Saturday 23 February 2019

No Policy No Resources - a Council in Denial

"No we haven't agreed a lease termination on Barnet House yet". "No we don't know the scale of abortive costs"...on the new Thameslink station that Government may claw back. "It's not just about the money"... when talking about why it's difficult to recruit and retain care staff on the minimum wage of £7.83/hr. These are just a few of the comments that came out under questioning at the recent Policy & Resources committee meeting. I had asked 21 questions and Barbara Jacobson, a local resident and assiduous scrutineer of Barnet's finances had asked 14 questions. You can read the questions and non answers (because Barnet never give you a straight answer) here.

I had several major concerns linked to Brexit and which are also linked to council funding. The first was about the construction of new homes. Barnet have been receiving around £10 million a year from central government in the form of new homes bonus. Barnet are forecasting that we will receive £54 million over the next 5 years and are critical in order to meet the budget. I raised the concern London’s construction sector has an ageing workforce that is heavily reliant on migrant labour. EU nationals make up 30 per cent of the 300,000-strong workforce, while just half are UK-born. Of the UK-born workers in the capital, 38,500 (12 per cent) are set to retire in the next 5-10 years. Yet it is estimated that 60,000 more construction workers are needed in London and the South East in 2017 to keep up with demand. There have also been articles documenting the slow down in the construction market in London; just one of the articles about it you can read here. As such I was concerned that if the number of new houses built in Barnet failed to meet the threshold to trigger the New Homes Bonus, this could have significant financial impact on Barnet. What reinforced my concern was that Barnet set a target of 3,100 new homes to be built in 2018/19 which would more than meet the New Homes Bonus threshold. However, in the first 3 quarters of 2018/19 only 553 had been completed (according to Barnet's own performance figures) significantly below the threshold. The response was, we think we will make the threshold and if we don't achieve it we will have to update the budget. That strikes me as incredibly complacent especially as there are concerns (detailed in the Municipal Journal) that the local government minister, Rishi Sunak may not honour £500m of New Homes Bonus payments due to councils. If these payments dry up the level of additional cuts that would be necessary to balance the budget are very large.

I then asked about the risks that insufficient care workers can be recruited and retained to meet the needs of the sector. Bear in mind Barnet is the largest London borough and has more care homes than any other borough. It also affects the care workers who support people at home. Again a high proportion of care workers are EU nationals and after Brexit it may become even more difficult to recruit staff. The question I asked was as follows:
"The risk register identifies the issues related to adult social care staff recruitment and retention. However, it does not address explicitly/quantify the financial impact on Barnet if, for example wages rates for carers are forced to increase significantly to attract and retain staff. What studies have Barnet carried out or commissioned to specifically quantify the financial impact of an increase in carer pay rates?"
Now I think that is a sensible question to be asking but Barnet's response was:
"The council has existing contracts with providers for the delivery of services which commit the council and the supplier to a set fee for services. The council continues to work closely with the local market at both a borough and regional level to assess the ongoing risk and impact of salary requirements within the workforce and ensure that rates remain sustainable and competitive". What they are saying in effect is - not our problem. The reason I am particularly concerned about this issue is that very recently a care home near to me, Apthorp House, received an inadequate rating from the CQC.  This care centre is run by Fremantle to whom Barnet outsourced their care services to back in the early 2000's and who last year were paid £3.7 million by Barnet. You can read the full CQC report here but I warn you it makes distressing reading. One of the quotes from the summary was as follows:
"There were not enough staff deployed to meet people’s needs. People told us they had to wait to receive care, and we saw people’s dignity was compromised as there were not enough staff available to support them in a timely manner. Bathrooms were dirty and this exposed people to the risk of harm due to poor infection control practice. Risks to people were not always identified, and risk assessments were not always followed. Medicines were not managed in a safe way".

Now, looking on line I noticed that Apthorp are advertising for care staff but at the national minimum wage of £7.83/hr rising to £8.28 /hour after a probation period and care certificate. It is all very well Barnet saying we have a fixed price contract with care homes like Apthorp but if that means they can only afford to pay minimum wage and that isn't enough to attract and retain staff then we have the risk of a major problem which might ultimately lead to the closure of the centre. From my perspective we need a grown up conversation which may mean increasing the amount paid to care homes on the basis that care staff are offered London Living Wage as a minimum. Unfortunately when I asked the director of Adult & Communities (salary £148,099/annum) if they had considered the London Living Wage they said "It's not all about the money". Well I'm afraid to say that if you are on £7.83/hr, the money is pretty blinking important and an extra £2.72/hr (the difference between National Minimum Wage and London Living Wage) could make a huge difference to the ability to recruit and retain care staff. However, it will cost more money and Barnet say they don't have any. Barnet are also looking to review people who receive care at home and if the cost is higher than putting them into a care home then they will be moved into a care home. This is not about what is best for the individual, it is about what is cheapest and that seems brutal.

Next financial year Barnet have to make a further £20 million of savings topped up with £5.35 million from reserves. This is an incredibly tough budget and many people will blame central government and that is true. But Barnet can't relinquish all responsibility as they have chosen to freeze council tax for the last 7 years, only taking social care precept rises. Before the last election any sensible person would have seen the additional massive cuts coming and taken a 2.99% council tax rise but Barnet Tories chose to freeze council tax again. Some people may say they don't want to pay any more for council tax but ultimately you have to take a rational view; do I pay what is needed or do I bury my head in the sand and wait for the crisis to happen. Well it's happening and it will get much, much worse. My thoughts are that we need to take a big tax rise this year, say, 6%. Based on my calculations this would add an extra £6.8 million this year and every year going forward, so it would help to cut the savings target over the next five years from £65 million to £31 million, still a stretch, but would allow for some of the risks on wage pressures and reduction in new homes bonus. It would make up for the freeze last year and would at least mean that we stand a bit of a chance in delivering some services to a reasonable standard. It would require a referendum of Barnet residents but I genuinely believe that if you explain to people what the consequences will be of not taking this extra increase they will agree - so long as the money isn't squandered on non essential activities.

That's not to say that Barnet can't make savings elsewhere. Barnet are spending £50 million to relocate to a new office building at Colindale. It is overdue and they are now looking at May for a moving in date. I asked about the lease on Barnet House and whether they had agreed a termination of the lease but the answer was "no not yet". That means we risk having the building standing empty but still shelling out rent of £65,000 each month until the lease termination is agreed. 

Barnet have also made huge financial commitment to fund the new Thameslink Station at Brent Cross which is anticipated to cost £365 million. Originally it was planned to ringfence the business rates from the expansion of the Brent Cross shopping centre to fund the interest payments. However, with the decision of Hammerson to pause the extension Barnet have been negotiating with Government as to a different funding model. This has been identified as a potential risk for the council so I asked the following question:
"OP27 (of the risk register) identifies the risks associated with the affordability of the Thameslink project and in particular the risk that Government may claw back grants leaving Barnet liable for the abortive costs. What is the scale of the abortive cost liabilities and when will a final decision be made as to whether this project will be aborted?" Not surprisingly Barnet did not give any indication of the scale of costs so I asked a supplementary question asking whether the scale was half a million or £5 million or £20 million or £50 million. The answer was "we don't know at the moment". That is an answer I find terrifying and utterly unacceptable especially as the sum could be huge.
As the Finance Director pointed out the budget is finely balanced and there is little room for manoeuvre. I forecast that the financial position will only get worse next year as wage pressures increase, it becomes impossible to deliver all of the £20 million of budget savings and government puts more financial pressure on Councils.
We should be talking directly about the reality of a council tax increase above 2.99% and the need to catch up for the seven years of freezes. Now is not the time for political point scoring if we are to avoid a major financial and social crisis. I just hope there are a few more sensible voices out there.

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