More on the Northamptonshire loan

Readers will recall me waxing lyrical last week on Leicestershire County Council's best-buddy loan of £5 million to poor old Northamptonshire County Council. Just seven days later comes the devastating Best Value Report into NCC and its works commissioned by Communities Minister Sayed Javid.


Those with strong stomachs can click here for all the gory details. For hardened horror fans I recommend the appendix case study about Olympus Care Services in which the Council manages to fall out with its own pretend business.

The report's conclusions are stark: "The problems faced by NCC are now so deep and ingrained that it is not possible to promote a recovery plan that could bring the council back to stability and safety in a reasonable timescale [4.16]." "To change the cultural and organisational ethos and to restore balance ... would take of the order of 5 years and require a substantial one-off cash injection. Effectively, it would be a reward for failure. ... A way forward with a clean sheet, leaving all the history behind, is required. [4.17]"


The report writers propose total abolition in 2020 and replacement with two unitary councils made up of the seven districts and boroughs. In the meantime, the Minister is urged to impose direct rule.


The 'history' is quite something. Scrutiny that is not allowed to scrutinise, audit that is not given full facts. A £21.1 million overspend already this financial year. Total financial incompetence. For example, consider the council's approach to financial management - "sloppy, lacking rigour and without challenge [3.66]."


It gets worse. When he heard about the Best Value inspection, the Local Government and Social Care Ombudsman, Michael King, felt obliged to write to the inspectors - something that's almost unheard-of. What did he have to say? "...that NCC was one of the most difficult authorities the Ombudsman had engaged with both in the terms of time taken to respond in the course of investigations but also in the authority's approach to complaint handling, learning from mistakes and remedying injustice [3.87]."

That's right, they flatly refuse to listen to tribunals, their external auditors and their fellow councils. Any self-respecting elected member would resign forthwith on receiving this level of condemnation. We can take it for granted they won't. Indeed, they haven't. The Minister will have to abolish the council from under them and even then they will simply stand again for the new unitary authorities. For incompetence that goes above and beyond, for wilful and persistent negligence in ignoring the facts, there should be special punishments. Those responsible should be banned from public service for a period reflecting their level of responsibility.


And as for Leicestershire County Council... Everybody in local government must have known there was an investigation under way. Why didn't they wait for the outcome before dipping into our pockets? Northamptonshire is going to disappear in 2020 at the latest. Are their successor bodies going to be held responsible for their debts? No, why should they be? How could they be?


But, fear not, our £5 million has not been spent entirely in vain. There is a lesson here for our county councillors if they choose to read it. You know how LCC is always banging on about how little funding they get from the government? Well NCC tried that one too. The inspector's response?


"The whole point of a funding formula, however inadequate its basis, is to reflect different needs [3.8]."


Exactly.

Cash-strapped County Council enters the dodgy loans business

When Sandra told us last night that she'd heard Leicestershire County Council were loaning Northamptonshire £5 million at nominal interest, I couldn't believe it. But here's the proof - and it's even worse than it sounded.

They're closing children centres and abandoning libraries. They've long since been stripped of schools and flogged off care homes. But obviously they can still 'loan' £5 million to their Tory mates on a neighbouring County Council that is to all intents and purposes bankrupt as well as pointless.


The reason? If Northants actually went bankrupt the government would be the biggest loser. Sorry, that sounds like a win-win to me. It's not as if the people of Northamptonshire would lose out because they already pay through the nose for nothing.


The best bit? The money isn't coming from reserves, money that's sitting in the account doing nothing. It's coming from the revenue account - day to day income and expenditure. It's another £5 million in cuts with the vague possibility of repayment some day. Far better to have an each-way punt on the Grand National.


The best deal for everyone in the shires would be for county councils to be abolished forthwith and their powers given to larger, probably combined, unitary districts. That was our Labour policy at the County elections last year, but somehow Leicestershire still elected these people.

The Democratic Deficit

Local councils were created to provide local services for local people.  Their origins date back to at least the Anglo Saxon era.  The idea, essentially, was that local people would vote for local representatives because they agreed with what they had to say about local needs.  If there were no great needs, then the councils needed to raise less money.  If there were great needs, then a majority vote of local people effectively endorsed a bigger budget.

For thirty years or more, governments of all persuasions - yes, including New Labour - have cut back local decision-making and, to a greater or lesser extent, local revenue raising.  David Cameron hasn't achieved much in his single term prime ministership but he has blown a truly massive hole in the concept of local democracy.

* The Tory-led Government has imposed the biggest funding reductions in the public sector on local councils.  Funding for local government has been cut by 40% over this Parliament, with councils having to reduce their budgets by a total of £20 billion by 2015/16.

* David Cameron and Eric Pickles are distributing these massive cuts unfairly – hitting those that can afford it least the hardest. It is scandalous that the areas with the greatest need are shouldering the largest reductions in central government funding.

* The Prime Minister says “we’re all in this together”, but his local authority of West Oxfordshire – one of the least deprived areas in the country (ranked 316 out of 325 in the indices of multiple deprivation) – is getting an increase in spending power of 3.1% in 2013/14, while most places faced significant cuts.

* The most recent Local Government Financial Settlement means that over this Parliament – between 2010-11 and 2015-16 – the ten most deprived areas will have had their spending power cut by ten times the amount of the ten least deprived areas.

* The Government is hitting the poorest people in those communities too. Eric Pickles lectures councils and says they have a “moral duty” not to increase council tax bills this year, but at the same time he has dropped his own council tax bombshell on people on the lowest incomes. 

* At a time when carers, the disabled, single mums, war widows and veterans are having to pay more council tax and the hated bedroom tax, the Prime Minister refuses to rule out cutting taxes for millionaires yet again. It tells you all you need to know about whose side he is on.