Why the £25 million won't prevent cuts
Andrew Robertson | 16.02.2002 02:14
Responding to the three-year budget presented to the government in November last year, the government announced it would offer Hackney council £25 million, but as the old saying goes, ‘there is no such thing as a free lunch’.
This ‘offer of support’, is dependent upon no less than nine conditions including £13 million worth of savings and according to one councillor the windfall will be used to ripen the finances for privatisation.
In September last year, for the first time since its inception, the government used the intervention powers under section 15 of the local government Act 1999 issuing instructions to five separate departments of the council. These ‘directions’ would, according to a government news release require the council to, “implement plans to establish a new body to deliver the education, submit proposals to carry reviews of services for older people and mental health services, clear the large backlog of outstanding Housing Benefit and Council Tax Benefit, submit a plan for improving waste management services and recycling, produce proposals for a review of property and accommodation management, produce a strategy for bringing their budget into balance and an action plan for establishing a new system of financial management within the authority”.
In the last year and a half, Deloitte & Touche & PricehouseWaterCoopers have received £3.5 million from the government.
According to councillor Chit Chong, this injection of cash was preparing the council for privatisation, “where as before the accountants would say you’re broke, you need to privatise, they are now saying get your finances in order, then privatise!” Both firms of accountants have been at the forefront of top-level financial management restructuring as well as headhunting financial managers responsible for some of the departments hit by the cuts. In response Hackney council presented a budget strategy to the government, outlining their finances for the next three years, residents of the borough although by now accustomed to seeing their public services depleted, were still shocked at the scale of proposed cuts presented. The hope of residents within Hackney was that when central government analysed the strategy they would assist the fourth poorest borough in the UK and provide financial assistance where it was most needed. So when local government minister Nick Raynsford announced last week a £25 million grant to “support frontline services”, it appeared that local residents had not hoped in vain.
However, this lump sum of money will only become available to the council, if they agree to nine conditions, one of which strictly forbids them to use the money to prevent the cuts for this year, “it is not to be used to finance growth in revenue levels, or to offset failure to achieve savings, but only to meet genuine unforeseen and unbudgeted contingencies”. Yet, Mr Raynsford expressed in his announcement, “this is an exceptional offer of support to prevent unacceptable cuts in services while Hackney Council continues to take urgent action to get its finances back in order”. Instead when presented to the council the whole £25 million according to a spokesperson at the DETR, “is intended for an anticipated gap in Hackney’s budget…it’s an assessment arrived at with discussion with the independent advisor of what Hackney needs to make ends meet in the next financial year”.
In fact a total of £13 million worth of cuts agreed in the budget strategy are still set to go through and appears to contradict a statement made by Health minister Jacqui Smith when her department gave their instructions to Hackney council last year “it is vital for some of the most vulnerable people in Hackney that social services continue to deliver and improve their services”. Quite how they are going to achieve this once the budget strategy takes place is hard to tell, as the already stretched social services department will receive a reduction of over £4.2 million from it’s budget, with home care help being reduced to half hour visits and reductions in free bus passes being just two of the many areas targeted.
DLTR deny they are forcing these ‘savings’ on to the local authority, “there was no requirement that Hackney's budget strategy drawn up in response to our Direction, should be approved by DTLR…we have included in conditions the need for the Council to produce project plans for the savings set out in that strategy, and to produce further financial plans for balancing the budget without central government help in 2003/04 and 2004/05. But, in the end, only the Council can actually approve Hackney's budget.” As for Hackney council, they are not yet ready to make a statement.
In September last year, for the first time since its inception, the government used the intervention powers under section 15 of the local government Act 1999 issuing instructions to five separate departments of the council. These ‘directions’ would, according to a government news release require the council to, “implement plans to establish a new body to deliver the education, submit proposals to carry reviews of services for older people and mental health services, clear the large backlog of outstanding Housing Benefit and Council Tax Benefit, submit a plan for improving waste management services and recycling, produce proposals for a review of property and accommodation management, produce a strategy for bringing their budget into balance and an action plan for establishing a new system of financial management within the authority”.
In the last year and a half, Deloitte & Touche & PricehouseWaterCoopers have received £3.5 million from the government.
According to councillor Chit Chong, this injection of cash was preparing the council for privatisation, “where as before the accountants would say you’re broke, you need to privatise, they are now saying get your finances in order, then privatise!” Both firms of accountants have been at the forefront of top-level financial management restructuring as well as headhunting financial managers responsible for some of the departments hit by the cuts. In response Hackney council presented a budget strategy to the government, outlining their finances for the next three years, residents of the borough although by now accustomed to seeing their public services depleted, were still shocked at the scale of proposed cuts presented. The hope of residents within Hackney was that when central government analysed the strategy they would assist the fourth poorest borough in the UK and provide financial assistance where it was most needed. So when local government minister Nick Raynsford announced last week a £25 million grant to “support frontline services”, it appeared that local residents had not hoped in vain.
However, this lump sum of money will only become available to the council, if they agree to nine conditions, one of which strictly forbids them to use the money to prevent the cuts for this year, “it is not to be used to finance growth in revenue levels, or to offset failure to achieve savings, but only to meet genuine unforeseen and unbudgeted contingencies”. Yet, Mr Raynsford expressed in his announcement, “this is an exceptional offer of support to prevent unacceptable cuts in services while Hackney Council continues to take urgent action to get its finances back in order”. Instead when presented to the council the whole £25 million according to a spokesperson at the DETR, “is intended for an anticipated gap in Hackney’s budget…it’s an assessment arrived at with discussion with the independent advisor of what Hackney needs to make ends meet in the next financial year”.
In fact a total of £13 million worth of cuts agreed in the budget strategy are still set to go through and appears to contradict a statement made by Health minister Jacqui Smith when her department gave their instructions to Hackney council last year “it is vital for some of the most vulnerable people in Hackney that social services continue to deliver and improve their services”. Quite how they are going to achieve this once the budget strategy takes place is hard to tell, as the already stretched social services department will receive a reduction of over £4.2 million from it’s budget, with home care help being reduced to half hour visits and reductions in free bus passes being just two of the many areas targeted.
DLTR deny they are forcing these ‘savings’ on to the local authority, “there was no requirement that Hackney's budget strategy drawn up in response to our Direction, should be approved by DTLR…we have included in conditions the need for the Council to produce project plans for the savings set out in that strategy, and to produce further financial plans for balancing the budget without central government help in 2003/04 and 2004/05. But, in the end, only the Council can actually approve Hackney's budget.” As for Hackney council, they are not yet ready to make a statement.
Andrew Robertson
