horndeanmatters

It isn’t often (in fact this is the first time) that I bite back with the local paper but The Horndean Post deserves a response which is a shame as The Post has usually been pretty fair. As the Finance Portfolio Holder at EHDC I could have addressed every point in The Horndean Post before they went to print but was not contacted.

The article entitled “Council spends millions in loans… on the quiet” manages to turn a great news story into an article with a negative slant so lets put some more flesh on the bone and give some more detail.

Over the last 5 years the funding EHDC receives has been cut significantly with the ‘Revenue Support Grant’ (the annual grant from central government) of about £2.5m dropped to zero and other grant income totalling a further 3.5m being progressively reduced. This leaves EHDC with a shortage of £6m every year – or about 25% of our running cost.

So, with options being to cut services or massively increase council tax, we decided to look for other solutions and did something about it. This was a multi-pronged approach including the following:

1 – Cutting the excessive fat from old style cosy easy going local councils

2 – Starting up new profit making businesses

3 – Cost savings by partnership working with other Local Authorities

4 – Long term investment portfolio for secure income

EHDC and Havant merged the senior management team of directors which has saved both Councils about £1.5m a year in salaries without affecting service. We were one of the first local authorities to consider such an unusual approach and it has been a major success for the last 8 or so years.

EHDC has some exceptionally talented officers and some lead Councillors who are or have been board directors of large successful local, national and international businesses – This gives a great opportunity for this business capability to be applied to EHDC to transform it from a traditional District Council to a modern efficient stable organisation.

We also spoke to other local Councils to look at how we could deliver the same service for less money and for services like waste disposal for example and we joined with Winchester to create a larger customer base with Biffa and a lower cost. Now that contract is ending we have just changed this to work with Havant to keep this saving moving forward. We have been able to replace the lost income every year without increasing Council tax by making EHDC more business like and through investment AND increased our services.

The property investment strategy is one we have been working on for two years – it isn’t a new stealthy initiative.

The £6.5m a year property investment will generate an income is worth £125 every year to every household in EHDC that we do not need to charge in increased tax or lost services. That has to be a GREAT NEWS story – and it is!!!

Below is a pie chart of our income. Property is a significant part of our future income. It is in fact the same size as our council tax. Not only do we secure significant cash funding from this we also generate £4m a year in rent which we do not take as income to pay off the equity in the property. In addition we build up a similar sum each year in equity as the properties grow in value.

Our multi pronged approach means that for the last 5 years we have been able to continue to provide every service to the community with no cuts. In fact, for several years out of the surplus funds we have generated we have paid for an additional 3 PCSO’s to help support the police, brought in £368,000 a year in grant funding to help local causes with £4,500 every year for local Councillors to support local good causes and several other initiatives that have also gone missed by the local press…

So in the front page of paper this week it is reported that “No trace of the spending spree can be found in easy-to-access public documents” – As a matter of fact this has been brought to 2 annual budget reports at Full Council meetings and also 3 Full Council meetings where the policy to buy property to raise funds was agreed. All of these are available online in the meeting minutes but more importantly were discussed in public forum for anyone including the press to hear being debated.

If only the press turned up at EHDC meetings occasionally then they would know all about this – in fact the cabinet meeting at EHDC tonight was the first time I have seen a reporter at an EHDC meeting for 3 or 4 years… So much for being held to account by anyone, let alone the press, who might otherwise know what was going on…

The story also explains that back bench Councillors are only told about the deals after they have been carried out – That is simple, we are bidding in a competitive market for property and the last thing we are going to do is publish our bids before deadlines to let every other local authority or investment institution know what we are willing to pay. The system is simple, we agree a strategy with all members and then get on and carry it out.

The story also notes that consultants are paid a finders fee – this is correct, just like an estate agent charges for marketing a property and securing a buyer.

So as this is being portrayed with a negative slant are EHDC doing anything wrong?

No. Property investment is being used by local authorities up and down the country to replace key income that is being lost from grant funding to ensure we can continue to provide all of our services. Our strategy has been audited by our audit and scrutiny panel as well as external auditors.Tthis is just a good business decision being carried out effectively.

Pension funds, hedge funds and a dozen other institutions also rely on property as a steady secure income and we have the advantage that we can secure funding at about 1.6% (Compare that with your mortgage rate), we have no expensive shareholder or management charges and every pound in profit goes to us, the council tax payer, and no one else. Not only do we get the income but we also get the equity growth in the property as a future bonus.

The Tesco EHDC has bought for £40m brings in £900,000,00 a year in income from a business that will be trading next year and every year for the foreseeable future – that means we don’t need to increase Council Tax to supplement this income.

As a resident of EHDC I fully support the this strategy. It underpins a low cost Council Tax base while making sure that not only can we continue to provide all of our services but also to pick up some of the services the Police, HCC and others can not afford to continue to carry out.

Holding any elected member to account is essential and part of this is the political opposition but the other part is the press. For this to be effective they need to be present at the meetings where issues are debated and I would guess this topic to have been covered at no less than 5 public meetings at EHDC.

So, I hope this helps put this great news story into context with the full story turning and helps explain how EHDC have the accolade of being the best performing District Council in the country when you look at Council Tax increases.

As to the headline “Council spends millions in loans… on the quiet” – it isn’t that it was on the quiet, just that no one was there listening when we debated it in public and agreed to do it.

For a list of the properties EHDC owns visit this link HERE

Guy.