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countering the spin and providing the balance


We're in the Money

We're in the MoneyAfter all Commissar Coombes' huffing and puffing in the media about being 700,000 short this year, we can now tell the true story of Fylde's finances. 

It is a story that makes incredible and unsatisfactory reading. It shows once again how spin and evasion are being used to misrepresent Fylde's accounts to the media, and so to the public at large. 

It's no wonder that one Councillor said at this year's budget meeting "John Coombes has presided over an increase of 6 million over three years, mostly on salaries and administration. We spend 20,000 a year on a press officer and can't even afford to spend 20,000 to keep the baths open". It might also be why Councillor Alfred Jealous has previously said that spending 20k on a press officer was the best money the Council had ever spent.

So what's going on?

This time last year, a 500,000 shortfall was being trumpeted by our esteemed Commissar John Coombes. 

This year, on February 2nd, he was reported in the Evening Gazette as saying "The authority is currently trying to clear a budget deficit of 700,000"  

"Here we go again", is a phrase that springs readily to mind, as does the song "Tell me the old old story".

Those who take the trouble to read counterbalance (or the Council's financial statements), rather than the press releases issued by Fylde's media spokesperson, will know to take all this guff with a pinch of salt. (see Cooking the Books)

The truth of the matter is that if Fylde Council had not put 1.1 million into several of its "Earmarked Reserve" accounts, (some of which were newly created that year to hold the money) there would not have been a 512,000 shortfall at all last year.

OK. Now for the technical bit.

The Council uses several accounts, but the main ones of interest to us here are:

The "Revenue Account". We might call this our current account or our bank account. It's used for day to day spending money. 

They also have a "General Reserve" which we would probably call our savings account or deposit account. It holds the money to cover emergencies, together with any surplus cash that is not planned to be spent on anything else. 

The third is actually a set of accounts called "Earmarked Reserves". 

We might call these "Tins on the mantelpiece". Each tin has its own label on, and when we get some spare cash we put it in one of the tins. It's a sort of saving up process, or at least a way of holding money for something until we need it. We might have one tin for a new car, another for holidays, and so on.

However, as we all know, if the roof needs fixing, most of us would say it  was more important to fix the hole in the roof than to spend on a holiday or a new car.

So, at the start of this year, Fylde Council had its usual current account balance for running the day to day spending.

It also had its General Reserve account which, at that time, held 758,000. 

It also had the set of Earmarked Reserve (tins on the mantelpiece) which, in total, held 1.896 million. 

As we came toward this March, which is the end of the Town Hall's financial year, the Commissar made his financial 'wolf' cry yet again. He wrings his hands in mock desperation and says he is heading for an overspend of 700,000 this year.  

To cover this, several measures are proposed, including closing the swimming baths, abolishing the Mayor, cutting the payments to the Age Concern and Citizen's Advice Bureau services and several other daft options.

All this time, he knows he has the 1.8 million (or thereabouts) in the Earmarked Reserves tins on the Town Hall mantelpiece. 

Worse than that, he will shortly be told, if he didn't already know, that by the end of March, his General reserve is expected to grow to 864,000 and his Earmarked Reserves will have grown to around 4 million - because something in the order of 2 million will have been squirreled away in them during the year just ending.

And in addition to this, the Government has paid Fylde an extra (and completely unexpected) 428,000 for capital housing works, and another 486,000 to offset the costs of introducing a free Concessionary Travel scheme and other additional work local councils have been given to do.

You might think this is all good news, but not the Commissar. How can he justify the maximum permitted Council Tax rise if folk know he has all this money lying around doing not very much? So the Baths closure saga rumbles on. The press start a campaign to keep the pools open. Children are pictured handing in petitions, none of which should be necessary, because the money is there to pay for whatever is needed, its just that its in a different tin!

So, the time arrives to decide the budget for this year. 

He imposes an inflation-busting 4.95% Council Tax increase. He cuts the funding to the Citizen's Advice Bureau by 36,800. He then chops another few thousand off smaller items like the arts budget, and increases car parking and other charges. Then he adds back in 206,000 worth of what are called "Revenue Growth Bids" (this is additional spending to fund new or improved services compared with last year), and then he nicks 205,000 from the money he was given to pay for better Concessionary Travel for OAPs and declares, miracle of miracles, he has done the impossible and balanced the budget.

What he fails to mention is the 846,000 that is even now sitting in the General Reserve (the deposit account) and the 4 million sitting in the Earmarked Reserves (the tins on the mantelpiece).

If he had used some of that money, he could have avoided the need for any service cuts, he could have funded repairs and upgrading to both swimming pools, and required no increase in Fylde's Council tax at all this year.

But then, he's supposed to be the businessman, the financial expert. What does counterbalance know about it?

Dated:  28 February 2006


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