Hart Finance Car Crash

Hart Finance Car Crash

Hart Finance Car Crash

We are becoming increasingly concerned that Hart’s finances are experiencing a slow motion car crash. This post will cover three significant issues we have identified from the current budget. Tomorrow, we will cover the Shapley Heath financial shell game. Later next week we’ll take a look at the growing black hole in the medium term finances. Plus, there’s the loss of £1m on the waste contract. Today’s three issues are:

  • Changes to the actual spend in FY18/19 and FY19/20
  • The budget doesn’t add up and so is not internally consistent and can’t be relied upon
  • Big changes to the approved draft budget in the final published version apparently in contravention of the Constitution

Hart Finance Car Crash: Changes to Actuals

Hart Finances Out of Control - Changes to Actuals

Hart Finances Out of Control – Changes to Actuals

As can be seen the actual total spend for 2018/19 has fallen from £5,387K to £5,020K between the two reports, a significant difference of £367K. Similarly, the spend for 19/20 has fallen from £11,241K to £10,877K, a difference of £364K. It isn’t clear whether this change in the management accounts will cause a restatement of the statutory accounts.

In the private sector, restatement of prior year accounts would be regarded as a profoundly serious matter. In Hart Council, it seems to have passed without comment.

Hart Finance Car Crash: Budget Does Not Add Up

Hart Finance Car Crash - Budget Does Not Add Up

Hart Finances Out of Control – Budget Does Not Add Up

We highlighted back in February in a letter to all councillors and an email to the JCX’s that the draft budget did not add up. Nobody cared at the time. Apparently, they still don’t care because the final budget doesn’t add up either. The sum of the spending in the service areas for GL Codes 10000 , 44069 and 90012 is not equal to the total for those GL Codes in the “Subjective” summary. In short, the budget does not add up. It appears as though HANEED (Housing Needs) is missing from the detailed service areas. This may account for the discrepancy. This service area is budgeting £813K of spending and nobody has noticed it’s missing. This is just sloppy work.

We have highlighted this anomaly to officers, but have yet to receive a reply. It’s difficult to see how it can be relied upon to be accurate.

[Update]: The budget has now been updated and the errors identified have been corrected [/Update]

Big Changes Between Draft and Final

Hart Finance Car Crash - Big changes between draft and final budget

Hart Finances Out of Control – Big changes between draft and final budget

In addition, there have been big swings in the budget for each service area between the draft and final versions. Total net spending has reduced by ~£37K, probably partially explained by extra grant income. However, total spending in Corporate Services and Community Services has been significantly reduced, largely offset by a big increase in Technical and Environmental Services and a smaller increase in Place.

These large variations appear to be in contravention of Hart’s Constitution. Once the budget has been agreed at a full council meeting, it is set in stone. It can only be varied in a limited way without further approval from Council.

Budget regulation 3 limits the officers to spending within the approved budget:

Hart Council Constitution Budget Regulation 3

Hart Council Constitution Budget Regulation 3

Budget regulation 5 allows virement (transfer) between budgets.

Hart Council Constitution Budget Regulation 5

Hart Council Constitution Budget Regulation 5

But this is limited by FR12 to £10,000 without Cabinet approval or £50,000 with Cabinet approval. These changes are larger than the transfer limit. Changes this large should have gone back to full Council for approval.

Hart Council Constitution Financial Regulation FR12

Hart Council Constitution Financial Regulation FR12

In addition, FR10 says that they cannot incur unbudgeted expenditure without the approval of full Council.

Hart Council Constitution Financial Regulation FR10

Hart Council Constitution Financial Regulation FR10

In other words, whoever runs Corporate and Community Services have been authorised to spend more money than they now have in their budget. The heads of Place and Technical Services are not authorised to spend all of the money in the final budget. It’s a complete mess.

Hart Council is fiddling while our money burns.

We have asked questions about these and other issues to be answered at Council on Thursday 29 July. They can be found here.

 

 

 

 

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