Archive | September, 2017

Resigning matters

25 Sep

Forest Gate North councillor Rachel Tripp has resigned from cabinet.

Speaking to the Newham Recorder, she said:

“As Robin knows, I have been unhappy for some time about our direction of travel as a council on specific issues. Despite the fact that I have hugely enjoyed my cabinet work in both equalities and the small business programme, I have decided to stand down.

“I remain fully committed to working as a local councillor in the very best interests of the residents and everyone else in the wonderful place that is Forest Gate North as well as wider Newham.”

Resigning on a matter of principle: I can’t remember anyone doing this before in Newham, at least not in the Wales era.

It would have been so much easier for Cllr Tripp to sit back, shut up and collect the cash, as others have done (and many still do). This is a brave and principled decision.

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Spot the Difference (part 94)

25 Sep

The draft Statement of Accounts originally published in July, which set off a furore once people spotted the words ‘written-off’ in the section dealing with the Olympic Stadium loan:

DSoA Original

The version being considered by the Audit Board/Investment and Accounts committee meeting on Wednesday :

DSoA audit board

Did they think no-one would notice?

Long-serving councillor Conor McAuley (Custom House) has devoted his September ward report to the Stadium loan write-off. The report is worth reading in full. But here is the conclusion:

The Mayor and one or two other councillors are arguing that an ‘impairment’ is not a ‘write off’ but they are contradicted by the very next line in the accounts which states that these charges are subsequently written off.

I am appalled not only by the loss itself but by the fact that we had to study the annual accounts to find this information.

Such a fanfare was made about the original investment, one might think that the Council was seeking to bury the loss

It tends to remind me of the £4.3+ million lost in the Council’s investment in 2012 in the London Pleasure Gardens project that was supposed to animate the Silvertown Quays area south of the Royal Docks. The Council lost every penny of this investment and it even had to pay the winding up costs of the company.

As I understand it, Newham’s Overiew & Scrutiny Committee has never looked at this loss, so I doubt their commitment to look at the Stadium debacle.

The Council’s draft accounts will be discussed further at the Council’s Audit Board on 27 September. It could be a difficult meeting.

That final sentence is a masterpiece of understatement.

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Stadium latest

11 Sep

IMG 0365

A stone’s throw from the Olympic stadium…

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Not just a river in Egypt

8 Sep

My blog post yesterday prompted a flurry of media interest, which resulted in the following statement being issued (my emphasis added):

A Newham Council spokesperson said: 

“The Council’s draft accounts for 2016/17 were first published on our website on 3 July and were then open to the normal period of public scrutiny until 11 August. These draft accounts are currently with our auditors for their review. The finalised accounts are due to be considered at a scheduled meeting of our Investment and Accounts Committee on 20 September.” 

“Our draft accounts, which are subject to change and approval, show a prudent, responsible and regulatory compliant treatment of a Council loan related to the London Stadium. The loan is shown, for accounting purposes, as currently ‘impaired’, or damaged, due to the current financial performance of the Stadium. It is not a write off of the loan.”

The draft statement of accounts, which I linked to in my post, says on page 12 (again, my emphasis added):

“These charges are subsequently written-off to the Capital Adjustment Account.”

If Newham don’t want people thinking they’ve written things off they should probably avoid using the words ‘written-off’ in the accounts.

But let’s not split hairs. Let’s accept that the loan is indeed, as that spokesman says, “‘impaired’, or damaged, due to the current financial performance of the Stadium.” And then compare that to what Sir Robin said when the loan was first taken out (my emphasis added):

“Even on the most disastrous figures, even if everything goes wrong, we still make a profit on this.

“The risk is really, really minimal.

“The debt, which costs our residents nothing, will be repaid and then we start to share in the profit.“

Just one season into the operation of the stadium and it turns out that not a word of this true.

The Investment and Accounts Committee meeting on 20 September is a joint meeting with the Audit Board. It is public and details are on the council website. I predict the public gallery will be busier than usual.

UPDATE (13/09/2017): The meeting has been moved to Wednesday 27th September. Same venue: Committee Room 2, Newham Town Hall, East Ham, E6 2RP.

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Down the drain

7 Sep

Sir Robin Wales is about to flush £40 million of council taxpayers’ money down the toilet.

Detail hidden in the draft accounts due to be signed off by cabinet tonight shows that the ‘loan’ made to help transform the 2012 Olympic stadium into West Ham United’s new ground is being written off.

Newham Council ‘invested’ £40m via a special subsidiary company called Newham Legacy Investments Ltd.

At the time, Mayor of Newham, Sir Robin Wales stated:

“Our investment of £40 million secures that legacy by transforming the Olympic Stadium into a world class attraction […]. This will provide us with a share of the profits generated over the long-term and a range of community benefits for Newham residents.”  

After just one season of operation as a football stadium the council is now ‘writing off’ that £40m investment. A line in the Draft Statement of Accounts 2016/17 states:

“Impairment totalling £44.4m of a Long Term Debtor in one of the Council’s group undertaking, Newham Legacy Investments Ltd” (page 12, item 7) 

and 

“The company’s 2016/17 financial results disclosed a loss of £2.5m (2015/16: loss of £41.6m), and net liabilities of £44.4m (£41.9m of net liabilities as at 31 March 2016).” (page 88, item 39)

Newham Legacy Investments Ltd has had a number of directors over the last five years including senior council officer Zoe Power (Head of Projects and Programmes, Newham) and Cllr Lester Hudson (deputy Mayor, Cabinet member for Finances and Chair of Audit board). Given that the audit board should scrutinise decisions made by cabinet, council and council-owned subsidiaries this combination of roles was a massive conflict of interests.

While Newham handed over £40m to convert the stadium, West Ham United themselves only contributed £15m, despite being owned by two multi-millionaires and the Premier League being the richest in the world.

The £40m being written off is double the amount of ‘savings and efficiencies’ being made this year. Residents were promised the investment would provide Newham with a share of the profits generated over the long term. It turned out be a gift to Messrs Sullivan and Gold. The money, borrowed by the council from the Treasury, will now have to be re-paid by local taxpayers.

This blog has regularly cast doubts on whether the other commitments including local jobs and tickets for residents have been delivered.

This is not Newham’s first Olympic investment to back fire. In 2012 it also had to write off more than £3m invested into London Pleasure Gardens. With additional liabilities added on, taxpayers were left close to £5m out-of-pocket.

All-in-all, Sir Robin’s track record on finance (under the ‘scrutiny’ of the double-jobbing Cllr Hudson) is not impressive.

Which makes this week’s news that Newham council has bought a multi-let office block in Redhill, Surrey for £25m all the more worrying.

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