Where Has All the Money Gone?
We have frequently reflected upon the mayor’s fixation on her pet policy programmes. Of themselves, there is generally not much of a problem with them, if taken in isolation. We are not keen on some, but so what?
The problem arises when there are a number of competing demands on a limited budget.
A fixation on those things which are ‘sexy’ in the political sense means that you do not give sufficient attention to the mundane work of the council. You are also liable to spend money that you do not have.
Council Tax is a good case in point. It's boring and it's about money. It's not about grandstanding or grandiose posturing. You don’t splash your tax collection rates on social media.
Council Tax collection is symptomatic of the Fiaz approach to local government. It's like a tap that you can turn on and money comes out. This is why we have seen an unprecedented series of tax hikes in the years that Fiaz has been in office. Responsible residents pay, and effectively, they are penalised for doing so. They pay to cover the losses that Fiaz has been unable to collect.
Prior to leaving office, Wales oversaw 10 years without a rise in council tax. And he left useable reserves of over £50m.
After five years in office, Fiaz has overseen rises of in the region of 25% and the reserves have evaporated.
Under Wales the collection rate for council tax was around 97%. We learn from HMG that the collection rate in Newham has now dropped to 89.4%.
What this means in real terms is that some £13m in cash that was due in this year, is unlikely ever to be collected. This comes on top of £11.5m that wasn’t collected the previous year.
Evading local taxation is nothing new and boroughs with a high population ‘churn’ are more difficult to collect from. What is new, is the failure to address the problem. It requires resourcing and a constant focus, two areas where it seems that the mayor is lacking. Our very rough estimate is that some £40m-£50m has been lost because of the laissez-faire attitude of the mayor towards such mundane matters.
There will always be losses. But there is a massive difference between an annual 3% loss and an annual loss of 10%.
£10m plus, lost every year? How different would the council finances be if there was an additional £40m-£50m in cash sitting in the coffers?
We have seen the first councils declaring that they are broke under section 114. Newham denies that it is heading in this direction, but we are very aware that discussions have been taking place behind closed doors to avert this.
When Newham claims, as Mayor Fiaz will inevitably do, that the deficit is someone else’s fault, remind her of her failure to collect money that was owed and that £40m (or more) would have made a significant difference to the balances. The financial problems that Newham faces are not, primarily the fault of Richie Sunak or Jeremy Hunt. The author of the problems is somewhat closer to home.