Tag Archives: newham

Newham’s Debt Timebomb

28 Feb
Last year I wrote about the enormous debt racked up by Newham council in the ten years since Sir Robin Wales was elected as executive mayor.

As the result of recent correspondance with a local Labour party member, I thought I’d revisit the issue and explain a little more why it makes me feel so uneasy.

Of course public debt isn’t like personal debt, much as the Tories may try to persuade us otherwise. But equally local government debt isn’t like national government debt either. National debt for a country like the UK, which has a sovereign currency, is always ultimately repayable through creating new money (this is what the recent rounds of quantitative easing basically involved – creating new money to buy back old debt). Obviously it’s a last resort and can go disastrously wrong, as Mugabe demonstrated in Zimbabwe, but it means the UK can never go bankrupt and will never default on its debt.

But the same does not apply to Newham. We can’t print new money to pay off the debt, so the only options are taking on new loans to pay off the old ones or ensuring revenues exceed expenses and using the difference to pay down the loans. This latter option means raising taxes, cutting costs or a combination of the two. The former option will only work for so long, as eventually your line of credit runs out or the interest payments on the debt swell to an unsustainable point.

And it’s really the question of the interest that bothers me at this point. Sir Robin has been extremely fortunate to have been able to borrow and spend at a time of record low interest rates. If you look at the council’s accounts you will see that the cost of servicing the debt today, in cash terms, is the same as it was ten years ago despite the fact that there’s almost twice as much of it. But only a fool would believe that today’s historically low interest rates will last forever – or even for as long as the life of Newham’s loans.

So when interest rates start to go back up, the cost of servicing the debt goes up.

Where are those extra interest payments going to come from? Either more borrowing – which would be extremely foolish – or from revenues. Either council taxes have to go up sharply, or services have to be cut yet further. In Newham neither looks an attractive option: make some of London’s poorest people pay a lot more tax, or cut the services they rely on.

What Sir Robin has created is a debt timebomb. If he’s lucky, or astute, he’ll have moved on to bigger things (Lord Wales?) before it goes off. But the people who live and work in the borough will be stuck with the consequences.

 

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A Parish Council for Forest Gate?

20 Feb

 

In 2007, the Government passed legislation which permitted the creation of community councils in London, with the aim of enhancing community governance in urban areas. These new community councils would have similar powers to the parish councils that exist elsewhere across the country.

Central government – both this one and its Labour predecessor – wants to encourage localism, a greater devolution of power and decision making to the lowest possible level. A Government white paper last year set out support for new parish councils and made it clear they wanted to see more councils established to take greater control over local services

Already local residents in Queen’s Park and London Fields have started campaigns to set up their own councils to change their community for the better.

Would it make sense for us to have our own council in Forest Gate?

It wouldn’t mean leaving Newham, just having some powers transferred into the hands of local people and an ability to spend money on the projects we consider priorities. For example, the new council would have to be consulted on any planning applications, such as the one submitted by Obsidian for the re-development of our town centre. The lack of effective planning enforcement is something that has long blighted Forest Gate Town Centre. Other possible powers which could have a positive impact on how we as residents could improve Forest Gate include managing community and leisure centres, establishing a ‘village hall’, street cleansing and community safety. It may even be possible to take over the local parking provision to ensure that it better reflects the needs and desires of the local population. 

The new council would be funded by a precept – an additional amount of money collected alongside the council tax. It might also receive a grant from Newham to enable it fund services it took over from them.

In order to establish a new parish council here Newham, as the ‘Principal Local Authority’, would have to first undertake a ‘community governance review’. They could decide to do this themselves, or we can petition them to do so. If 10% of the electors in the affected area signed the petition Newham would be legally obliged to carry out a review within 12 months. 

Together the existing wards of Forest Gate North and Forest Gate South are home to about 20,000 people, but the area covered by the council need not exactly match those boundaries. However, that makes a sensible starting point for thinking about this.

I think there are exciting possibilities here for local people to re-engage in the governance of our community, but what do you think? Is this an idea worth pursuing? Why not head over to Woodgrange Web and join the debate – http://bit.ly/yKo35I

 

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A Conversation with Councillor Gray

4 Jan

In a comment on John Gray’s Labour Blog (which is actually it’s title, not a description I’ve given it) I asked, in relation to what I perceive to be a lack of transparency in the way Newham council conducts its business:

Why is vital business always conducted behind closed doors at Labour Group meetings rather than in public council meetings?

Why were the public and the press excluded from the [council’s] discussion about the new £40 million offer to the OPLC?

Councillor Gray replied:

I am amazed that there is anyone who can question the huge overall benefit from the Olympics and that any council (especially a Labour Council) would not want to have a direct public ownership stake in the stadium.

I was a Council officer (in a different council) for over 15 years and political groups have always debated and voted on policies in private.

Unsatisfied by this response, I pressed the matter further:

You say “I am amazed that there is anyone who can question the huge overall benefit from the Olympics and that any council (especially a Labour Council) would not want to have a direct public ownership stake in the stadium.”

Apologies if I’m being a bit thick, but I’m afraid you’re going to have to enlighten me. Whilst I agree that there will be overall benefits to London and the UK from hosting the Olympics (even at the vastly expanded cost of £9 billion) and I am personally looking forward to attending a number of events in the summer, I cannot see why Newham council would want to have a direct stake in the future ownership of the main stadium once the Games are over. If the benefits are so obvious, why aren’t Greenwich, Tower Hamlets, Waltham Forest and Redbridge taking a similar stake? Why isn’t the Greater London Authority?

Of course the Olympic stadium should remain in public ownership, but the OPLC is a public body, so Newham’s investment won’t make the ownership any more public than it already is.

The question therefore remains, what additional benefits will Newham people derive from the proposed £40 million investment that they will not get if the stadium legacy is wholly funded by OPLC?

The answers to that may lie in the report that you and your colleagues considered back in December when you approved the £40 million investment offer, but that document has not been published and your meeting was held behind closed doors. Quite why an arrangement between two public entities should be regarded as ‘commercially sensitive’ is beyond me.

Councillor Gray again responded:

Again, purely in my personal opinion, I don’t know why (and maybe they are putting in a bid for all I know) but suspect that the simple answer is that the stadium is in Newham. I also think that the GLA have no legal ability to do what you suggest. Nor at this time the political inclination.

The OPLC is a “public body” at the moment, but that doesn’t mean that it will be always.

Look, I believe in public ownership, I am a believer in “Municipalism” and that the role of a Council is not just to be an “enabler” of services. ??????The potential of the Stadium is enormous and IMO (sorry BBM) it is quite right and proper that the Council wants to play a prudent role in its future.

Whether you think it is a good thing or not all, public entities have a duty to negotiate to get the best commercial arrangement possible, whether it is a with a private or public body – so of course, you cannot make your negotiation position public.

Feeling that my basic question had gone unanswered, I tried again

You talk about potential and municipalism, but make no mention of concrete benefits to Newham people resulting from the £40 million we are putting in.

The business case for the investment that the council approved would have included some kind of benefits analysis as part of the return on investment calculation, so there must be a list of them written down somewhere. Why not just share that?

If this investment is such a great deal for the people of Newham, why aren’t the mayor and the council trumpeting it from the rooftops?

This prompted the following, frankly unenlightening reply

I honestly think that I have as much as is possible at this moment.

The key thing to remember at this time is that there is no “deal” to actually talk about. There is a proposal which is being negotiated. The proposal (as in any other negotiation) could be turned down, amended or withdrawn. In the midst of negotiations you just don’t generally trumpet things from the rooftops

And there I think we must leave it.

The post to which the comments were attached has sunk down below the first page of Councillor Gray’s blog and I sense that we’re really only talking to each other. To his credit John Gray has remained entirely polite in his replies to me, which is not a courtesy he always extends to commentors on his blog or others he perceives as political opponents. And at least he has a blog, which is more than can be said for the mayor or any of his other colleagues (as far as I am aware). 

Maybe at some point we’ll find out what we’ll be getting for our money, but I’m not holding my breath. Sir Robin is hell bent on taking some kind of control of the Olympic stadium, and spending a big chunk of our cash to do it. The idea that he might explain himself to the people who will actually paying for it is not one that will detain him, even for a nanosecond.

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A Welcome Return

21 Dec

I’m glad to see that Mike Law has done a rapid u-turn and re-started his blog.

GIven the utter uselessness of the 60 Labour councillors when it comes to holding their mayor to account and the spinelessness of the Newham Recorder, Mike’s blog is pretty much the only place where serious questions get asked about what is going on in Newham.

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Separated at Birth?

17 Oct

Sir Robin

Mayor_sir_robin_wales

Johnny from the X-Factor

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Newham Council’s Mountain of Debt

3 Oct

People have expressed surprise that the mayor has proposed to borrow £40 million to lend on to West Ham United FC to part-finance their bid for the Olympic stadium. They ask how one of the poorest boroughs in London can afford to take on such debts.

What they obviously don’t realise is that Newham has already has massive debts. According to the draft statement of accounts for 2010/11, the council’s “total external borrowing at 31st March 2011 was £1,186 million.”?????? Against that, “the Council had investments of £303 million.”?????? Which leaves a net position of £883 million of debt.

That level of debt is truly shocking, but what is more alarming is the massive growth in those debts during the mayor’s reign.

As at 31st March 2002 Newham’s total external borrowing was £616 million. With investments of £91m that left a net debt of £525m.

Today’s total debt figure of £1,186 million represents an increase of 93%. Even taking the major increase in investments into account, the net debt position has increased by 69% over the past 9 years.

Although the council claims that the current debt is “well within [our] approved borrowing limit” it is a frighteningly large sum. According to the 2001 census (the most recent data on the council’s website) there are 91,822 households in Newham.

That means the council owes the equivalent of £12,916 per household.

 

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Newham Councillors Paid More Than £1.2 million in Allowances

21 Sep

Last week the Newham Recorder published a story headlined Newham councillors getting £25k each expenses, claiming that the average councillor received £24,333 to service their wards.

The story also stated that “the basic allowance for councillors newly elected last year was reduced to £9,579.”

It is a sad reflection on local journalism in Newham that neither claim is quite correct. 

The £24,333 average applies if you only count the 40 members of the council who served the full 12 months from April 1 2010 to March 31 2011. It completely ignores those who left the council at the May election and those who joined after it. This tends to inflate the average, as those 40 councillors were generally more senior. 

The basic allowance, sadly, hasn’t gone down. The reason new councillors only got £9,579 was that they didn’t serve a whole year and therefore only received a pro rata portion of the allowance.

There are plenty of reasons to attack the mayor and his cronies for their free-and-easy attitude to taking home our money, but the Newham Recorder does none of us any favours by getting the numbers wrong.

So if the Recorder got it wrong, what is the truth about councillors’ allowances?

Well, in the year ending 31 March 2011 the 61 members of the council (the mayor and 60 councillors*) collected a total of £1,221,752 in allowances and expenses. This works out at an average of £20,029 per member.

But even this doesn’t really tell the full story, as some councillors get far more than others as a result of “special responsibilities”. The top 10 earners in 2010/11 were:

  • RA WALES   80,695
  • AR BAIKIE   49,776
  • IK CORBETT   42,811
  • RJ CRAWFORD   42,811
  • U  DESAI           41,776
  • C  McAULEY   41,776
  • A  KELLAWAY   37,002
  • JH LAGUDA   33,499
  • EH SPARROWHAWK 32,809
  • CW FURNESS 32,231

Councillor Baikie’s allowance includes an additional special payment for serving 2 six-month terms as deputy mayor.

The full report on members’ allowances in 2010/11 can be found here: http://goo.gl/EGDP7

When looking at the above figures it is worth remembering, for context, that average income for a household in Newham is £27,600 a year.

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* That is 60 ‘full-time equivalents’ made up of 39 people who served a full year, 21 who served 1 April to the May election and 21 new councillors who took over their seats and served from the May election to 31 March.

 

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Declaring War on Council Crackdowns

24 Aug

Sir Robin Wales cracks down on bad stuff (in his dreams)

Last week Newham Council announced a new ‘crackdown’ on slum landlords; today it announced a ‘war’ on guns and knives.

It seems barely a week goes by without some dramatic new initiative designed to tackle the latest menace, usually in the form of a ‘crackdown’ on whatever it is. This generates a few headlines in the local press before disappearing off the radar, to be replaced by the latest bee in the mayor’s bonnet.

I did a Google search on Newham and Crackdown, and it returned more than 85,000 results!

So, here are a few of the things Newham Council has ‘cracked down on’ in the past few years – and I didn’t get past page 3 of the Google results to compile it:

  • Crime and anti-social behaviour in Plaistow
  • Squatting
  • Tenancy Fraud
  • Illegal Cars
  • Drugs
  • Garden Waste
  • Blue Badge Fraud
  • Truancy
  • Timeshare sales
  • Boy racers
  • Dangerous dogs
  • Landlords flouting safety regulations
  • Street gambling
  • Illegal property conversions
  • Unlicensed street trading
  • Illegal skips
  • Anti-social behaviour in Stratford
  • Crime and Anti Social Behaviour in Romford Road
  • Sale of crossbows

The thing is that with the exception of crossbows – an issue that lives solely in Sir Robin’s imagination – these are all important things that need to be dealt with. But by labelling every initiative a ‘crackdown’ you remove all meaning from the word. And you end up taking the same approach to everything – as the saying goes, if the only tool you have is a hammer, every problem looks like a nail.

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More Fun and Games in the Mayor’s Palace of Varieties

4 Jul

The Sunday Times carried a detailed story yesterday alleging that West Ham United made payments totalling £20,000 into the bank account of Dionne Knight, a director of the Olympic Park Legacy Company. This arrangement was put in place by Ian Tompkins, who is the director of West Ham who masterminded its Olympic stadium bid and Ms. Knight’s lover. In a previous life Mr. Tompkins was director of Communications at Newham Council, where he worked closely with the Mayor, Sir Robin Wales.

West Ham claims that the payments were for ‘consultancy work’ helping to prepare procurement documents for contracts to convert the stadium after the Olympics and that, as far as they were aware, the OLPC had given permission for Knight to do the work. They also claim the payments were on behalf of the Legacy Stadium Partnership, the joint venture entity with Newham Council that will own the 250-year lease on the stadium; as the partnership didn’t have a bank account set up they paid Knight directly. 

According to records at Companies House, Legacy Stadium Partnership LLP was first set up on 12 April 2011, but the Sunday Times says that the first payments were made to Ms Knight in the month before the OLPC made its decision in February. Quite how West Ham could have made payments on behalf of an entity that did not even exist is not explained.

Since the story emerged both Knight and Tompkins have been suspended from their jobs, pending internal investigations. Knight has admitted she hadn’t told OLPC about her work for West Ham.

The Sunday Times, perhaps predictably, has billed this as a “corruption scandal” and local anti-Labour blog London Borough of Newhamgrad uses the same word in its summary. That’s going too far, at least on the evidence to date.

But there are a number of fairly obvious questions that arise from all this about what Ms Knight knew about the status of the bids to take over the stadium and what she might have discussed at home with Mr Tompkins, and what he may then have communicated on to his employers at Upton Park to help them construct a winning tender. The OLPC says ‘chinese walls’ were in place and Ms Knight had no access to key information, or influence on the outcome. But as she was working for West Ham without their knowledge it is unclear how much of a grip OLPC had on the situation. One might also ask why West Ham, on behalf of the joint venture, felt it necessary to hire a consultant to work on stadium conversion procurements before it knew the outcome of the OLPC process and why it thought there would be no conflict of interest in hiring an OLPC executive to do it while the bidding process was ongoing. 

Of course Newham residents will have an interest in finding out the answers to these questions, as we are the ones on the hook for the £40 million loan being made to the Legacy Stadium Partnership (to the principle benefit of West Ham United FC), should the whole thing go horribly wrong. And if the 20 grand paid to Ms Knight was on behalf of LSP, as WHU say, half of it is our money – for which the Mayor is accountable.

 

 

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Is Sir Robin channelling St George, or or turning into a Tory?

19 May

This is something I posted a few days ago on the e-Democracy web site:

The BBC is reporting that Newham libraries are to remove all foreign language publications, quoting the Mayor as saying the move will “encourage people to speak & learn English.”

The decision has, predictably, comes in for some criticism from members of communities that will be affected by the move. But the Mayor rejects this, saying, “English language is something that we’re pushing very strongly.

“Two things about the English language: You need it to get a job; secondly it brings a community together.

“Public money should be spent encouraging people to speak and learn English. Whenever I raise that with my residents they all agree with that.”

Leaving aside for a moment Sir Robin’s self-aggrandising description of Newham people as “my residents,” this is an interesting position, and much more in tune with current Conservative thinking, which rejects multiculturalism as a failure, than the view taken by the left since at least the 1960s.

In a speech earlier this year in Munich David Cameron said, “We have allowed the weakening of our collective identity. Under the doctrine of state multiculturalism, we have encouraged different cultures to live separate lives, apart from each other and the mainstream.” He added that we need to make sure that “immigrants speak the language of their new home.”

I wonder if this apparent conversion to Tory thinking is a just an excuse for a bit of mean-spirited penny-pinching, trimming into the prevailing political wind, or whether the Mayor genuinely believes it. If so, will he follow up by axing the translation services that put the borough’s myriad communications into a variety of community languages, on the basis that if people want to transact with government they should do it in English? It would be controversial, but would have the merit of consistency.

There is some small irony in a Scottish mayor presiding over a London borough with an ethnically diverse population positioning himself as a champion of Englishness. It would be fascinating to know what other councillors think of all this, and whether they were consulted before Sir Robin decided on this latest campaign.

 

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