Friday, 31 January 2014

Freeze grant and Camden

The 2011/12 freeze grant of £2.5m (2.5%) was permanent and has since been in base funding.

The 2012/13 freeze grant of 2.5% was temporary and only received in that year.
The 2013/14 freeze grant was for 1% of the base adjusted to remove the deflationary effects of the CTRS (i.e. based on the same base calculation as the previous two years). 

Though worth 1% (£1m) this grant was to be paid in both 2013/14 and 2014/15. The Finance settlement confirmed that the 2014/15 element will be added to Revenue Support Grant and therefore becomes ‘permanent’ (though will be subject to RSG cuts in future years).

In 2014/15 there is a new 1% grant based on the same adjusted base as the 2013/14 grant. This will also be added to base funding in the second year (2015/16) and is therefore ‘permanent’ (though as above subject to RSG cuts once rolled-in).

The Finance Settlement also announced another 1% freeze grant for 2015/16 that again would be included into the base for eligible councils in future years (i.e. from 2016/17).
So effectively because we froze Council Tax - in 2014/15 Camden will be receiving: 
  • 2011/12 freeze grant (£2.5m); 
  • second year 2013/14 freeze grant (which is now permanent) of £1m; 
  • and £1m first year 2014/15 freeze grant.

Thursday, 30 January 2014

Why we won't be raising Council Tax like the Brighton Greens

As the Green Party continues to use their tenure at Brighton Town hall as a vehicle for national policies and comment, Camden Labour is being asked by the Camden Greens to hold a referendum on Council Tax increases. 

Here's my response:

Council Tax has been frozen for all four years of Camden Labour's administration, saving the average household over a hundred pounds a year. Just when people are dealing with higher tube, energy, water and broadband bills Council Tax is the only bill which hasn't gone up for residents in recent years.

Unlike other councils - like Green-run Brighton who are arguing for a 5% increase without telling people what precisely it's for - we feel the continuing uncertainty over the 'real recovery' means that people's bills mustn't go up without proper justification. 

Using the Green question to Full Council (that the council should've raised Council Tax by RPI) and/or the Brighton rise (5%), we done some numbers - showing that bills would be between £332 and £552 pounds more for a Band D property.

Such a move would give Camden the highest Council Tax in inner London.

Because we put in place a long-term financial plan in 2010, in contrast to many other councils, Camden will not be making further cuts until the new spending plan from Whitehall kicks in - April 2015 - and only then after extensive consultation with the public.  In this context an increase to offset cuts which aren’t happening this year would surely be unjustified.

Allowing incremental increases to the Council Tax just below the threshold (1.99%) would have only marginally protected base budgets – but would have succeeded in passing costs to the taxpayer, including the poorest taxpayers now the Government has cut Council Tax Benefit by £2.4m.  The assertion I believe made by the Greens at Full Council that this would have covered the cuts is untrue.  Camden would also have lost Council Tax grants from the government totaling £5.5m.

We also feel that people shouldn't be asked to pay more - or for services to be cut - unless we continue to reduce costs at the Town Hall.  Since 2010 senior managers have been cut by 20% and senior pay, including the new chief executive, by over 10%.  The ratio of highest-to-lowest is now 10:1, well below the average of other councils at 15:1 and indeed FTSE 100 companies at 232:1.  While we face very difficult choices next year, I am confident that further costs can be cut from the Town Hall - including more middle management.   

We’ve also taken steps to make Council Tax fairer with more reforms to Council Tax than any other previous administration.

We've ended historic Council Tax perks for all 3900 second homes in the borough. Previously these homes got a 10% discount. Instead we've invested the money in a new scheme to provide wrap-around childcare at 25 hours for residents, removing a costly barrier to work or a better career.

Last year Council Tax was increased to 150% on furnished properties left empty for more than 2 years.  Amazingly, this move led to a reduction in the number of empty homes in the borough by 40%.  Because it was so successful we asked the government if we could extend the policy to close further loopholes - but were denied by Conservative minister Brandon Lewis, continuing the Whitehall grip on local decision-making.  

Camden is the first council in the country to provide an exemption to Foster Carers for Council Tax.  We are doing this because we want to send a message to council carers that they do a fantastic job.  It also helps reduce costs and helps kids stay in their community - if we can't find children a place with a local carer then we have to put them in private or residential care, which is extremely expensive at over £1200 week, and places vulnerable kids away from their friends, communities and schools.

Finally after the Conservatives cut a portion of Council Tax Benefit for the poorest 16000 households in the borough, Camden will help the hardest hit by limiting liability to 8.5% for the second year running and giving extra help to make work pay for 4500 low paid working households and their children.

Camden continues to campaign for a Mansion Tax, with proceeds ring-fenced for the borough rather than the Treasury, as well as a ‘Bed Tax’ for hotels and other measures set bout in the London Finance Commission.   

Monday, 27 January 2014

Boris backs Camden empty property levy from Davos

Speaking from the World Economic Development Forum in Davos, London Mayor Boris Johnson may have caused ripples in the ranks of the London Conservative councils by calling for them to adopt Camden's approach for Council Tax to be "whacked up" to 150% for long-term empty properties.

Speaking in today's Times (page 8) he said:  "I see no reason why Kensington and Chelsea shouldn't apply the same measure" and added, "If 150 per cent increase isn't enough, I'd go up a multiple of that."  

Last year Camden increased Council tax to 150% on furnished properties left empty for more than 2 years. This move led to a reduction in the number of empty homes in the borough by 35% in just nine months.

Camden, like neighbouring Westminster, Kensington and Chelsea and Hammersmith and Fulham has a high number of long-term empty homes.    There is concern that properties are purchased but then left empty for quick sale as investments for wealthy overseas buyers. Seeing as property prices went up in Camden by 4.4% in one month alone, you can see why.  

Advocacy of further extension to the levy will put Boris Johnson at odds with the government: Camden's levy was so successful we asked the government in August if we could extend the policy to close further loopholes - but were quickly rebuffed by Conservative minister Brandon Lewis, who called such a step "punitive."

Monday, 13 January 2014

Camden and Fracking

Government proposals to give councils 100% of all business rates raised by fracking don't change a thing locally. 

Camden is a densely populated area and is not open to shale gas exploration. Even if it were any minor gains in business rates would almost certainly be offset by dealing with environmental impacts and so there would be no financial incentive for us a borough.

Our energy efficiency programmes for homes and businesses favours the development of  decentralised energy networks to reduce carbon emissions and the environmental impact of energy generation. For example, we have delivered a Combined Heat and Power network from the Royal Free hospital to heat council estates in Gospel Oak, and we plan to build a greener energy centre in Euston to provide heat for council homes in Somers Town. We have also pressed at national level for a shift to renewable energy and a 2030 decarbonisation target for electricity generation, to allow investors the certainty they need to progress the shift to renewables.

Fracking is clearly not in the interests of Camden, neither financially nor environmentally and is not a policy we will be pursuing.

Wednesday, 8 January 2014

1980s, Paribas and "the loan that Camden forgot" - some Camden political history

Today I attended the 'topping out' ceremony of the new BNP Paribas building at 6 Pancras Square, right next to the new council HQ on the King's Cross development.

Boris Johnson cements relationship with French bank
The new Paribas development, next door to the new Google HQ, is another affirmation of the amazing transformation of King's Cross and will help the area by boosting jobs and businesses - and bring much needed new business rates to support frontline services.

Having BNP Paribas there is also a sign of how far Camden council has come from the 'bad old days' of the 1980s, where the council was under fire for disastrous financial management and services.

(With thanks to Camden: a political history and some hours spent in The Skinners) The story, known as "the loan that Camden forgot", revolves around a decision by the then Labour leader Tony Dykes to take out a £75m loan from BNP Paribas to support services in the aftermath of rate-capping, betting that an incoming Labour government in 1987 would restore funding to councils.

The original terms were that the council would have a 4 year period before any payments were due.  On losing the 1987 election Camden officers were quickly instructed to renegotiate and extend the loan repayment date to 1991.

Duly achieved, the council turned its collective attention to other matters - such as continuing factionalism of the decade before.  Fast forward to 1991 the French bank wrote to cash-strapped Camden to ask why they council had not made the first payment (of £25m) or refinanced the loan again - Camden looked at the fine print: it had to cough up.

What was worse was the 1991/2 budget was particularly bleak for the borough: the council faced a massive £12m budget hole (a huge amount today) in addition to this payment and a crisis in social services.

As the council was not permitted to borrow any more, it had to apply to Whitehall for credit to support its budget.  This was duly refused by the Minister for Local Government, Michael Portillo.

The council scrabbled around for options.  Putting up the new Community Charge (Poll Tax) would just invite the government to cap Camden.

Facing no alternative the Camden Labour Group took the only option it could - suddenly raising the rents on our 30,000 council homes.

Amidst uproar, councillors - some of the just elected for the first time the year before - went to their District Management Committees with a proposed in-year increase of rents by £11 a week, a 35% increase.

Naturally the tenants movement went ballistic and the local press had a field day.  The District Auditor was called in and the Ham and High accused Camden Labour poor financial management ("a disaster") and a failure to run the Town Hall. It demanded the then leader, Julie Fitzgerald, resign.  

I remember this story being related to me as a new councillor in 2002, much like a political old-wives tale cautioning never to spend-beyond-your-means, but also implying that no decision taken now - or heated meeting attended - could ever be as hard as the one made then.

BNP Paribas got it money back but the loan fiasco was the start of something very different for us.  Although there were more political bumps to come, it shook the Camden Labour Group  -which had spent much of the 1980s in turmoil into reality - and initiated a fundamental change in political direction, starting with the appointment of Steve Bundred as Chief Executive and then new mainstream leadership under Richard Arthur and subsequently Jane Roberts with John Mills in charge of finance.

In the space of just over a decade, with greater Labour Group unity and focus on high-quality services and financial prudence, Camden went from basket-case to Council of the Year in 2002 and, in 2008, the highest rated local authority in the UK.

So today is it perhaps more apt than ironic that our new neighbours in King's Cross are an institution with whom we have such a history - a journey for us and a reminder not to lose political judgement or a focus on sound money for a Labour council.