Tax and Cut Terry; Auctioning off the Family Silver
For those of you unfamiliar with the reference, Harold MacMillan was a Tory prime minister in the 1960s. As Earl Stockton he was critical of the sale of public assets by a subsequent Tory government under Margaret Thatcher. He referred to it as “selling off the family silver”.
Our gnomes have unearthed a report from the January Cabinet papers. It seems that the cabinet member for cutting services and increasing taxes has a new wheeze up his sleeve.
He recommended and cabinet agreed that they would begin selling Newham’s assets in order to support their revenue account. Newham owns a Yodel Distribution Centre in Wednesbury, West Midlands.
Just to be clear here, this is the same Terry Paul who was critical of the previous mayor for his financial planning. Apparently £54m in balances was insufficient for Cllr Paul. Well, he has spent most of them over the course of two years, (they have £4m left). So now he is raiding the asset base in order to make a profit (at least we hope that it’s a profit) on the capital assets that Wales so outrageously acquired.
It is rarely a good idea to sell assets in order to manage your revenue account. Put simply, this is because it does not solve any problems. The books don’t balance because you spend more than you receive in income. If you don’t sort that problem out, you have simply delayed the decision about what to do by a year.
Avoiding the problem is not the same as solving it.
We don’t know how much this will raise because the capital receipt is not disclosed on the public agenda papers, cabinet members probably do know, so they will be able to answer the questions below.
What income did the council receive from the leasing of the property (gross and net)?
What was the annual cost of the loan which was used to purchase the property?
How much of the loan was outstanding on Jan 31st 2021?
Was the loan (or will the loan be) paid off? And at what cost?
What is the net benefit/profit to the council from the sale, after fees and charges and capital repayments are deducted?
We note that this went through, pretty much on the nod, so a lot of work must have been done behind the scenes to ensure that the council is not losing out on the deal. Surely. Come on, they must have…. It can’t be that the cabinet have agreed this without any idea of whether there will actually be a benefit to Newham?
