDING MILLIONS OF COUNCIL TAX INCOME ON INTEREST DEBT REPAYMENTS” – REPORT September 20, 2016