Please find below the text of a letter sent to all councillors this morning. The letter points our various flaws in the budget and urges them to reject the proposed budget and ask for a balanced budget instead.
If you want to stop this budget shenanigans:
Please sign and share the petition you can access from the button below.
Hart Budget Letter to Councillors
You Must Not Knowingly Budget for a Deficit
Tonight, you are being asked to sign off on a budget with a deficit. Not only that, the Council is forecasting an even bigger deficit the following year. They even admit there is a structural problem with the finances.
The budget paper section 15.5 says that you “are under an obligation to produce a balanced budget and must not knowingly budget for a deficit”. This is reason enough to vote against it.
However, buried in the detail of the budget papers one can see that the budget for Homelessness is being cut from ~£166K this year, to £65K next, a cut of over £100K. Moreover, the Grants to voluntary organisations are being cut from £1,234K in FY19/20 to £628K next year. By contrast, the cost of the “Leadership” team is soaring.
In addition, the Council is proposing to spend £279K on the unnecessary Shapley Heath project. Of this, over £250K is internal resources supervising a spend of £25K on external consultants. Even if you think some spending on Shapley Heath is warranted, such a bloated cost structure is completely indefensible.
The timing of the release of this budget, conveniently the day after it could have been examined by Overview and Scrutiny, piqued my curiosity about what secrets might be buried in the detail. I have found two anomalies which the Council has refused to answer before tonight’s meeting, so I urge you to seek proper answers from the Officers.
The first relates to the mysterious disappearance of employment costs from open-space related service areas.
These service areas also have substantial capital budgets associated with them. My suspicion is that either the Rangers are going to be made redundant (unlikely) or their employment costs are now going to be capitalised. In the past, as the budget clearly shows, they were expensed to the revenue account. You might ask officers to explain this to you. The Government certainly frowns upon such “creative” accounting.
“Capitalisation runs counter to the principles of prudent financial management. It can never permanently solve financial difficulties, but simply postpones the need to deal with them.”
You may recall that inappropriate capitalisation of expenses is what led to the downfall of Worldcom. If I am right, you might well ask why this change has been obscured and why you have not been asked to approve such a change to policy.
The second anomaly is that some elements of the budget do not add up.
For many of the GL Codes, the total in the summary page matches the sum of the detailed build-up of the costs in the service areas (e.g. 45010 – Purchase of Hardware). However, for other GL Codes (notably 10000 – Basic Salary and 44069 – Homelessness Costs), the summary total and the sum of the details do not match. For Basic Salary, the summary total is £4,591,233, yet the sum of the details is only £4,299,929, a difference of ~£291K. Similarly, the summary total of Homelessness is £65K, but the sum of the details is £0, a difference of the whole £65K. You might like to get to the bottom of this and ask that all of the GL Codes are checked for consistency.
It is controversial enough that councillors are being asked to sign off on a budget with a structural deficit. It would be completely untenable to sign off on a budget that did not even meet the most fundamental of acceptance criteria, namely that it was internally consistent and added up.
You might also note that, at the time of writing, over 850 people have signed a petition with the following demands:
The budget should not be approved until the following conditions are met:
- The overall budget is balanced and doesn’t require £381K from reserves.
- Spending on unnecessary projects is stopped immediately, including Shapley Heath, which will save at least £279K of the projected deficit.
- The budget for the “Leadership Team” is cut so that together with other savings, the budget at least balances.
- Further savings are identified in other non-core areas so that the planned cuts to the Homelessness (GL Code: 44069) and Grants (GL Code: 47010) budgets can at least in part be mitigated.
- A cross-party committee is established to examine the long-term structural financial deficit and recommend long term solutions. This should be established prior to the start of the new financial year and report by 30 June 2021.
I urge you to reject this budget and request that a balanced budget be produced that properly adds up. Either that or seek some independent advice on the sanctions that can be placed on councillors who knowingly approve a budget with a widening structural deficit with no recovery plan. This letter will be published on the We Heart Hart website.