The funding crisis at Barnet Council - How can the council plunge into crisis in six weeks

At a meeting of the Barnet Council policy and resources committee last night, we heard how Barnet Council has been engulfed in a massive funding crisis and is facing a huge budget deficit. We heard how the Tories, having promised "lower taxes than Labour" are now planning to impose the maximum council tax rises they are allowed to. We heard a presentation from Barnet blogger John Dix, AKA Mr Reasonable explaining just how hard the crisis is going to hit our pockets and why the financial controls in Barnet cannot be working if this was not flagged up earlier.

John wrote a brilliant blog explaining in detail the crisis. I suggest you click here to read what John had to say.

The following paragraph in reports give some clue as to the scale of the crisis.

1.1.3 The council’s outturn position for 2017/18 reported a significant overspend of £7.9m. This outturn is stated after the net drawdown from specific and general
earmarked reserves totalling £5.6m. The gross overspend for the council before the use of reserves was therefore £13.5m. This overspend is also in addition to
the planned use of reserves for 2017/18 of £7.7m. Overall, the total call on revenue reserves and balances for 2017/18 has been £21.2m
1.1.4 Given the scale of the 2017/18 overspend and the challenges of delivering
some of the previously approved savings, the council now believes it has financial pressures which cannot be easily mitigated during 2018/19. Urgent action is already underway to resolve these in-year budget pressures, however the sum still requiring mitigation is £9.5m.

This diagram shows the huge deficit facing the council, which was not mentioned less than a month ago before the election

John asked these questions at last nights committee meeting

1. The MTFS indicates a budget gap for this year of £9.45 million and a gap next year of £19.27 million yet at this committee in February there was no forecast gap for this year and a gap of £6 million next year. What has happened in 4 months to have made such a huge difference to the budget shortfalls
2. At the end of Q 3 2017/18 the forecast outturn was a shortfall of £6.6 million yet by year end the shortfall had risen to £13.5 million. Did something dramatic happen in Q4 or is this a problem of poor/out of date financial reporting and if so who is to blame?

3. At 1.5.4 it proposes a new corporate plan for April 2019 reflecting the Conservative manifesto including keeping council tax low. Given that in the final year of this administration the budget shortfall is forecast at £42 million do you think keeping council tax low is prudent or denial of the financial reality 4. If the high level calculations for 2023/24 prove to be correct in forecasting a £62 million budget shortfall, who should I hold accountable for this financial apocalypse?5. By reallocating the NHB to support the revenue position it will cost an additional £1.3m per annum in capital financing. Is this simply storing up problems for later year

6. If the current S151 Officer believes that we should have a reserve of £15.1 million why did the previous S151 Officer allow it to fall to £9.6 million at the start of the last financial year. 

7. If this committee had been made aware of the seriousness of the financial situation in February do you think they would have still voted to freeze council tax (excluding the social care precept) for this financial year

8. These budget shortfalls do not include the impact of the additional cost of borrowing to complete the Brent Cross Thameslink station. When that is factored in what is overall forecast budget shortfall for 2019/20 and 2020/21

9. Who was responsible for making you aware of the additional borrowing requirement for the Brent Cross Thameslink station and why didn’t they do it sooner?

10. At 1.5.14 you identify managing demand as a way to reduce the budget gap. Given that you have been saying that for at least the last 6 years  since you published the graph of doom and that it is a policy that has repeated failed to deliver, do think you need to change the people who keep recycling this approach. 

11.The report talks about radical options for the future of local services but fails to mention any engagement with local residents at the early stages of this process to help develop these options. Please will you confirm that you will publish a resident engagement/involvement plan before the process commences.

12. Given the foregoing issues raised under agenda item 7  and the need to cut capital borrowing why is the council  considering making a 30 year loan to Saracens to enable the construction of a new West Stand at Allianz Park?

13. Given that Capita are responsible for the finance function in the Council  why is Barnet paying for Grant Thornton support following a review of financial procedures and practices

14. Before confirming a spend of up to £500,000 what are the specific objectives of this exercise and how will you measure whether their input has met those objectives?

You can see the councils rather unsatisfactory responses here. Perhaps the most unsatisfactory is to Q7.

The increase in 2017/18 overspend and associated carried forward pressure is new information since February, but the scale of the future challenge for the Council has been well known for a number of years.

In a supplementary question, John Dix asked Richard Cornelius when the council actually knew about the shortfall. He said "Early May, Purdah was unusually strict before this election" (make of that what you will).

John took questions from Councillors about his presentation. Interestingly, only Labour councillors bothered to ask John anything. The most interesting question was from Councillor Ross Houston.

After the meeting, a local resident I hadn't met before was asked to give her opinions of what she'd heard. Here is her response. It rather sums it up.

Perhaps the most interesting outcome of the meeting was the response of Richard Cornelius to a suggestion by Barry Rawlings that financial management be brought back in house, rather than be managed by Capita. Richard agreed that a paper be brought forward to examine this. Could it be that an outbreak of common sense has occurred at Barnet Council and we have just passed the high tide mark for the frenzy of outsourcing?

Whatever happens, it is clear that Barnet residents will have to pick up the tab. That means you and me will be paying through the nose for misamanagement and cock ups. Not a pleasant thought. 

Hugh Rayner, chair of Barnet Audit, slams his own committee for poor training and skirting over issues

Last night Long serving Barnet Councillor and chair of Audit, Hugh Rayner, chaired his final meeting of the committee. As is the way when a councillor retires, Cllr Rayner said a few words about the committee and the insights he'd gained in his time as chair. Normally these speeches are an exercise in backslapping. Last nights meeting was perhaps the most explosive end of term meeting in the history of the council. As we reported earlier, the Deputy Chair of the Committee, Sury Khatri blasted his own (former) party and stated that residents were being fleeced. In all the excitement of this explosive revealation, many will have forgotten the fact that Councillor Rayner also blasted (albiet in a more calm and measured way) the workings of his own committee. Councillor Rayner claimed that the committee wasn't properly trained for the job, that the committee had skirted over issues. Watch this clip. Here is what Councillor Rayner said.

"The Audit Committee is an important committee. It is important  that members get involved in the process and are able to ask the deep questions that are necessary. I sometimes get the impression that we skirt over a little bit, possibly by lack of knowledge, but good training will lead to better auditing"



In short, last night we saw the chair of the Audit committee saying that the committee members lacked proper training and had skirted over issues. When you then consider that his vice chair stated that residents are being fleeced by Capita and other contractors and that the leadership doesn't like difficult questions, there can be no doubt that the administration is out of its depth, badly run and not capable of making sure that anything is being done properly.

The complete mess that the council have made, with a top heavy structure of contractors monitoring contractors and no one being properly accountable was exposed by local blogger John Dix (AKA Mr Reasonable) who asked a question of the committee that reveals why it is almost impossible to get anything done properly in Barnet. Just watch this short clip. Near the end, Hugh Rayner asks whether the structure could be better. The non answer sums up just why we need a new broom.



The Barnet Liberal Democrats are of the view that John Dix should be co-opted onto the Audit committee as an independent peoples representative to ask these robust and difficult questions. He is constantly denied access to documents and fobbed off, yet he asks harder and more searching questions than the rest of the committee. He is just the sort of independent minded person we need to get the council back on track

Whilst we applaud Hugh Rayner for calling out these issues yesterday, it seems that independent minded Conservative councillors are no longer welcome.  As Sury Khatri said "As Cllr Dan Thomas (Deputy Leader of the Barnet Conservatives) lays the ground for his right wing and hard Brexit based leadership coup, he only wants yes men in the Conservative group"

Liberal Democrat Candidate for Mill Hill Roger Tichborne was the first blogger to film a meeting in the council chamber, before it was officially allowed. Roger said "Rather amusingly, it was Hugh Rayner who I chose to film. Hugh was not best pleased at the time, but we won the day and I think it is quite appropriate that I was there to film what is perhaps the finest moment from Hugh in the Council Chamber. As a candidate for the Lib Dems in Mill Hill in the elections in May, I absolutely guarantee that I will ensure that Hugh's suggestions are taken up. Like Hugh, the Liberal Democrats believe good scrutiny is the key to success. I will make this vow to every Mill Hill resident. If the Liberal Democrats get in, we will not wait until our final council meetings to make important points that are vital to ensure value for money for residents. We will ask these questions from day one."