Agenda item

Opposition Business - Management of the Council's Finances

An issues paper prepared by the Opposition Group is attached for the consideration of Council.


The Constitution Procedure Rules relating to Opposition Business are attached for information.  Members are asked to note that these procedure rules are subject to amendment, following review by Members & Democratic Services Group with the changes to be submitted for approval under Agenda Item 8.


Councillor Neville introduced the issues paper, prepared by the Conservative Group.  Issues highlighted were as follows:


1.         Concerns were raised in relation to:


a.      the increase in Council borrowing under the Labour Administration since 2010 and associated increase in the capital financing requirement in order to repay the debt and debt interest.


b.      what was felt to be the unsustainable nature of the increase in borrowing identified.


c.       the impact of the increased borrowing in terms of the additional pressure created on the Council’s revenue budget as a result of debt repayments increasing and need, as a result, to generate further savings at a time of continuing austerity.


d.      what was felt to have been the lack of financial planning and progress made in identifying and achieving the required level of savings under the Labour Administration, which it was felt had now resulted in the need for various small scale savings having to be sought that were having a significant impact on local residents.  Examples given included proposals such as not locking park gates at night and reducing road gritting, whilst at the same time looking to license private sector landlords and prioritising spend on discretionary housing services rather than on other vulnerable sections of the community such as the elderly and disabled.


e.      the failure of the Labour Administration to make the significant and difficult financial decisions required to place the Council on a sound financial footing and reliance on the Leaner Programme, now referred to as Enfield 2017, introduced by the previous Conservative Administration as the main strategy for delivering the ongoing level of savings required, given what was felt to have been the lack of alternative options and progress to date.


2.      The need to recognise that the increase in borrowing had been in addition to the earmarked reserves left by the previous Conservative Administration in 2010 and knowledge at the time that the incoming Administration would be faced with challenging financial circumstances.


Given the concerns raised, the Opposition Group were recommending as an outcome of the debate that the Council’s Audit Committee be given (as an appropriate cross party committee) responsibility for reviewing the Council’s accounting policies and all ongoing expenditure and borrowing proposals in order to ensure a sustainable approach.


Councillor Stafford, Cabinet Member for Finance, responded on behalf of the Majority Group highlighting:


1.         The level of financial uncertainty nationally and impact this was having locally, given the fact that the Chancellor of the Exchequer had promised in 2010 to balance the books, but had not yet achieved this with the country still in austerity and the level of Government borrowing still increasing.


2.         The action being taken by the Labour Administration to manage the Council’s finances.  The Council was not bankrupt, its External Auditors were satisfied and had cleared the accounts and public satisfaction ratings were good.


3.         Whilst the Council had borrowed money to finance significant capital projects, these had been designed to benefit the borough.  He also reminded members of the accusations made by the Opposition at the last Council meeting that the Administration had been too slow in delivering these capital projects, which they were now being critised for borrowing funds to deliver. Examples of schemes already delivered included Green Towers, Ordnance Road Unity Centre, additional Primary School places, Palmers Green Library, Eco Park and Deephams Project.


4.         The need to recognise:


·                the impact of the global economic crisis on the UK economy and instigation of policies such as quantitative easing to stimulate domestic growth; and

·                that whilst the current Chancellor of the Exchequer had not been able to balance the budget nationally Enfield’s Labour Administration had been able to carefully manage and balance the Council’s budget, operating within prudential borrowing limits and this had been subject to verification by the External Auditors.


Other issues highlighted during the debate were as follows:


(a)       The concerns raised by the Opposition Group in relation to:


·                Management by the current Labour Administration of the reserves and balances inherited from the previous Conservative Administration, back in 2010.  Despite being left with what was regarded as a sound financial position the budget gap under the Labour Administration had increased and was currently projected to be in excess of £84m.


·                The failure of the Labour Administration to properly plan for and deliver the savings required to address the challenging financial position and increasing budget gap faced by the Council, since they had gained power in 2010, especially when set against increases in spending in areas such as the Residents Priority Fund.


·                The approach adopted by the Labour Administration towards addressing the further reductions in local government spending, which as well as increasing borrowing now appeared to involve the identification of short term and relatively small scale savings but with high impact on local residents and minimal or no consultation e.g. unlocking of park gates at night, reduction in gritting programme etc.  In addition concerns were expressed in relation to disposal of Council property assets and the potential outcome of consultation currently being undertaken around the Library Strategy and potential changes to the programme of domestic refuge collection given previous manifesto commitments


·                The need for changes to the Council’s accounting policies to be subject to detailed review and scrutiny.


·                The significant increase in the level of borrowing to fund schemes such as the Lee Valley Heat Network and Housing Gateway which it was felt did not necessarily offer the Council Taxpayer value for money and ignored the fact that this would, irrespective of prudential borrowing limits, incur revenue costs that would increase the pressure on already limited budgets.


·                Management of the Council’s overall borrowing requirement in relation to the limits set for prudential borrowing levels and impact any potential increase in interest rates may have.


·                The failure of the Labour Administration to utilise additional funding streams available for initiatives such as Free Schools and at the impact the Labour Administration’s “salami slicing” approach towards budget management was having on areas such as the environment and street scene across the borough.


(b)       The need identified by the Opposition Group to recognise the impact of the previous Labour Governments policy in relation to the economic crash and progress made by the current Conservative led coalition Government in managing the delivery of sustainable economic growth.


(c)     Notwithstanding the concerns raised by the Opposition Group, cross party support was expressed at the need for continued lobbying in relation to the calculation of the Governments local government funding grant formula and impact of the “damping” mechanism, which it was recognised failed to take into account issues such as population growth and the level of demand being created by an increase in the elderly population in areas such as Enfield.


(d)       The need identified by the members of the Majority Group:


·                To recognise what was felt to be the poor track record of the IMF (quoted in the Opposition Business Paper) in managing the response to the global economic crisis and fact that there were no longer any easy budget savings to be achieved, given the ongoing level of austerity measures.


·                To recognise that whilst the Opposition were claiming the previous Conservative Administration had left the Authority on a sound financial footing in 2010, there had still been a requirement for the Labour Administration taking over to identify and deliver a programme of savings in order to balance the budget moving forward.


·                To highlight, whilst not complacent, local residents support for the Labour Administration’s approach towards management of the Council’s budget, given the outcome of the 2014 local election.


·                To recognise the lack of evidence in the opposition business paper that the Council’s finances were being badly managed and fact that the Council’s Independent External Auditors had praised the Council’s financial management.


·                To focus on the fact (not identified within the Opposition Business Paper) that since 2010, under a Conservative led coalition Government, the Council had been required to make savings totalling £70m with further significant budget reductions also identified as needing to be made over the next four year period.  This was against a background of national debt continuing to increase, as the Government continued to struggle in managing its finances nationally and as a result seeking to transfer the burden onto Local Authorities and other public sector bodies.


·                To recognise that despite criticism from the Opposition Group, the Enfield 2017 programme was progressing and delivering efficiencies.  In addition the Council had also been successful in engaging a far higher number of local residents and stakeholders in the budget consultation process than the previous Conservative Administration.


·                To support the fact that borrowing was being undertaken in order to fund significant capital projects such as providing school places, regenerating estates, building new homes and creating jobs that would, it was felt, have a lasting impact on the borough.


·                To highlight the need for the Opposition Group, in view of the concerns raised, to provide an alternative budget with practical clear suggestions as to how they would identify and deliver the level of savings needing to be made in a way that would benefit local residents.


Councillor Neville summed up, on behalf of the Opposition Group, by re-stating the concerns raised in relation to the increase in level of borrowing by the Labour Administration given the ongoing impact in terms of not only repaying but also servicing the debt and additional pressure being placed on the revenue budget as a result.  He felt the overall consequence of this would either be that either Council Tax would have to rise, which was not a realistic option, or further reductions in expenditure would need to be identified.


Whilst the criticism in relation to lack of progress on certain housing and regeneration capital projects remained, the Opposition Group were not opposed to investment in schemes that could be seen to deliver long term benefits to the borough such as infrastructure improvements, job or wealth creation.  The concern expressed was related to investment on projects which it was felt would not provide value for money.  As a result the Opposition Group felt that the Council should only be borrowing what was necessary, could be seen as a good investment in terms of the outcomes identified and was affordable.


Given the concerns raised, it was felt the proposal to task the Audit Committee with a review and appraisal of the Council’s borrowing and accounting policies would be sensible and beneficial.


In response, Councillor Stafford highlighted the fact that the monitoring procedures recommended within the Opposition Business Paper were already in place.  As Cabinet Member for Finance he met regularly with the Director of Finance, Resources and Customer Services and Council’s external Financial Advisors to review the Council’s Treasury Management policy and borrowing requirement.  In addition Cabinet received regular revenue and capital budget monitoring update reports with Audit Committee already having the ability to monitor the Council’s accounting and Treasury Management policies without the need for any additional powers.  For these reasons he advised that the Majority Group were not minded to support the recommendation in the Opposition Business Paper.


As an outcome of the debate the Leader of the Opposition requested that a vote be taken on the following recommendation within the Opposition Business Paper:


(1)     In view of the serious problems it faces the Council agrees to instruct the Audit Committee, being a cross party committee, to specifically review the accounting policies of the Council, monitor its borrowing levels, regularly review the Council’s financial position  and review the whole budget consultation process to ensure it is meaningful and democratic going forward.


The above recommendation was put to the vote and not approved, with the following result:


For: 20

Against: 35

Abstentions: 0

Supporting documents: