Archive | July, 2015

Snouts in the trough – 2015 edition

27 Jul

Newham has published its annual report on the allowances paid to councillors in the previous financial year – April 2014 to March 2015.

The report lists all councillors who served in the financial year 2014-15 and as this was an election year it includes those who left office in May 2014, as well as those who were re-elected and those joining council for the first time.

It’s further complicated by Alec Kellaway dying shortly after the election and his being replaced by Tonii Wilson in a by-election a few months later. And by Charlene McLean being removed from office for non-attendance in March. She re-elected in May 2015.

Altogether 81 different people served as elected members in the period covered. Between them they claimed a total of £1,234,457 in allowances. Of that, £638,712 was paid as basic allowances, £592,869 as ‘special responsibility allowances’ (including the whole of the mayor’s £81,029 allowance) and £2,876 in other allowances (travel, childcare, phone etc.).

Though you wouldn’t know any of this by reading the report. It doesn’t provide totals for individual members or overall.

As ever – and quite deliberately – it has used a format that makes it unnecessarily awkward for anyone to work with. Would it really kill them to give us an Excel or .csv file?

So who gets the most? Well obviously that’s the Dear Leader. But look at the top ten earners among councillors:

Name Basic £ SRA £ Other £ Total £
R WALES 0 81,029 0 81,029
L HUDSON 10,734 36,977 0 47,711
R CRAWFORD 10,734 34,012 240 44,986
I CORBETT 10,734 34,012 0 44,746
F HUSSAIN 10,734 32,977 184 43,895
C FURNESS 10,734 32,977 100 43,811
E ROBINSON 10,734 32,977 100 43,811
A BAIKIE 10,734 32,977 0 43,711
U DESAI 10,734 32,977 0 43,711
K CLARK 9,118 27,458 180 36,756
A McALMONT 10,734 24,542 750 36,026

All but one are men. The only exception is Ellie Robinson. Yet again.

Aside from Anthony McAlmont, who is the ‘independent’ chair of Overview and Scrutiny, all those listed above are full-time councillors with ‘special responsibilities’ that require them to work 5 days a week on council business. Including Sir Robin that’s 10 full-time politicians we’re paying for. If the mayor is serious about finding £50 million in cuts I can think of one easy ways to make savings!

Don’t feel too sorry for Ken Clark: his earnings are suppressed by the fact he was only elected in May 2014 and therefore has seven weeks’ less pay to report than his peers.

For those of a nostalgic bent, here are the previous editions of ‘snout in the trough’:

  • 2011 edition – “Newham Councillors Paid More Than £1.2 million in Allowances”
  • 2012 edition – “Snouts in the trough – again”
  • 2013 edition – “Snouts in the trough – 2013 edition”
  • 2014 edition – “Money (that’s what I want)”


24 Jul

Well, that didn’t take long.

Less than 24 hours after Overview and Scrutiny voted to reject the mayor’s decision to set up a pension scheme for himself and his chums, and to ask him reconsider, he’s announced he’s going ahead anyway.

Even by his low standards this is shameless and self-serving.

And, at a time when residents face £50 million a year in cuts to vital public services, his contempt for us couldn’t be more obvious.

Picture credit: @StopCityAirport

The geezer is underpaid

23 Jul

Sir robin wales labour hand up for more money

Hands up if you think you’re underpaid on £81,000 a year (photo: WorldSkills)

by Iain Aitch

‘The geezer is underpaid’ is not a phrase you expect to hear from the Deputy Mayor of a Labour council when talking about his boss. You expect it even less when his boss, Newham Mayor Sir Robin Wales, draws allowances of £81,029 per-annum and is asking Council Tax-payers where £50m of cuts should be made. 

Yet these are the words that came from the mouth of Councillor Lester Hudson at Wednesday evening’s Overview and Scrutiny Committee (OSC) at East Ham Town Hall. Hudson said he was speaking on behalf of the Mayor as he attempted to justify how and why Wales should get a £10,858 pay rise, in the shape of a pension paid for solely by Newham residents. 

Once tax breaks were taken into account this would leave the Mayor with a council tax-funded income of £96,231. This is more than four-times the mean Newham salary that other councillors reported to the meeting. Hudson was adamant that Wales, full-timers and those who receive Special Responsibility Allowances (SRA) should receive a hefty 13.4% pension contribution from residents. The contribution from Wales and councillors? Zero. 

The meeting was discussing these pensions because the issue had been called in to the OSC by councillors concerned at just how this £600,000 spend over three years would make them look. Councillors Dianne Walls, Seyi Akiwowo and Kay Scoresby asked how this would appear to residents on the doorstep come election time, but Councillors Hudson, McAlmont, Vaughan and Noor argued that MPs get a generous pension, so why shouldn’t they? Vaughan asserted that they were as good as MPs; ironically, Noor decided they were better, even though it appeared that he did not know quite how pensions worked. 

Several members struggled with the concept that they were paid allowances for duties rather than actually being employees of Newham Council. Some had to be reminded more than once. They still remained puzzled. Hudson didn’t help by constantly referring to being an employee, even when he was regaling the meeting with tales of his Cambridge degree, his past as an accountant and how he could earn more elsewhere were it not for his selfless dedication to public service.

If there was a The Thick of It moment during the OSC it was when the big white book of meeting rules was pulled out and dusted off. Newham’s council meetings and committees are not places where dissent is a common occurrence and suddenly there was some. Computer says no. 

The chair, Councillor Anthony McAlmont, didn’t know quite what to do. The rule book was consulted. But it was clear there was more than a simple problem of pensions or procedure at play. The room was divided along gender lines, with Councillors Rokhsana Fiaz and Susan Masters joining the dissent. Female councillors spoke about the impact of austerity, the impact on residents and the probable illegality of the scheme being proposed. Male councillors spoke about how selfless they were and how much they were worth to the public. 

In tense exchanges, issues of childcare, meeting times and parental leave were raised by the women. Councillor Hudson expressed an opinion that those issues had already been discussed at Labour Group. Councillor Akiwowo face-palmed at this point. Fiaz rolled her eyes. Walls pointed out that no such discussion had occurred. Akiwowo came out fighting and impressed mightily. She had already rubbished the idea that huge pensions would attract a younger, more diverse set of councillors. “I’m not 55 and I am pretty diverse,” she said. But the point was lost on the old guard in the chamber. Hudson, unable to vote, left the room stating that he hoped ‘common sense would prevail’ to yet more eye-rolling, astonishment and opprobrium. 

At the meeting’s conclusion, all five women voted to recommend that the Mayor reconsider the pension scheme. All three men voted to say all was fine and dandy and when do the payments start?

The final decision as to whether to spend the £600,000 on pensions now rests with the Mayor. At a time when community centres are being closed, childcare facilities cut and repairs put off it would surely be embarrassing, even for this Mayor, to rub Newham residents’ faces in it, wouldn’t it? Let us see. 

Whatever the decision, it does now seem that the split within Newham Labour’s ranks is becoming visible. It was seemingly bubbling under even before the ink was dry on the ballot papers at the last council election, but now it is out in the open. We may finally have an opposition sitting in the council chamber, only not where anyone would have expected to find them, least of all Sir Robin. 

Iain Aitch is an author and journalist who lives in Newham. He has written for the Guardian, Daily Telegraph, Sunday Times and Financial Times.


Number crunching

20 Jul

The council is shortly going to consult residents on the £50 million of savings it is going to have to make as the result of central government funding cuts.

Here are a few numbers to put that into context:

  • £563.5 million – amount borrowed in so-called ‘lender option, borrower option’ (LOBO) loans
  • £37.2 million – ‘cost of capital financing’ (i.e. interest on loans, including LOBOs) in 2014/15 (budget)
  • £111 million – cost of buying and refurbishing Newham Dockside as the council’s new HQ
  • £40 million – amount ‘loaned’ to help convert the Olympic stadium for use by multi-millionaire-owned West Ham United
  • £5 million – additional amount to be invested in retail & merchandising ‘opportunities’ in the Olympic Park 
  • £4.7 million – amount lost on the council’s ‘investment’ in the short-lived London Pleasure Gardens
  • £7.1 million – estimated loss of rental income due to voids on Carpenters Estate up to 31st March 2014
  • £2.1 million – estimated loss of council tax due to voids on Carpenters Estate up to 31st March 2014
  • £7 million – amount Newham had invested in Icelandic banks when they crashed in 2008 (and only recently recovered)
  • £1.2 million – annual allowances paid to the mayor and councillors
  • £0.6 million – estimated annual cost of the Newham Mag

Natural order

17 Jul

Douglas Adams

Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.

Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.

Anything invented after you’re thirty-five is against the natural order of things.


The Internet.

Directly-elected executive mayors.

Yep. Douglas Adams nailed it.

Gold plated

15 Jul

At their meeting on 25th June the mayor and his cabinet colleagues took two important decisions. The first was to permanently close the Upton Centre, on the grounds that works required to re-open it are ‘unaffordable’. The second was to award himself and his advisors new, taxpayer-funded pensions.

In April 2014 the coalition government decided that councillors and elected mayors shouldn’t continue to be members the Local Government Pension Scheme (LGPS). The reasoning being that councillors and mayors are not employees, but volunteers. The law was changed to freeze current membership at the end of each elected member’s term of office and stop new joiners. For sitting Newham councillors that meant that from the end of May 2014 they became deferred members of the LGPS with all rights frozen at that point. Councillors elected for the first time in May 2014 were ineligible to join.

Never ones to let the grass grow under their feet where personal remuneration is concerned, our councillors decided at their very first meeting after the election

That the Council should provide a pension scheme for elected members, which provides benefits as close as possible to those available under LGPS

They delegated authority to the heads of Legal and Finance to take the necessary steps to make this happen.

But what the mayor and his chums finally agreed last month is subtly different:

That the pension scheme would be made available to all Members in receipt of Special Responsibility Allowances (SRAs)

So only the mayor himself and those councillors he handpicks to be his advisors will be members of the new scheme. Ordinary backbench members will have no pension.

And they will have no say over this decision either. In an unstrange twist of fate it turns out that under an elected executive mayoral system this kind of decision is one for the mayor himself in consultation with his cabinet. This is not a matter for full council.

And happily the monitoring officer was also able to use Section 33 of Localism Act 2011 to relieve the mayor and cabinet from the restrictions of pecuniary interest by granting dispensation to them to participate in the discussion and then vote themselves flipping great wedges of cash.

The chosen scheme will be a

…Defined Contribution Pension with medium employers contribution rate of 13.4%

That 13.4% employers contribution is more than double the 6% that ordinary council staff now get. The self-serving greed is breath-taking. Sir Robin already receives an allowance of £81,029 per year. This new scheme will mean council taxpayers forking over an extra £10,858 per year in pension contributions to him alone. Add in the payments for his coterie of advisors and the bill balloons to hundreds of thousands of pounds between now and the next local election.

The justification being put forward for doing this is laughable.

This will act as an inducement to attract a wider range of economically diverse and younger (than the average age of 55) candidates, as stated in the 2014 report of the Independent Panel for Remuneration of London Councillors. That would improve representation across the borough and enhance democracy. It would also make it easier for existing councillors to take on more responsible posts that will require them to spend less time working outside the council.

This supports the Council’s resilience agenda through helping to promote a Strong and Cohesive Community and also to promote the Council as an Efficient and Trusted Organisation.

The lack of a Council pension didn’t stop Newham residents standing for election in 2014 – there were at least nine candidates in each of the 20 wards. Nor did it prevent new councillors becoming mayoral advisors or accepting SRAs. For example, Francis Clarke and Ken Clark went into Sir Robin’s cabinet immediately after the election and Hanif Abdulmuhit took an SRA as lead councillor for Green Street

Given that the mayor personally gets to decide who joins the cabinet and who gets an SRA it is bizarre to suggest pensions are needed as an incentive for people to stand for council. Even if elected there’s no guarantee they’ll ever join the gilded circle.

It’s also unclear that this is even legal. The Local Government Association has advised that it’s not and no other council in the country is planning to do the same thing.

At a time when community centres are closing and the council is looking for ways to save a further £50 million a year this is – at best – an extraordinarily tactless decision. At worst it’s a massive ‘fuck you’ to those that depend on council services.

Perhaps that’s why the Overview and Scrutiny committee has decided to ‘call in’ the decision. There will be an emergency meeting to discuss it next Wednesday (22 July) at East Ham Town Hall, starting at 5 p.m. It is open to the public.

Fifty shades

14 Jul


Labour party members across east London received an email from Newham councillor Unmesh Desai over the weekend. He wants to be the party’s candidate for the London Assembly seat of City & East in next year’s election. The incumbent, John Biggs, now has more pressing business as mayor of Tower Hamlets so Desai hopes to realise a long-held ambition:

I am Unmesh Desai, I want to be your candidate for City and East London next May because I want to bring City Hall closer to our communities.  I want to see more important decisions made locally.

I have a solid track record of three decades of community campaigning across East London as an activist, trade unionist and a councillor. 
I am delighted to have received key endorsements from my local MPs Stephen Timms and Lyn Brown, Newham’s Mayor Sir Robin Wales and our MEP Claude Moraes. 50 Newham councillors are backing me, as are councillors, activists and campaigners from every parliamentary constituency, as well as the GMB.

I have the passion, commitment and determination to ensure our voice is heard loud and clear at City Hall.

Nominations close on 31st July and your constituency will meet before then to decide who to nominate. If you want to find out more about me and my campaign, please do get in touch.

Alternatively they could look at his campaign website,

You can see more about my experience here: INSERT LINK.


Something else that’s missing is a list of the “50 Newham councillors” he claims are backing him. 

I’d back myself to name ten councillors who wouldn’t support Desai if he was running for town dog catcher, so the idea that he has the active support of every one of the rest is hard to believe.

But of course he could prove me wrong by publishing the names. Go on, Unmesh: INSERT LIST.

Show and tell

13 Jul

Newham Show 2015

Yet more shenanigans at “the Mayor’s” Newham Show.

Just as they did last year. the Focus E15 campaign decided to use a Sir Robin’s publicly funded propaganda fest to draw attention to his less-than-enlightened housing polices. As the event is paid for by residents and held in a public park they have every right to attend and talk to who they want to. But the council’s security people took a different view. Leaflets were confiscated and the campaigners were physically ejected from the site. 

As the picture above shows, things got a bit physical.

And there was no shortage of swearing either, though this year it wasn’t directed at the public.

Cabinet member for ‘building communities’  – and Sir Robin’s new best friend – councillor Ken Clark spotted Ahmed Noor wearing a Newham councillor teeshirt at the community tent. He demanded to know who gave “that bastard a fucking teeshirt.” Although Noor is currently suspended from the Labour party he is still a councillor, but this nicety was beyond our Ken. He then directed a volley of four-letter words at Noor and his friends, leaving no-one in any doubt that  the Plaistow councillor should depart post-haste. And anyone that’s a “fucking friend” of Noor is now Clark’s “fucking enemy”: he would “fucking get him.”

The whole extraordinary tirade was witnessed by members of public and several other Newham councillors. Given that Ken Clark is about twice the size Ahmed Noor – who is also fasting at the moment – they were for once sympathetic to Noor. 

Once again it seems that Sir Robin and his cabinet believe they have they have the right to scream at, abuse and threaten who they like, especially at the Newham Show.  

Baikie Grove

9 Jul

Andrew Baikie

In a press release issued by the council today, Andrew Baikie, Sir Robin’s ‘5-days-a-week’ mayoral advisor for housing is quoted as saying:

We are experiencing an acute housing shortage in Newham and our council housing stock is imperative to helping us tackle this.

Indeed, councillor. Well said.

So it’s mystifying that you are deliberately leaving hundreds of council properties empty on the Carpenters Estate and why you are working with Countryside PLC to sell off ‘surplus’ council homes under the NewShare scheme.

Perhaps you could explain?

How councils blow your millions

6 Jul

Tonight’s Dispatches (Channel 4, 8 pm) is entitled “How Councils Blow Your Millions”

The programme uncovers unknown deals between cash-strapped councils and banks that are costing taxpayers millions of pounds a year. As you might expect, Newham council is featured strongly:

The council with the biggest portfolio of LOBO loans is the London Borough of Newham, which has £563m of these risky loans. Channel 4 Dispatches has obtained a council document which shows that this year the local authority has been paying rates of up to 7.6% on these loans.

Sadly our councillors will be unable to watch, as they will be in a Labour group meeting (except Ahmed Noor, who is suspended). 

Rather than addressing this pressing issue they’ll be talking about a phoney public consultation on spending cuts, the impending fabulousness of the ‘Mayor’s Newham Show’ and the new gold-plated pension scheme for the privileged few (the mayor and his hand-picked circle of advisors) that we’ll be picking up the tab for. 

Channel 4 put out this press release ahead of the broadcast:

Parliamentary committee chairman calls for inquiry into £15bn of risky bank loans taken out by councils across the country

Clive Betts, the Chairman of the parliamentary committee which scrutinises local government has called for an inquiry into £15bn of risky bank loans taken out by more than 200 councils across the country.

These risky and complex loans are known as LOBOs. Some councils like Newham and Cornwall are being charged interest rates of more than 7% on tens of millions of pounds of these LOBO loans at a time when base rates are at a historic low.

Expensive exit fees imposed on councils by banks like RBS and Barclays mean that councils can’t get out of these loans which can run for up to 70 years.

Dispatches estimate that banks made more than £1bn in upfront profits on these local authority loans.

A former trader at Barclays Capital told Dispatches he had “deep moral qualms” about LOBOs and didn’t feel they were “fair” on councils.

For the past three months, Channel 4 Dispatches has been investigating the books of town halls across the country. How Councils Blow Your Millions: Channel 4 Dispatches, airs tonight.

Dispatches presented its evidence to Clive Betts, who said: ‘I think the committee will want to look at this very seriously indeed’. He said he would question ‘whether should these loans be continued, is there any way they can be unravelled and councils given loans at a fair interest rate. ‘

Calculations suggest that if councils could refinance at today’s rates they could save taxpayers £145m this year alone – or almost three quarters of a billion pounds across this parliament.Betts has also called for the Financial Conduct Authority to investigate the City firms that give specialist financial advice to town halls on their borrowing.

Dispatches uncovered evidence that some council advisers were not only paid by the local authority, but earned commission from City brokers if town halls took out these risky loans. Betts described this potential conflict of interest as “outrageous”.

What are LOBO loans?

Few outside a council’s finance department or the City of London know about the existence of these LOBO loans. While these loans might look a bit like a fixed-rate mortgage they are long-term loans tied to complex interest rate derivatives set up by the banks

LOBO stands for Lender Option Borrower Option and unlike a fixed-rate mortgage they have three key twists:

  • The loan contract runs for between 40 and 70 years
  • Councils have to pay huge exit fees if they want to move to a better deal
  • Banks have the option of raising the rates at regular intervals

Most LOBO loans were taken out between 2003-2011 when council officials believed interest rates would stay high. As base rates have hit rock bottom and stayed low, many local authorities have been left counting the cost.

Research suggests about 240 local authorities across the UK have taken out about £15 billion of LOBO loans.

In some cases local authorities have taken up to half a billion pounds of these loans, borrowing from private banks including Barclays and RBS.

MP calls for investigation into LOBO loans

Labour MP Clive Betts told Channel 4 Dispatches that he wants his committee to investigate these loans and would like to explore whether there are grounds to unravel these deals

He has also called for the Financial Conduct Authority to investigate the behaviour of City firms that offer local authorities specialist financial advice. Dispatches has obtained evidence that as well as being paid by councils some of these firms earned commission from City brokers if a council took out a LOBO.

Betts told the programme: “That’s outrageous. In the end a council appoints and pays for an independent outside advisor to come in they expect that advice to be independent and not to be paid for by somebody else who is gaining a profit from these loans being set up. I mean that really is scandalous if that’s happened.”

He added: “I think the FCA now ought to investigate this, and if it hasn’t got the powers then the government ought to consider giving it the powers to regulate this in the future.”

Expensive ‘inverse floater’ LOBO loans

There are a number of different types of LOBO loans but currently the most expensive for councils is known as the “inverse floater”.

These are LOBO loans taken out by councils that have tied interest payments to a complex formula designed to reduce a council’s interest payments if rates go up.

However, as base rates have fallen and stayed low some councils have ended up paying high rates of interest.

Channel 4 Dispatches has established that at least 12 councils which have the most expensive LOBO loans include Cornwall and Newham. Most of these have “inverse floaters” taken out with RBS.

The council with the biggest portfolio of LOBO loans is the London Borough of Newham which has £563m of these risky loans. Channel 4 Dispatches has obtained a council document which shows that this year the local authority has been paying rates of up to 7.6% on these loans.

Banking whistleblower speaks outA former banker with Barclays Capital, Rob Carver, has spoken out about his “deep moral qualms” with LOBO loans.

Carver used to work on Barclays Capital’s Exotic Interest Rate Derivative Desk . He didn’t deal with councils directly, but millions of pounds of Lobo contracts passed across his desk.

He says: “I didn’t feel that the trading we were doing was fair. I didn’t feel that they [councils] understood the business that they were getting in to, and I didn’t think ultimately it would be a very good deal for the – the local taxpayers of that authority.”

‘Conflict of interest’?Channel 4 Dispatches also hears evidence that some City consultants giving councils specialist financial advice on their borrowing earned commission on LOBO loans that a council took out.

We’ve learned that as well as being paid by councils, some advisors earned commission from city brokers if the council took out a LOBO.

Mark Pickering previously worked for Sector, a firm of council advisers which earned these commissions.
He felt this was a potential conflict of interest.

Asked whether Sector earned commission on LOBO deals, Mark Pickering says: “Yes, it did go on during my time at Sector…. I felt pretty uncomfortable and that’s why I sought to do something about it by setting up an independent alternative.”

Mark Pickering left Sector and set up a rival firm, which doesn’t take commission. His firm , Arlinglcose, does not advise councils to take out LOBO loan.

He said: “it’s rare to find a situation which the balance of the benefits have seen to fall favourably on the local authority.”
Capita, which owns Sector, told the programme:

  • they ‘strongly refute any allegations of inappropriate business activities’
  • We provided ‘generic, factual, comparative information to local authorities regarding their funding options’
  • ‘We did not and do not direct local authorities to seek funding from any specific organisation”

Right to Replies

A Barclays spokesperson told Channel 4 Dispatches that these loans have helped councils:

  • ‘build new schools, roads and parks. They are straightforward, fair and easily explained’
  • ‘The average interest rate was about 4.5 %, typically cheaper than the public sector loans available’
  • ‘It is untrue lobo loans work against the best interest of the local authority’

At RBS recent AGM, Channel 4 Dispatches asked the banks chairman, Sir Philip Hampton, if he could justify charging councils, high interest rates for LOBO loans.Sir Philip Hampton says:‘It’s very difficult to talk about specific interest rates attached to specific asset classes… the rates go up and down, sometimes we do quite well with interest rates spreads and sometimes we do really badly – that’s the nature of banking. So I don’t think, we don’t have any mechanisms for separating out councils for any particular treatment, I don’t think we’ve got the market power to do that.’

Councils say the LOBOs they took out had lower interest rates than government loans and that on average that’s still the case.

Newham council told us it’s made ‘£65 m of savings’ on its borrowing since 2002 and that it’s ensured its ‘ borrowing protects the council’s finances from …different interest rates’. It added that after refinancing its debts between 2002 and 2009 its interest payments were halved. They also say they comply with accounts and audit regulations.’

Cornwall Council told us they take expert financial advice and: ‘We are happy our portfolio provides value for money and protects against the risk of fluctuating interest rates ..two LOBO rates are higher… due to the extended period of extremely low interest rates that could not have been foreseen.’

The Local Government Association say that LOBOs are legitimate for councils to use but should be assessed as part of their overall portfolio and not judged in hindsight.