As you will be aware, I have been campaigning for the Labour / HRA Administration to release the full letters regarding Havering's emergency loan.
I am pleased to confirm that we now have permission to share these, which I have done below.
Why do we need to see these?
Councillors did not have full sight of the terms and conditions of the loan, when we went to vote on the budget in February. In fact, we were told that the details had been embargoed until the day after we were to vote on the budget.
As you can imagine, this left a number of us upset and angry. How can Councillors be expected to vote on a budget (which includes a massive loan), when we don't know the fine details?
More upsetting was that a 'back-up' meeting was set for March. We could have debated the loan in full had the budget been set then (when the letters were no-longer under embargo).
Similarly, Councillors were only given a summary of terms and conditions and one senior Administration member told us that "group leaders had already been briefed". This was disputed by the Conservatives and EHRG leaders.
You can imagine that this left me somewhat feeling in the dark about things.
So, I campaigned for the Administration to release the letters.
Why now?
The Leader has informed us that he has just got permission from the government to put these letters into the public domain.
It also comes, conveniently, two days after we filed a motion that would ask the council to release the letters. This motion was due to be debated in just over a week. So, the letters are available just before the vote (meaning the administration don't have to stand up and argue against releasing them, as they'd not vote with the Conservatives).
So, what's in these letters? Is it bad?
Yes, it's bad. The deal stinks.
Havering is going to have to subject itself to external review of our finances. I think that's very sensible and I hope it is a very robust review. You'll note that the minister hints towards cuts in his letter.
This has upset a number of councillors as we were told that, by taking the loan, we'd avoid government inspectors who would make cuts that councillor couldn't object to. We would, the argument was, lose control. Well, now we're going to face this rigorous review anyway.
Second, the term of the loan. 20 years, at the normal rate +1%. This is going to be around 6% a year. So, around £3m a year in interest. Our deficit is already going to be around £12m next year. Now it will be £15m.
A death spiral of debt we can't afford.
What is most upsetting in all of this, however, was that Councillors were informed that Havering would be fighting hard (and convinced it would win) to make sure we were only charged the normal interest rate. After all, we keep saying that this mess isn't our fault.
But, the day after getting the signal that we may get this loan, the Leader promptly replied and accepted all the terms and conditions. Sure, there's a paragraph on the end of the letter that very politely asks them to reconsider. But, we've accepted it.
In the words of another Councillor, "Havering council has rolled over and had it's belly tickled".
Some fight!
What next?
Well, we're getting the loan. There is no way out of this. The good news is that we only incur interest when we actually withdraw the money. We may not need to until late in the year, and we may not need as much.
The Labour / RA administration were planning to sell around £20m of assets last year. They only managed about £7m. That's a £13m disaster, which means we have to borrow to cover that. But, if may also mean that we instead sell those assets this year, closing the gap a bit.
The HRA have rolled over. Labour and the Conservatives, at a national level, are not talking about reforming the funding formula. Labour have found £28bn to 'green pledges' but not a penny for Havering. Conservatives spent the money on tax-cuts.
Every political party has failed here. The bonus of us having an 'independent' group running the council was that they didn't answer to Westminster. But, where was the protest and the noise?
In my eyes, it's fast becoming time for Havering's residents to protest this loan and funding as much as we protested ULEZ. We may not win, but they all need to hear that we're here.
The loan shouldn't be a loan. It should be a grant.
Watch this space. I feel a campaign coming on.
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