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Doing the Business

Doing the BusinessIn the last few weeks, with hardly any fuss or trumpeting, the Politburo formed a shell company.  A fortnight or so later, there was an innocuous press release announcing the fact, and suggesting the Commissar hopes to take advantage of relaxed legislation that allows Councils to compete with the private sector, but otherwise, very little has been made of the development.

When this sort of thing happens, we've learned to be a touch cynical, and we wonder just what might be behind the development.

This is a (strongly political) Conservative administration, and generally, Conservative philosophy believes in letting business get on with things. So throwing down the gauntlet to compete against local businesses isn't the first thing you'd expect of them. 

counterbalance smells something dark brown and hairy, with a long tail (and possibly bubonic plague).

So what could be going on here? Why have they established a so-called 'arms length' company? 

The answer is we don't know - at least not yet. But we can speculate.

It could simply be an unfulfilled election pledge from last time that is being crossed off the 'to do' list before the election in May.

But the modern vogue is for what in the trade are called ALMO's (jargon for Arms Length Management Organisations), and maybe that's what is going on here. Typically, (although their supporters would see it differently), ALMO's are used to distance people and politicians from the deliverer of a service, thus removing the democratic influence that is the whole point of it being a council run service in the first place. 

You know the sort of thing; you have a problem and ask your councillor about it. They are as helpful as they can be, but tell you that it's all now run by the ALMO, and really, you'll need to go and see them. When you do, you find them saying - well we'd like to help, but we are a business you know, and we have to make a profit now, so we'll have to charge you a commercial rate

In this regard, the point of Councils is not to become, or to replace, businesses. It is to determine the extent and allocation of support provided from everyone to benefit those unable to cope with normal commercial charges.

New Fylde Housing more or less falls into this category. It was (for Fylde) an early foray into this territory. The staff who were the housing department set themselves up as an ALMO, and borrowed the money to buy all the Council houses from Fylde Council. They bought them for about 10,000 each (when similar sized houses were selling for around 60,000 each) so it was pretty easy to use the houses as collateral for the loan and generate some operating capital. 

Pretty soon afterwards, the policy to charge a market rent to new tenants was established. Existing tenants were protected for five years or so, then the plan was to annually increase their rents by more than those of the 'new' tenants, until they caught up to the market rate. 

When you remove the ability of elected local Councillors - who generally know the circumstances, (and in this example, they may well have known needy families themselves) - to determine the allocation and extent of housing subsidised by the public purse, and you give it to an arms length business, the whole principle of providing housing specifically for those in need is compromised. It doesn't matter how many councillors sit on the board of the Housing Association, nor that it is a registered 'social landlord' - when commercialism and income generation come into conflict with social need, you can guess which way the pendulum will swing.

The same principles apply to most, if not all, ALMOs. 

The advantage that ALMO's bring to a Council is that the Council loses much of the 'hassle' of running services and being accountable for them. It also means the expenditure falls outside the Council's capping limit (because it is no longer the Council's expenditure). So you can see why they are attractive.

The losers are generally the people who use the services, (because they have to pay more), and those who paid for them to be acquired or built up in the first place, (for example, when public assets change hands for a fraction of their real value, as the council housing did). 

But there is another advantage for councils to distance themselves from the population they (should) serve. This is the trend we are seeing as Councils switch from providing services, into a role of leading or managing the community.

Increasingly we are seeing council (and former council) employees undertaking the role of enforcer and issuer of fines and penalties. The most glaring example to date in Fylde has been the parking enforcers. 

But in our view, parking is just the tip of a very unpleasant iceberg heading our way. Almost certainly you will see the same sort of zeal applied to rubbish and recycling in the not too distant future. 

One plan now being considered by Government Ministers is called 'variable charging.' It would require changes in national law to introduce a charge for each bag of non-recycled rubbish put out by a household. A version of this scheme already operates in parts of Europe, and charges between 25p and 50p per kilo of non-recycled waste. Only recyclable waste would be collected free. The Lyons enquiry - which is looking into alternative ways of funding local government, and due to report in the near future, is widely expected to advocate a charge along these lines.

There are microchips in Fylde's bins ready to weigh the contents of each household, offering the prospect of charging each household by weight not recycled, as well as fines for putting the wrong rubbish out on the wrong day or in the wrong place, or too early, or not recycling enough, and that's only rubbish collection. Think what you could do with dog fouling, litter, noise and letting your garden get untidy.

What better way than to subcontract that service to a business that is neither elected nor democratically accountable, and is at arms length from the politicians who can wash their hands of your problem as they rake in the cash from fine income and the like.

If you think this is fanciful, have a look at this quote from the blog of Wesham's Politburo member Councillor Simon Renwick.

"Environmental Crime 
A shift in Council policy I'm hoping to pursue is to change the name of our dog wardens and environmental enforcement officers to Environmental Crime Officers. This change, coupled with extra resources and an extra employee or two will send out the message that, dropping litter, fly tipping, fly posting and dog fouling is a crime that won't be tolerated. For too long this and other councils have been sending out the wrong message and until we get tough by fining and prosecuting people, it will continue to happen......."

But just as one summer a swallow does not make, so neither is this politburo prophesying conclusive evidence of intent.

However, almost all the manual workforce has now been moved into a single department called 'Streetscene' and Councillors that should know, are telling counterbalance that pretty soon most, if not all, of the manual staff and line mangers will be moved into the new shell company that Fylde has just created.

Now the brown, hairy thingy not only looks like a rat. It smells like a rat.

It's bad enough for us as the public, but it is arguably worse for the staff affected by the change. Moving them into a company could change their terms of employment, pension rights and so on. It might be argued in time they are no longer really council employees, and a fiver an hour for indians is really generous, especially after the Commissar had to pay 250k to get rid of the chief.

Welcome to the brave new world of local government.

Dated:  10 February 2007


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