Hands up, who voted for it?

Who voted for what?  Well, the Guildford Borough Council 2013-2017 Corporate Plan of course. Didn’t all the Councillors vote to approve that last October?  Question is, did they actually know what they approved?

As has been commented elsewhere, it’s all about the money.  The Corporate Plan seems a good place to start, smuggled out last October, after approval by the full council and review by the Corporate Improvement Scrutiny Committee [CISC], subject to no public consultation.  If you read the accompanying CISC 19 September 2013 document for the draft Corporate Plan you’ll find para 8.2 states “There will be financial implications to deliver the elements outlined in the action plan”.  Too right there will be financial implications and we’ll come on to those below. 

In the glossy Corporate Plan booklet there is a hierarchy diagram that shows how the Corporate Plan subsumes the Local and Financial Plans under the Economic and Housing Strategies.  Many of us that have worked in large corporations have read corporate plans and this one is as anodyne as any, written to obscure not reveal, written to be all things to all men and give maximum room for manoeuvre without prior commitment.

More important is the Medium Term Financial Strategy [MTFS] to which the Corporate Plan refers but you won’t find one on the council web site.  With a bit of poking around you can find a document called the “2013/14 General Fund Budget Book” that contains a description of the MTFS.  Now this is a more interesting read.

If you fast-forward to page 252 you will find it contains the “General Fund Capital Programme – Estimated Expenditure 2013-14 To 2017-18” where Item 18 “Property Acquisition” sticks out like the proverbial sore thumb at £10 million or 97% of the council’s Economic Development expenditure budget with a projected total across the whole scheme of £15 million.  It seems likely this represents funding for the borough council’s foray into commercial property investment.  This is over two-thirds of this year’s approved schemes and is driving the major part of the funding requirement of £16.8 million.  You may well ask how this feeds into the council’s future financing requirements?

Were you aware that the Budget Book on page XXIV under the section entitled “Budget Projection to 2016-17” contains a forecast of an increasing financing deficit that is estimated to rise to £2.8 million by 2016/17 and that’s after a 42% increase in the Council Tax Requirement over the period 2013/14 to 2016/17?  Did you know your Councillors were voting for a future Council Tax Requirement increasing by something in the region of 10% per year on average over that period when they approved the Corporate Plan? How has this financial hole arisen?

The “Budget Projection to 2016-17” on page XXIV shows the impact of the withdrawal of the Formula Grant of £5.7 million, resulting in an increasing reliance on the Business Rate Retention Scheme along with the New Homes Bonus.  Now, perhaps, we can see where a strategy that drives a need for excessive new commercial property development and excessive house building arises.  Surely the council can’t be preparing a Local Plan with such a programme in order to plug a hole in its future financing requirements?

The New Homes Bonus is a piece of government bribing of local authorities to get them to build more houses in return for which they receive the Bonus payments for six years for each annual tranche of new build.  In its report of March 2013, the National Audit Office characterised the New Homes Bonus Scheme “as part of the government’s economic growth agenda, and … as one of several major changes to local authority funding…”

The NAO then went on to say, somewhat ironically “New housing is often unpopular with residents who may be concerned about pressure on local services, loss of amenity, traffic congestion, and disruption during building. The government… is to incentivise local authorities to encourage new homes locally by contributing to visible benefits for local communities and countering resistance to growth in housing.

Countering resistance to growth in housing“… well that seems to encapsulate why we are where we are, with the Guildford Borough Council Executive Committee trying to tell us to “lie back and think of England” while it covers us with excessive housing.  What did Margaret Thatcher once say? “No, no, no!”

Luckily the New Homes Bonus Calculator spreadsheet model is available to anyone and it has been loaded with the latest available data for each local authority including Guildford.  Plug in your estimated number of new houses in each property category to get the forecast Bonus.  At around 350 new homes per year, the Bonus for Guildford pops out at enough to balance the books and remove the hole in the financing forecast for 206/17. So why does the current draft Local Plan contain a target of 652 houses per year?

Let us speculate for a moment.  What if the commercial property investment by the council this year has injected much more risk into its financial stability and removed the prudence we have enjoyed up to now?  Might it be that the community is to be asked to back this imprudence over the next 15 years by suffering excess house building in the Green Belt under the Local Plan so this council can balance the books?

We shall see.

So, as was said at the beginning, it’s all about money.

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