Councils lend to hard-up Herefordshire Council (From Hereford Times)
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Councils lend to hard-up Herefordshire Council
2:00pm Saturday 2nd February 2013 in News
CASH-strapped Herefordshire Council borrowed about £8.5 million from other authorities in November last year alone to make ends meet.
One loan was £1m from cost-cutting West Mercia Police, to be repaid this month with £567 of interest.
Other short-term loans over November included £1.5m from Leicester City Council to be paid back in December with £425 of interest.
Two million pounds was also loaned from Merseyside Transport to be paid back by July this year with £4,909 of interest, while the same amount was borrowed from South Yorkshire Council to be paid back by August this year with £5,868 of interest.
Each interest sum includes brokers’ commission.
The council says it is good practice to use short term loans to provide “additional liquidity” when balances were relatively low. Much of the council’s more recent borrowing has been to fund capital spending.
Figures for December are not yet available but further borrowing was being anticipated.
Comments(30)
bobby47
says...
2:51pm Sat 2 Feb 13
Perhaps Im being overly cynical but why should the people of Leicester have their money transferred to our Council to make a tiny profit on a huge risk.
I guess this is where we are nowadays. Councils and other public bodies taking our money and dishing it out without any accountability.
Of course it's entirely legal but is it morally right to dish out tax payers money to prop up failing Councils without ever putting the issue to the public who fund this bloody merrygoround of public spending?
Ubique5740
says...
3:48pm Sat 2 Feb 13
Made a complaint to the police , ( only my second in over 70 years on this planet ) the other day, received a reply from our local officer , first paragraphs stated that he covers 42 villages with a population of around 20000 . Not sure if he wanted me to get my hankie out or go to the local Dress Hire Shop and hire a uniform and start patrolling High Town. Just confirmed that he ain't going to do anything except use this excuse every time - a very sad affair.
I have up to now supported the police but I now have niggling doubts. A recent survey put the Police on the same level as our MPs. Need I say more
bobby47
says...
4:15pm Sat 2 Feb 13
Why is it bloody good practice? Why ain't it poor bloody practice?
Why, when its clearly not a good thing that some fool in a suit can say it is and we are supposed to swallow it up and say,'thank you very much for your good practice. It's madness!
These people who have learned to speak and think in this way are seriously deluded and we've allowed it to become a normal way of life.
How on earth did our society allow this form of thinking to creep up on us and completely dominate our lives?
At the heart of it all is arrogance, a detachment from normality and unaccountability to the public.
Ubique5740
says...
4:21pm Sat 2 Feb 13
William Rudd
says...
4:37pm Sat 2 Feb 13
Ubique5740
says...
4:51pm Sat 2 Feb 13
Roger J
says...
5:02pm Sat 2 Feb 13
megilleland
says...
6:23pm Sat 2 Feb 13
9:53am Tue 29 Jan 13
And I doubt whether any of the other councillors do. Ratepayers need to read these documents to be discussed at Council at the end of this week.
http://councillors.h
erefordshire.gov.uk/
ieListDocuments.aspx
?CId=809&MId=4840
General Overview & Scrutiny Committee
Friday 1 February 2013 9.00 am
Item 6 on agenda:
Budget 2013/14 and Medium Term Financial Strategy
together with additional documents:
1 Budget Report to Cabinet 050213 FINAL (3)
2 FINAL Medium Term Financial Strategy
3 RB Appendix to Cabinet Report FINAL
4 Appendix C Detailed 2013-14 budget
5 Reserves Appendix D
I spent the whole evening looking at these documents, trying to understand the mechanics of how the council spends and invests council tax payers' money. Plenty of questions to ask. The Hereford Times needs to run a story on these documents so that we can raise our comments.
In the Capital programme proposals (10.56h)
Funding to support Car Parking Strategy – As part of the overall review of car parking there is likely to be a requirement to change the location of car parks in Hereford. This will also link to the emerging sustainable transport policy and options for its delivery. The scheme will require detailed costing but a capital allocation of £2m is proposed for inclusion but will be subject to further review.
silentbull
says...
9:51pm Sat 2 Feb 13
fmrbill
says...
11:04pm Sat 2 Feb 13
William Rudd
says...
10:50am Sun 3 Feb 13
Few examples
Gloucester City Council 30 million over the next 18 mths
Shropshire Council 21 million and another 9.6 million by April next year
megilleland
says...
11:04am Sun 3 Feb 13
megilleland
says...
11:16am Sun 3 Feb 13
10.53 In the 2012/13 budget process Cabinet was advised of the need to put in place appropriate budget contingency over the medium term. As a result, the 2013/14 budget includes a £2m addition to the General Fund reserve. This is required for the following reasons: the continuing pressure on the financial resilience of the Council given demand led pressures in People’s Services, the achievement of budget savings and continuing central government funding reductions. This assessment reflects good practice by using a risk based approach when setting the required level of reserves.
10.54 The Council also maintains reserves set out for specific purposes. A full list of reserves is at Appendix D.
Herefordshire Council: Reserves 31 March 2012
Schools balances £5,789,000
Grange Court £83,000
Commuted sums £36,000
Industrial Estates - maintenance £413,000
Schools Insurance £495,000
Schools sickness £84,000
ICT £91,000
Members ICT £40,000
Planning £24,000
Community Centre £180,000
Waste Disposal £2,407,000
Hereford Futures £125,000
Whitecross school PFI £321,000
Schools Rates Reserve £106,000
Economic Development £163,000
Pool car reserve £10,000
Three Elms Industrial Estate £362,000
Unused Grants carried forward £2,729,000
Total £13,458,000
£3million in unused grants! Who is eligible?
Ubique5740
says...
11:33am Sun 3 Feb 13
1. Is HCC lending money to any Councils ?
2. If I have a capital expenditure I take the money out of MY Reserve and pay it back over an agreed period of time (well its what my good lady decides ) - why don't the Council do this ?
megilleland
says...
12:11pm Sun 3 Feb 13
"For the first time in a generation, striving councils now have licence to go full steam ahead and grab a share of the wealth of their local areas and to seize the opportunities of enterprise, growth and prosperity."
Eric Pickles MP
Stand by to be raped!
bobby47
says...
12:49pm Sun 3 Feb 13
Firstly the normally measured and thoughtful Posts from Megilleland have changed and now in desperation he suggests, quite rightly we are being fiscally 'raped'.
Secondly, my dear friend fmrbill is clearly in a dark place that has him scurrying headlong away and from the pastures of his windswept farm to a tiny and sparsely furnished prison cell in protest at the way in which these tics are treating us and our funds.
This surely can't be right!
It's of course one thing that they can cause me to suck upon high doses of diazepam, but its an entirely different matter when they cause other Posters to display signs of despair.
littlewhitebull
says...
1:11pm Sun 3 Feb 13
Yes, I realise that this makes no business sense at all, but this whole state of each council continually borrowing from each other to provide liquidity is becoming quite nonsensical - unless someone with a great business brain can explain why it works.
I can assure you that if my boss operated his company like this - he would go bust, and I and the other employees would lose our jobs.
dippyhippy
says...
1:34pm Sun 3 Feb 13
Biomech
says...
1:53pm Sun 3 Feb 13
That said, this doesn't apply when you're using someone elses money, when they paid you for a service and you're giving it to someone else. If everyone is lending each other money - stop. It's futile. If I lend my mate a tenner and he lends his mate a tenner and so on back to me - what was the point in doing it in the first place?
More importantly, while I'm happy to take everyone else money ;), assuming HC are lending as well, I do not want MY tax money for MY area given to some smackhead in Leeds!
bobby47
says...
2:10pm Sun 3 Feb 13
We in Hereford are now and allways will be the borrowers. We will not ever be the lenders. No such transaction will ever take place where we loan out our funds to others. It ain't going to happen.
We are fiscally knackered and will remain so for decades to come!
megilleland
says...
2:18pm Sun 3 Feb 13
Part One
http://www.youtube.c
om/watch?v=LNhsRjsw4
Yc
Part Two
http://www.youtube.c
om/watch?feature=end
screen&NR=1&v=wQTPoT
X8IAE
It just goes to show you that we are getting mugged every time.
William Rudd
says...
2:24pm Sun 3 Feb 13
Found this quote...Herefordshir
e Council often lends funds to other local authorities and will sometimes borrow from others. In its report to cabinet on 30 July, detailed how it borrowed £3m from another council for 33 days at particularly advantageous interest of 0.6 per cent, which compared with the 3.26 per cent average loan interest rate the council experienced from government for the year.
If they have to borrow from one another then I can see the reason behind it.
Interest rates are far lower than if they borrowed from elsewhere.
Biomech
says...
2:34pm Sun 3 Feb 13
I took out a 15k loan over 5 years and it's going to cost me about £5,000 in interest and fees!
bobby47
says...
2:51pm Sun 3 Feb 13
As an aside Will....Did your lad go to that business meeting at the Starlight Rooms? Good or poor turn out, any good and did the Council leadership attend?
WYSIATI
says...
1:57am Mon 4 Feb 13
In the short term it is entirely appropriate to borrow and to lend to manage cash flow - we all do it - you have money in the account you are lending it to the bank, you might overdraw - far better to borrow from another authority for a pre-defined period at far far better interest rates than any of the rest of us can get - would you rather they take the 25% punitive rate that my bank wants from me for a short term overdraft?
Unused grants carried over - wouldn't that be grants received for multi-year projects that have not yet been spent up? Would be good to see that sort of spare money used productively - in fact I am sure there would be outrage if it was not used.
Managing your cash flow is not the same as setting and managing the budget and balancing the ability to raise tax and cope with huge fluctuations in both spending and income.
I think Mr Pickles is boasting about letting councils keep business rates (rather than see those go back to central Govt) - it's his wheeze to slacken planning restrictions and get development in place - it is not a policy that's likely to help Herefordshire at all
megilleland
says...
10:11am Mon 4 Feb 13
From the council's Medium Term Financial Strategy 2013/16
4.7 Business Rates Retention
4.7.1 From April 2013 the system of local government funding will change fundamentally. The
business rates retention scheme will create a direct link between business rates collected and local authority income and provides an incentive for economic growth.
4.7.2 The main features of the proposed scheme are;
* Rates will be split between the ‘local share’ (retained by authorities) and ‘central share’ held by the Government (a 50/50 split).
* A top-slice will be taken for funding Police, New Homes Bonus and other central funding
* All rates will come back to local authorities through specific grants etc
* There will be a stable starting point for all authorities, i.e they are no worse off than would have been under current system.
* A system of tariffs and top-ups will even out resources by comparing;
* An authority’s business rate baseline (based on average of rates over previous
years and after allocation to fire authorities) Medium Term Financial Strategy Page 17
* Its baseline funding level (using a slighty adjusted 2012/13 formula and 2013/14
and 2014/15 national control totals)
4.7.3 Councils will benefit from business rate growth over the base position, but are subject to
risks of rates decline, losses on appeals and also meet the cost of uncollected rates
The business rates adjustment will definitely go down as rental values will be based on 2013 figures. Rating valuations are updated every five years. The next one due in 2015 has been deferred by the government until 2017. I imagine to keep the high rental values of 2008 in force.
It has emerged that as part of the deal, councils will be asked to foot the bill for any appeals that firms make against the annual charges. So yet again council taxpayers look like forking out more money out to keep the system in play.
WYSIATI
says...
12:24pm Mon 4 Feb 13
Sad to say it won't be the council tax payers picking up the bill since Mr Pickles has re-defined democracy to mean that he can cap council tax but won't actually say that.
It will be those who depend on services that end up paying and those who lose their jobs because there is less money but more demand and a few law suits/challenges to add to the claims over pothole damage, unfair dismissal, redundancy and other expensive but un-productive ways the council will be forced to spend the money it's got
megilleland
says...
5:06pm Mon 4 Feb 13
courtesycall
says...
5:33pm Mon 4 Feb 13
megilleland wrote:"It has emerged that as part of the deal, councils will be asked to foot the bill for any appeals that firms make against the annual charges."
From the council's Medium Term Financial Strategy 2013/16
4.7 Business Rates Retention
4.7.1 From April 2013 the system of local government funding will change fundamentally. The
business rates retention scheme will create a direct link between business rates collected and local authority income and provides an incentive for economic growth.
4.7.2 The main features of the proposed scheme are;
* Rates will be split between the ‘local share’ (retained by authorities) and ‘central share’ held by the Government (a 50/50 split).
* A top-slice will be taken for funding Police, New Homes Bonus and other central funding
* All rates will come back to local authorities through specific grants etc
* There will be a stable starting point for all authorities, i.e they are no worse off than would have been under current system.
* A system of tariffs and top-ups will even out resources by comparing;
* An authority’s business rate baseline (based on average of rates over previous
years and after allocation to fire authorities) Medium Term Financial Strategy Page 17
* Its baseline funding level (using a slighty adjusted 2012/13 formula and 2013/14
and 2014/15 national control totals)
4.7.3 Councils will benefit from business rate growth over the base position, but are subject to
risks of rates decline, losses on appeals and also meet the cost of uncollected rates
The business rates adjustment will definitely go down as rental values will be based on 2013 figures. Rating valuations are updated every five years. The next one due in 2015 has been deferred by the government until 2017. I imagine to keep the high rental values of 2008 in force.
It has emerged that as part of the deal, councils will be asked to foot the bill for any appeals that firms make against the annual charges. So yet again council taxpayers look like forking out more money out to keep the system in play.
That'll be a dilemma for councillors that run businesses and whinge on about business rates. If they appeal then the council (tax-payer) will pick up the tab, but if they do nothing business won't be as profitable. Hard choice to make!
dippyhippy says...
2:20pm Sat 2 Feb 13