Time really does fly. The past month – my first as Leader of the Royal Borough of Greenwich - has sailed by at lightning pace. I’m delighted to say it’s been an incredible time for me – busy, yes, very, but an absolute pleasure to be serving the people of this great borough in this way, and enjoying all that comes with that immense responsibility.
Blog posts about Greenwich
Articles, essays and features from well known contributors and opinion formers in Greenwich.
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In a recent financial report, which basically describes how between £858 to £2575 of your household's money (council tax) is spent this year, Greenwich Council spoke of ‘under borrowing.’
The phrase ‘under borrowing’ conjures up an image of a hardworking, diligent senior manager in the council being summoned, their head bowed, solemn looking, to be berated because they didn’t borrow enough money.
Greenwich Council is consistently sitting on over £250 million of bank deposits earning an average of just 0.35% in interest. Meanwhile the council has debts of £400 million on which it pays an average of 4.65% interest.
For every £million the council borrows as opposed to reducing debt through use of deposits they are wasting approximately £40,000 of council taxpayers money each year.
Of course our council needs some contingency funds and should retain some bank deposits for the proverbial rainy day.
However surely even our worst nightmare scenario of unforeseen circumstances, ‘exceptionals’ in the financial parlance or ‘exceptional incompetence’ (Please see our foot tunnels) in Greenwich Council parlance, even with our current council, would not necessitate £250 million of cash reserves to put things right.
If Greenwich Council used their (our ?) cash deposits to reduce debt by £150 million, still leaving a healthy £100 million for rainy days our interest payments would be reduced by around £6.5 million each year.
Just imagine what £6.5 million a year could do for our borough:
- Hundreds of Royal Borough council homes properly insulated
- Scores of our roads made safer by 20mph zones or other measures
- The totally unacceptable backlog in adaptation of homes for our infirm residents eliminated
All of the above would be without increasing council tax.
Greenwich Council often brings up the hollow argument about ‘borrowing now while it is cheap so we don’t have to when interest rates go up.’
Every year in which we borrow, we pay approx 4.2% net interest vs. zero on amounts paid back by using bank deposits. We should also receive ample warning before interest rates start to rise sharply so can make appropriate decisions then.
Some Labour councillor’s bleat on about ‘early repayment penalties’. Nevertheless the council has some amount of debt reaching its term almost every year which can be paid back without penalty.
Moreover on 3 occasions in the last financial year Greenwich Council borrowed a blind £10 million from the Public Works Loan Board. This was despite having £250 million in the bank. There is no early repayment penalty on not taking a loan out in the first place.
£10 million and £30 million are nice round figures. However borrowing these ‘nice round figures’ shows that Greenwich Council clearly lacks any rigour in assessing/minimising borrowing needs to bring maximum value for council tax payers.
When we need to buy a second hand car or get double glazing we borrow say £5,600 or £7,250. We don’t borrow a nice round £10,000 just for the sake of it and saddle ourselves with excess debt and interest payments. We also wouldn’t borrow money if we had a nice stash in the bank like Greenwich Council.
Why can’t the Royal Borough of Greenwich treat council tax payers hard earned money with the same respect we ourselves have to?
Additionally Greenwich Council had £37.5 million of assets ‘held for sale’ at the end of the last financial year. If indeed we were to sell these assets for their stated value we could reduce our interest payments by £1.58 million a year as well as allowing a new lease of life to some of these assets and perhaps new employment opportunities.
I should at this point add that at the end of the 2011/2 financial year Bexley Council had zero assets held for sale while Lewisham had just £800,000.
Again if we as individuals have things we don’t need any more (old appliances, furniture etc.) they either go to the charity shop, eBay or are sold through an advert in the local paper. Why can’t our council follow the same principle instead of wasting our money?
At a recent council meeting one Labour councillor spoke ruefully of me ‘consistently questioning the council's debt’ and explained how he had arranged ‘training’ on the subject. I make no apology for keeping the same views on council debt levels despite ‘training’ and will continue to question council debt at every opportunity until it returns to more reasonable levels.
It does not take an accountant to work out that Greenwich Council has a considerable amount to learn from very rudimentary management of household budgets. If these simple principles can be followed all of us will gain, particularly those most in need.
This article has been contributed by Matt Clare, a Conservative councillor in the Eltham South ward.
This afternoon saw the first of the local consultation meetings on the future of the South-East London NHS arranged by Special Administrator Matthew Kershaw. The room at Greenwich West Community Centre had space for about 200 people but was barely a quarter full.
The most dramatic but least useful part of the meeting occurred when a member of the audience declined to ask a question but instead mounted the platform, microphone in hand, and proceeded to stand right behind Kershaw and his female colleague haranguing them in a rather unpleasant and aggressive manner.
Before and after this intervention I thought Kershaw and his team gave a reasonable account of themselves before an unsympathetic audience, trying to answer all the points made but probably without convincing anyone of their case. They insisted that their proposals took account of likely population growth in the area. Kershaw declined to give a view on the principle of PFI but said that he has made confidential recommendations to the Department of Health which might lead to discussions with the PFI provider.
One West Greenwich resident said that her young son had been admitted to Lewisham Hospital as an emergency on several occasions and she was worried about the logistics of visiting him if he had to be admitted to QEII in future. She got a rather grudging admission that “a small minority” of patients with specific conditions might have to face longer journeys like this.
A well-informed woman from the National Childbirth Trust suggested that a four maternity unit solution would result in units very large by European standards and that evidence suggested that bigger maternity units were not necessarily better. She was effectively told that the review team had not completed their homework on the best size for maternity units.
Former Lewisham Mayoral candidate John Hamilton of the People Before Profit Party claimed never to have heard of Oxleas NHS Foundation Trust and asked whether it was a private health provider, I assume he was being disingenuous rather than profoundly ignorant.
Greenwich Councillor John Fahy asked a question which I think suggested - and apologies if I misunderstood him - that he would welcome a solution whereby Bexley patients travelled to Lewisham or Woolwich for day surgery.
Future meetings in the Borough will take place on
19th November 7pm Woolwich Town Hall
21st November 10am Forum at Greenwich
26th November 7pm St Mary’s Community Centre
3rd December 7pm Charlton FC
The author of this post is Paul Webbewood - a former Liberal Democrat councillor on Greenwich Council.