News and Views


Surrey CC issues profit warning

posted 24 Oct 2018, 03:27 by Peter Webb

Surrey County Council effectively issued a profit warning months ago. There is the threat of a Commissioner coming in to take over.  The Conservative leadership is aware but not inspiring confidence that it can transform things sufficiently. It is locked in its statutory and Party political straightjacket. Central government steadily reduces financial support. 

But central government is itself broken down leaving a need for Surrey leadership to draw up a plan to streamline all-Surrey and concentrate management and financial resources into a smaller structure. Project managed implementation should immediately follow. 

Government malaise is seen when a local borough cannot decide on important matters when the next Council meeting is three months away;  when Surrey CC is insolvent and near bankruptcy; when the top Civil Service is described as ‘Victorian’ and the Treasury  accounting practices date from the XVth century.

SCC Profit warning

posted 20 Jul 2018, 03:39 by Peter Webb

See "SCC finance director quitting role seen as yet 'another red light' (Surrey Advertiser in full in What the Press says). 

In What the Press Says are my published letter and quotes in the Surrey Advertiser news report of "Council members paid £££s to promote political parties ". Other outsiders like trade unions get facilities within County Hall. Why not STAG taxpayers with an office from which to intervene?

 The TPA  panel discussion on 'unitary' as in their Newsletter is interesting. But for 40 years to my knowledge countless people and hours of mainly paid-for time has been wasted on HOW TO DO LOCAL GOVERNMENT without enduring result. As in several other areas we know well this is a failure of successive governments and the political method. 

Local authorities' financial sustainability

posted 20 Jul 2018, 03:08 by Peter Webb

In a TOWN HALL report published on March 8th The NAO (National Audit Office) doubts whether the Department (of Communities & Local Government), along with other departments with responsibility for local services, understands the impact of funding reductions on the financial and service sustainability of local authorities. We have to watch while we feel this in our pockets as it is played out in Surrey CC. The underlying governance comments as for the nhs can also be made but with the difference that the NHS is a recognisably stand alone organisation while local services are a mess organisationally at the centre. (UPDATE 7th April)

Surrey County Council Profit warning?

posted 20 Jul 2018, 03:00 by Peter Webb

Will Surrey County Council be issuing another profit warning in the Summer like Carillion? They effectively did so last Autumn with the 15% council tax scare. The 2018-19 financial budgets have not so far revealed themselves in detail.   Is there included  a multi-million unidentified savings item representing a risk which could turn into a profit warning this year a la Carillion? Resident service dependents and taxpayers are not getting re-assurance mainly because it is a central government problem. Will the Annual Report due around end-June reveal all? (from UPDATE to all supporters and correspondents on 7th April)

Senior Tories warn of tax rises

posted 20 Mar 2018, 04:48 by Peter Webb

1  This apparently unremarkable headline appeared on March 18th and after the Chancellor’s Spring Statement which  saw a light at the end of the austerity tunnel. 

2 Unbelievably the two MPs, Ken Clarke and John Penrose, have had to write to the Chancellor pointing out that “official figures” inaccurately and over-optimistically exclude from the country's so-called debt  billions of pounds in future payments, including on PFI contracts and government  pensions. Reference to the “deficit” focuses only on an ‘overnight’ cash balance. 

3 This demonstrates that, though the point is widely understood, our political and manderinate  leaders, and treasury,  are so out of touch and living in the past that they persist in believing that only borrowing in the form of gilts by the treasury is real. It also shows up the ‘stone-age’ government accounting. 

4 In fact taxpayers are committed to paying the much greater total of IOUs. The traditional "debt" is around £1.8trillion but the true debt approaches three times that.(See the attached one-page WGA summary). 

5 In simple terms as an example, the employer's contribution to a person's pension for completed service is money costed in tax that has not been set aside pending retirements but spent on other things leaving the liability as uncontrolled debt. It has been borrowed. There is no difference in essence between borrowing from public employees and from 'the market'. Together they add up to much more than the official "borrowing". Because spent there is no invested  income retention or capital protection. 

6 Admitting government accounting failure "No company CFO (Chief Financial Officer)  would last long if they only bothered with their firm's bonds and ignored all their other liabilities completely" say MPs Ken Clarke and John Penrose. But even that understates the point by some margin because ignoring management accounting.  The company CFO has a total unified accounting system. Without it delegation and feedback data flows wouldn't reconcile and 'scoreboard' and balance sheet totals wouldn’t keep up, rendering the whole  useless. 

7 The 'overnight' cash balance is quickly known. But the present Full Whole Government Accounts (WGA) disgracefully take 20 months without budget values and when available for decision-making, substantive consideration and management attention are disregarded by the Lords of the Treasury and unsupported by the unqualified Permanent Secretary. 

8 Accounting failure extends to the budget planning process. The Public Accounts Committee (PAC) and National Audit Office (NAO) know this but are faced with political and treasury paralysis. As reported here the PAC has asked for the right system to be installed but the treasury doesn't want to understand let alone act. Politicians mislead us and themselves  by claiming, priestlike, that the "deficit" means what it doesn't. The two MPs are calling on the Chancellor for a "full national balance sheet" at future Budgets.

Surrey Council tax 2018-19

posted 20 Mar 2018, 03:17 by Peter Webb

Capped Council tax invoices 2018-19 for Surrey at just below 6% have now arrived on our doormats. We are to assume that services and operations can be maintained. But back-up information is inadequate and recent media reports of the need for a 15% rate for 2017-18 have become obscured by hints that yet more savings still need to be made. Was that a Carillion-like profit warning?

 

There have been some references in the press to a ‘deal’ having been done which will keep back from central government for one year only more of business rates. Other than that we have to continue to trust in Leader David Hodge’s management in difficult circumstances.

 

Unlike private sector bodies we, as the risking investors, are denied an Annual Report at this point in the proceedings. This would ordinarily give us the plan going forward. Last year when testing the system it was  found that library copies were hidden from view quite apart from being published weeks into the new period. David Hodge did then at least issue instructions for visibility on reference section shelves. That is only a ‘small step for mankind’  on the road towards formal democratic accountability.

GOVERNMENT MISMANAGEMENT

posted 17 Dec 2017, 10:10 by Peter Webb   [ updated 18 Dec 2017, 01:14 ]

It is not denied that there is a management void, no governing executive structure and no cyclical management accounting.  This is a constitutional fault and politically negligent. Operationally the Treasury is the weakest link. Accounting has not yet fully embraced accrual accounting which is thought to be a choice though essential for management accounting. 

Parliamentary supremacy does not extend to government machinery. The National Audit Office is not allowed to recommend at the apex. House of Commons Committees are uncoordinated, overlap and are non-executive. In this field they do not have full knowledge of accounting standards and technical know how. Political leadership is not interested and therefore does not drive change that would provide it with conventional and necessary management information. There is however full but powerless recognition of this need below that level. 

The Public Accounts Committee (PAC) has very recently "called on government to set out for the first time a properly integrated business planning, budgeting and performance system that endures”. That says it all, but sadly:

·        “government” does not locate responsibility.

·        “set out” presumably means only propose.

·   t the system architecture requires agreement first on the decision and reporting hierarchy.

·    the system must be designed for the Institution’s particularities and be installed. 

So, as over the centuries except in time of war, NOTHING CHANGES. Isn’t it time that ‘government’ stopped relying on others for “efficiency savings” and looked to itself. Blunders and waste and ‘not knowing’ cause poor performance and cost taxpayers £billions.

NEVER MIND THE POLICY FEEL THE PAIN from top to bottom of government

posted 30 Sep 2017, 04:35 by Peter Webb   [ updated 17 Oct 2017, 07:51 ]

Wasteful activity  in unsuitable structures is causing logistical blunders and losing £billions to the public finances. These are out of control. Resulting debt is unsustainable.

Evidence is clear and documented in government. Responsibility for failure to drive change of 'machinery' in well known ways  lies with the Prime  Minister in Cabinet, and the Treasury. 

1 Political leaders take no professional responsibility for the generality of government performance.  The top echelons of the Civil Service go unreformed.

2 Terms of discussion should be: objectives, resources,logistics and outcomes not ‘isms’ (fascism, capitalism, socialism…….). 

 3 Policy is decided without committing to a viable plan (budget  *). This political and treasury disunity causes uncontrolled debt. The IMF hadn’t grasped that. It is why the European accounts fail their audit. In UK devolution arrangements are compounding the felony. 

4 To 'government-speak' debt (borrowing in the market' - the 'overdraft - £1.7tn) must be added other borrowings such as PFI contract liabilities and under-funded accrued past-service public pension liabilities, all by now exceeding £4tn). 

 5 With no adopted plan (budget *) there is no management cycle completing with fed back Management Information.  That is flying blind through cloud.

 6 Formal accountability is missing from all levels. Parliament can’t get action to make sure that  it, “the people and ministers know how and why public money is spent”. Even that doesn’t cover consequences and context (the balance sheet) without which the picture is incomplete. But shame-faced politicians don’t want the people to be told.

 7 All it needs is for the PM to identify what she/he doesn’t know about what is going on and instruct the Cabinet Secretary to provide the regular Management Information  to show actionable variations from plan. Management accountants have the know-how and lead in this field. The narrative and numbers Annual Report is the vehicle for telling the people.

 ·        The government-speak budget is merely an allocation of funds. The ‘private sector budget is the forecast-aided adopted plan, resources and all. It then becomes the performance yardstick. The childishly named OBR (Office of budget Responsibility) only gets to the forecast stage and before their ink is dry the politicians have changed the assumptions. 

WHOLE GOVERNMENT PERFORMANCE and responsibility for it

posted 7 Aug 2017, 07:49 by Peter Webb   [ updated 7 Aug 2017, 07:59 ]

In August 2017 a Surrey County Councillor emailed: “Council finance is in difficulties but it is Central Government which is causing this by handing out responsibilities without funding”. The ‘Nothing to do with me, guv” syndrome. He is right. Ultimately the Prime Minister, Parliament or the Privy Council is responsible. It is not clear which. Most of funds come in the form of central grants and capped council tax.  Performance must accordingly be judged in the round and as a whole. In fact there is overwhelming recorded evidence of fundamental flaws: 

Politicians’ disinclination to be professionally responsible for the generality of government performance has produced a management void. Disunity between the political and the ‘treasury’ causes uncontrolled debt. This extends to Europe-wide real flaws of principle and in UK downwards to devolution arrangements.   

 The Prime Minister is traditionally not equipped for control of the public finances because not knowing and not managing. The ‘scoreboard is not up to date and budgets are not produced on the same basis. Long out of date figures and suspected qualified audit report have in medieval fashion been withheld  from electors' view during the general election and still haven't appeared. Constant resort to borrowing is not “Living within our means” and weakly suggests a real “magic money tree”. Context for voter understanding is accordingly left blank which is no help to the responsible governing authority. 'Government speak' is confined to a  cash "deficit" only. The true and larger expenditure deficit reflects borrowing from accrued past-service pensions underfunded, and PFI contracts.

 The Treasury and Cabinet Office fail to drive called for method and machinery change. This is as noted by the Public Administration and Constitutional Affairs Committee report "Accounting for democracy: Making sure Parliament, the people and ministers know how and why public money is spent".  The report opens "The House of Commons is supreme in matters of finance. Parliament can only exercise this supremacy if it understands….." and is fed from below.

 In fact Parliament, the people and ministers don't  know how and why public money is spent! Management accounting is unstructured and open-ended in the management void. There is no budget for comparison. Cabinet Ministers seem not to know what management information they need.  The specification would be properly determined given a fixed Cabinet agenda spot for period Treasury and departmental reports for minuted action or signing off.

 A letter has been forwarded to the Prime Minister stating this case and suggesting a directive to the Treasury and Cabinet Office. At the same time three questions have been forwarded to the Chancellor asking when changes in accounting and reporting will be made.

As the General Election draws near...

posted 2 Jun 2017, 09:40 by Peter Webb

….all the contenders ignore the issue described in the attached published letter. The NAO should call for "special measures".  But as already reported even the HoC Public Administration and Constitutional Affairs Committee can't get the Cabinet and Treasury to "drive change" prescribed. Leadership directives are absent. However sincere the emotive or inspirational rhetoric it  doesn't 'bring home the bacon'.   

We have to play along with the electoral entertainment for now even if Parliament and box-ticking elections are obsolescent. The Cortanas and Siris, Googles and facebook are with Artificial Intelligence taking over our thinking. Amazon is getting better at reading and feeding my mind for personal book choices right now. Cars are talking to each other now. Perhaps it is not a bigger more expensive and unwieldy NHS that we need but one that is allowed to continue to organically evolve without political interference and 'national debates' and 'conversations'. We will get a better all round idea of ourselves  and then for government decisions and machinery. Politicians, your spendthrift and uncontrolled debt days are numbered. You will not be needed for democracy, don't formally account anyway and will get in the way of the golden goose economy. 

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