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Hackney & the 3 year budget

Ivan Agenda | 19.12.2001 17:18

Hackney is straining at the seams, community services are disappearing, workers rights are being attacked, with unions being weakened and the ‘assets’ are being sold. Now, under instructions from central government, Hackney’s local authority, have voted for a three-year Budget strategy, which will leave the borough without a social fabric.

The government have been accused of putting the borough into more debt, whilst money is being made available for central government policy!

BACKGROUND

Due in part to a previous administration who, specialised in fraud, corruption and sometimes, plain ineptitude, Hackney council saw their finances spiral out of control. Such was the extent of their failure in 1999 the government intervened in the running of the council and ordered an audit commission, which subsequently exposed huge gaps in the authorities finances.

The immediate response that followed the findings, was the application of something called a section 114, this unsavoury dish served by government, prevented a single penny from being spent, effectively paralysing the organisation. The inadequacy of this order rapidly became apparent when rubbish began to pile up onto the streets, as waste vehicles sat idle in the depot requiring money for maintenance, soon after the waste management sector was put out to tender and became privatised to a company called Service team. This desperate measure was only lifted when agreements to introduce a three-year budget strategy were agreed.

In order to produce this budget and find ways to tighten the belt, a public sector organisation called the Improvement and Development Agency were brought in whose main role according to a council spokesperson was to “help (the council) find solutions to the very serious problems.” Since then a massive overhaul of the management has taken place, starting with the introduction of a managing director, on a salary of £150,000.

This restructuring was implemented by financial consultants Deloitte & Touche (D&T), who were paid by the Department of Transport and Local Regions (DTLR), to headhunt and appoint senior financial managers into each directorate. The appointed managers duties were according to a council press release, to provide financial expertise and help tackle the borough’s financial crisis”, in other words they are to be paid to find ways of making savings and apply the five directives ordered by government to each department under section 15 of the 1999 Local government Act. The first time since it’s inception this Act has been used.

The belief of the council is that so long as they sort out their administration, they will be able to save and restore the council to some form of stability, as a spokesperson at the council explained, “the absolute most important thing that Hackney council can do for the people…is get it’s spending under control and there’s nothing we can do for services and to make Hackney council better until we can stop the tailspin of expenditure we’ve had in the past.” This statement may have some truth in it, certainly the council has had an abysmal record of management but that doesn’t mean the residents of Hackney will be in a better position, as part of the stabilising of the finances will mean losing basic community services. The government up until now has been quite content to heap the blame on the local authority as a spokesperson at the DTLR said, “what we’re expecting of Hackney council is no more than we expect from any other council in the land and that is…they perform their statutory duties and to protect services…to their local residents, this is why we’re doing what we’re doing, it’s to protect local government services of the people of Hackney, we will not stand back and watch the people of Hackney suffer.” Presently, the financial support given to the council has been in the restructuring, which has seen £1 million spent last year and a further £2.5 million this year on consultancy and management support fees. Further immediate support has come in the form of what is called an ‘Unsupported Credit Approval’. This has meant the council has been able to borrow more money from the treasury and has done so to the tune of £20 million plunging them further into debt.


THE DEBT & PRIVATISATION

So how much are these debts and how did they acquire them? The precise amount outstanding is hard to tell but according to Green Party councillor Chit Chong, speaking at the last full council meeting, the figure is £700 million, and debt interest alone amounts to £75 million a year. This has led one group of local activists and residents, called ‘Hackney Not 4 Sale’ to begin a campaign by the name of ‘Dump the Debt’, calling on central government to cancel the huge deficit.

Much of this debt came from the 60’s, when money was borrowed to build quick fix high-rise blocks, these were subsequently knocked down but the debt remained. The latest addition to the debt was the financial debacle of the privatisation of the benefits system to a company called ITNET, whose website states ”Our expertise lies in the practical application of new technologies driving organisations through a seamless transition from one IT environment to another.” During ITNET’s tenure, hundreds of residents found themselves in the worrying position of facing eviction and having to defend themselves in court, as the payment backlog clogged the computer system, meaning people weren’t getting paid. Director of the Hackney Citizens Advice Bureau, Sola Ayobade saw first hand the effects of ITNET’s inefficiency, “you can’t even think about how it has been, It was the evictions then it was the landlords would come in and say look we’re about to lose our properties because we can’t get our rent…it was…all parties coming in, you know it was quite horrendous.” Since then the benefits have been put back under council control but the bill has been left to the authority and stands in the region of £35 million, a figure close to the amount of savings presented in the budget strategy to government. Hackney council claim ITNET are responsible for the lost money, but there seems little chance of any financial compensation, as a spokesperson at the council explained, “millions are owed to us by ITNET…Lambeth went through the same process with there company…it was Capita, it’s £18 million and I think they’re writing it off somehow, if you get involved in litigation. Muck is raked…you’d have to spend several million (pounds) of tax payers money hoping you’d get it back…What if you don’t? It might even be illegal spending of public money. We’re on a hiding to nothing, especially us chasing a contractor like ITNET.” Interestingly ITNET was outsourced when the council was in a much better financial position and Labour MP for Stoke Newington, Dianne Abbot, when speaking strongly at a unison meeting for library strikers believes the government should do more “I think the government should pay for it…they forced Hackney to out source its housing benefit…the government has the money to bomb Afghanistan – he’s (Gordon Brown) sitting on a war chest but the political will is not there.” This claim was denied by the DTLR who said, “we’ve been monitoring the situation closely and supporting consultancy…and management activities in the borough and providing £20 million worth of unsupported borrowing, you know I don’t think the claim stands up to be honest with you.” She further added, “The government didn’t compel the council to enter into that particular contract. The council is responsible for determining the terms of the contract, for managing the contract and it was also the councils decision to terminate the contract.”

Where political will has shown itself and where a substantial amount of money is to be provided is into a central government policy called the Neighbourhood renewal fund (NRF). The idea behind this according to the DTLR website is to “enable the 88 most deprived authorities to improve services, narrowing the gap between areas and the rest of the country.” Indeed, Hackney has been earmarked to receive £26 million in three years, which many hoped would be used to provide assistance to projects, which dealt with the fundamental difficulties facing the local residents, such as poor housing. A sum of £600,000 has been set aside for what is called the Cultural quarter programme. This ‘Cultural quarter’, officially is the area surrounding the front of the Town Hall and is currently having a major revamp including four major building projects. The first of which is already up and running and is called the Ocean, a music venue and bar, which many residents have complained is out of their price range. Secondly is the Technology & Learning Centre, a Private finance Initiative which will contain five commercial units, a museum and a library, the latter inclusion is ironic as four libraries in the borough are currently under threat from closure due to their budgets being cut. Hackney Empire is another project in process but the biggest complaint of all has come from the renovation of the square, which sits in front of the council building. Residents have been up in arms about a proposal, for which planning permission has already been applied, to pave over the small garden and trees that exist there presently. Although the square could look more presentable, many residents may feel that the money could be spent better elsewhere.

Councillor Chit Chong has publicly voiced his opposition to this use of the money and is further angered at another area in which the NRF is to be used. An amount of £130,000 has been agreed for the removing of abandoned vehicles in the borough, which due to a lack of money, had meant the council have been unable to keep up with the unsightly problem. The Independent Working Class Association who provide news on local issues reported to the council 5 cars that had been abandoned and needed to be taken away from the Kingsland Estate in Haggerston, by three weeks only one of the cars had been removed. The council admitted the responsibility of removing the cars could be outsourced to a private company but denied the money is being used inappropriately and fits the Neighbourhood Renewal Fund criteria. “There is absolutely no inappropriate use of NRF money…the money was approved by the Hackney 20/20 partnership…it is a project which clearly comes in that criteria and it wouldn’t have been approved by the 20/20 partnership if it hadn’t.”

THE SAVINGS AND THOSE AFFECTED

With a budget strategy demanded and with a government reluctant to give any money away for policies that aren’t within it’s own central policy, the council in tandem with the top level restructuring have been looking at every aspect under the control of the authority where they can save money. One such area has been the property disposable programme, which according to Hackney council is a legitimate process, “its accepted management of our assets, I mean most…things on that list are buildings that we haven’t used.” In the first auction, a once thriving day centre in Atherdon Road was sold for £420,000, despite the council promising in court they would not do so. The second phase in this series of auctions was absent of community buildings but did see a further 13 properties for sale, the majority of which being small businesses whose leases have run out but were up until that point very much in use. Most worryingly of all, the council is not seeing any profit from this as a spokesperson for the council admitted “The re-evaluation programme is adding to our financial crisis this year, you start out at the beginning and you think right we’re going to make £20 million but in reality we haven’t seen it”.

Another area the council has descended upon is the voluntary sector whose grants have been slashed right across the board. This move appears to be in complete contradiction to the message given to these organisations earlier in the year, when they stated in a criteria form for council funding, “we will assist the voluntary sector, combat poverty and inequality and encourage organisations we fund”. One segment badly affected in the vast array of services provided by the voluntary groups, is free legal Aid. Both the Hackney Law Centre (HLC) and the Citizen Advice Bureau (CAB) had their grants cut, which in the case of the CAB, meant they had to shut down one of their two remaining bureau’s. The HLC was originally given a devastating 100% cut, but this has now be reprieved to 18% which, still means a loss of £36,000 in the year. The work of these two organisations extends further than their own buildings, both provide essential up-to-date legal information to community groups who pass it on to their users, Pierre Makhouf of the HLC explains; “We provide advice for a huge number of ethnic groups. Including…briefing papers about developments in the law. We provide to Hackney CAB, Hackney Action for women, Hackney Action for racial equality, Hackney children’s rights. We provide advice to the Institute advisor and also to students of Hackney college, Hackney Muslim women’s council, Hackney women’s Aid, various social services departments.” However the council have denied there cuts will have too much of an effect on them, as they receive money from elsewhere, “we’ve assessed them against the kind of needs of the borough and what they provide and also where they are able as part of a national group or nationally for some reason are able to obtain other funding because many groups do. We make up a small part of their funding but they do get funding from elsewhere.” This claim was hotly denied by Mr Makhouf who accuses the council of knowing the effects the cut would have on them, ” the council knew and has always known that the money they provide to us is match funded by the legal services commission and if the council’s money goes then the legal services money goes and therefore we have to close down.”

No sector is safe in this financial clampdown and the Hackney workforce, are no exception. Council workers’ have had their pay and conditions altered drastically, with pay cuts of up to £1500 a year and cuts in overtime, shift allowances and flexibility. At the beginning of October this year many workers within the council faced a stark choice of signing a new contract or face the sack after they had received what is called a 90-day notice, a timescale an employee must receive by law if new contracts are to be given to workers. Legal action is a possibility and the details are currently being scrutinised by Unison over the council’s decision to change the contracts. As the original contracts could not be altered the council decided to write out new ones and according to Unison official John Page they threatened anybody who didn’t sign the new ones with the sack, “They effectively dismissed people from the existing contracts and then offered them re-engagement.”

This period of unease in the borough is a time when workers clearly need an effective union but along with all the cuts in process, Unison have had their facility time reduced but the council claimed that Unison compared favourably with other branches in the borough, “I think you’ll find that comparatively with other boroughs we would be well above in terms of expenditure in union facilities time, so we are not starting from the lowest common denominator, we are probably starting from the highest point.” This is hotly denied by Mr Page who said, “our facility time has been reduced by two-thirds…when I asked them what benchmark they were using, they weren’t prepared to provide one.”

The situation in Hackney looks set to deteriorate, as the budget strategy gets analysed by the departments in Whitehall. In the new-year a decision will be made on whether or not it will be accepted and whether the proposed cuts will go ahead. Chit Chong, the Green Party councillor has called for a public enquiry to ensure future openness, “we want an independent public inquiry into the running of Hackney over past decades, leading up to its complete failure and betrayal of local people. We must throw open the council's accounts to public inspection, so people can see just what's been happening.” It seems highly unlikely at this stage the government will consider doing so, as a spokesperson at the DTLR said “There is a…power to direct a local enquiry but we still need to consider these directions and we might say that’s fine and not go ahead with an enquiry, that’s an option that we have.”



Ivan Agenda