fylde counterbalance logo

search counterbalance

plain text / printout version of this article

countering the spin and providing the balance


Incompetence or Fraud?

Incompetence or Fraud?You can tell it's that time of year again. We're building-up to Fylde's budget decisions in March, and the Commissar's financial wolf-crying has started. Each year at this time he performs the "We're bankrupt and we have to close the Swimming Pools" routine. However this year, according to Saturday's Gazette, he's added Lowther Pavilion and Fairhaven Lake into the equation. You can be pretty sure he would have included Ashton Gardens as well, if he hadn't just signed a ten year agreement with the Heritage Lottery Fund to get a grant.

As we have repeatedly seen, each year he has overstated the spending problems so he could go on to show what a wonderful job he has done to pull the financial rabbit out of the hat and save the day.

This demonstrates either incompetence in estimating or, more likely given the frequency, a wilful intent to deceive that constitutes a financial fraud routinely practiced on Fylde residents.

This year, however it is a bit different.

It's different for two reasons. First, his financial profligacy and incompetence have reached new heights, (including an unauthorised overspend of £609,000). Secondly, there is a real and present threat on the horizon for the longer term - the cost of OAP bus passes.

Explaining the need to plug what he calls "A £1 million plus budget deficit", he is reported in Saturday's Gazette as saying "This is not down to bad management, it's external influences"

He goes on to blame cuts in government funding, combined with a £300,000 bill for OAP bus travel.

We disagree. The entire shortfall this year can be shown to be nothing short of his bad (or at least, incompetent) financial management - as this article will demonstrate. It means our new Mr Finance - on hire from Preston - has had to break open Fylde's piggy bank of earmarked reserves to bail our profligate Commissar out.

There is historic evidence of the Commissar's incompetence.

In March 2004, he was embarrassed when the external auditors found £522,000 worth of income from Government he had missed including in his accounts. (See 'Cooking the Books?')

A year later, in February 2005, he predicted a £500,000 budget shortfall.

On 13 April 2005, former Chief Executive Ken Lee trekked out to Elswick Village Hall to hold a Council meeting after receiving a really bad (SAS10) report from the Council's external auditors. The Commissar's financial mismanagement had hit the headlines. He narrowly avoided a vote of no confidence. (See 'No Accounting for Fylde').

In July 2005 he declared that his prediction about the deficit had come true. He said he had overspent by £512,000.

But this overspend only existed because before he closed the books, he took £1.1 million out of them and squirreled it away into some of his 'Earmarked Reserve' accounts.

He then took the £512,000 out of the 'General Reserve' account to 'balance the books' (after declaring his 'artificial' shortfall).

In fact, overall, he had actually underspent by around half a million on the year, but his accounting sleight of hand made it look as though he had made a loss of £512,000.

We believe he did this so he could justify charging the maximum Council Tax rise for that year.

The next year, (on 2 Feb 2006) he was reported in the Evening Gazette as saying "The authority is currently trying to clear a budget deficit of £700,000"   But by June, (only three months later), this huge deficit of £700,000 had turned into a surplus of £339,000.

His estimating was way out (altogether, by over £1 million on budget of around £10 million).

Some manager.

There are many more historic examples of his financial incompetence. We could go on for pages and pages, but its time to leave history and come up to date.

Last week, the Politburo Cabinet (16th January) heard a report from Preston's sub-contracted financial wizard Bernard Hayes, entitled "Medium Term Financial Strategy 2008/20011"

These reports are full of figures and a bit dry to read, so most Councillors don't bother. They wait for the nice finance officer to explain it to them. They trust him. They are sure he would tell them if anything was wrong.

Assuming he knows what he is doing (and judging by what we have seen so far, the present one does), they're right. He does tell them. He sets it all out in the dry and dusty report, but he doesn't draw attention to the bad bits when he reports it orally at the Politburo Cabinet.

What's more, the Commissar doesn't mention them either.

Up to now, we've thought this is because he doesn't want to expose his financial mismanagement and incompetence. However, we're now beginning to wonder if he simply doesn't understand the figures he is being given.

There is some quite disgracefully bad news in Mr Hayes' report.

The report is actually not that difficult to follow. It's available as 'Item 12 Medium Term Financial Strategy 2008/2011' from this page on FBC's website

We will work our way through some of the key points, using the report's paragraph numbers as headings, so those who are interested can cross check the facts and figures with the source report if they wish.

Paragraphs 1 and 2
Set the scene for the report

Paragraph 3.1
Notes assumptions made about the probable increase in Council Tax (4.9%) for next year, the allowances for pay increases and inflation, and so on.

It also notes that Fylde's recently completed job evaluation scheme (where everyone's duties and responsibilities were re-assessed and jobs re-graded where necessary) will add a further £200,000 a year to the salaries and wages bill from April onward. A bit further on (Para 7.2), it suggests that not everyone is happy with the result of the evaluation and 'a number' of staff have appealed against the grade they have been allocated. This means the costs could rise if those appeals are successful. So there will be at least an extra £200,000 to find on the wages bill.

Paragraph 3.2(i)
This introduces the bus money problems. They think they have it covered for this year and next year, but it has the potential to become a very important issue in the future, and we'll cover it separately in another article.

Paragraph 3.2 (ii)
This introduces the hidden bombshell.

'Street Scene' (The name for a department that includes all the manual workforce - bin men, gardeners, sweepers etc) - is overseen by Dim Tim, and run on a day to day basis by an officer called David Jenkinson. This department has incurred what the report calls "a significant potential overspend" during this year.

We think it looks like spending that is completely out of control.

It appears to be an unauthorised overspend which, later in the report, is estimated at £609,000 and described as an "Anticipated Overspend on Fleet Cost" (Appendix B).

More worryingly, the report notes "The reasons for this overspend are still being investigated and Cabinet will be updated once these are concluded"

£609,000 is a huge overspend for a Council the size of Fylde.

It is almost the whole cost of running both Kirkham and the St Anne's Swimming pools for a full year, (the ones the strapped-for-cash Commissar is now threatening to close again)

And they don't even know where this money has gone yet!

And our Commissar has the nerve to tell the Gazette "This is not down to bad management, it's external influences"


It was in black and white in the report in front of him at the Cabinet meeting. He said nothing about it. Neither did Dim Tim who, as Portfolio Holder for 'Street Scene' carries political responsibility for the service, nor did that Nice Paul Rigsby who is the Portfolio Holder for all things financial, and who ought to have provided the explanation.

If they didn't know about it, or didn't see it in the report, it is gross incompetence. If they knew about it and attempted to hide the facts, it is a disgraceful conspiracy of silence and an intention to mislead which amounts to fraud on other Councillors and the electorate. Either way, it is appalling mismanagement.

Time was that if an officer reported a retrospective, unauthorised overspend on this scale he would have been severely censured.

If he did so without also providing chapter and verse as to why it had happened, he would (rightly) have been publicly savaged by Councillors. That, most probably (and again, rightly), would have resulted in his resignation or dismissal.

How things have changed. Those former Councillors who are not turning in their graves must be shaking their heads in disbelief.

But worse was to come!

That same service (Dim Tim's 'Street Scene') has cost us another £100,000 because of "CVMU Poulton Depot - income not being achieved."

The report later says, in effect, the Central Vehicle Maintenance Unit has not achieved the income target they set themselves - because the Council has not been able to trade.

(FBC is allowed to 'trade' with - i.e. in this case maintain vehicles for - other Councils, but because they have such a poor league-table rating, they are prohibited from trading against private sector vehicle maintenance services).

Now this next bit is just speculation, but stay with us for a moment and see where it gets us.......

Say you want to build a new Town Hall that 'costs nothing.' You move all the vehicle maintenance staff out of the Central Vehicle Maintenance Unit on Heeley Road in St Anne's, and set them up in an even bigger garage on Poulton Industrial Estate. Maybe the Poulton garage leasing costs are a lot more than the nothing you paid at the Heeley Road site (because you owned it outright), maybe the travelling costs are higher. There could be all sorts of reasons for costs to increase in a move like this.

But at least you've made the Heeley Road site 'redundant' so you can now sell it to the Muir Group to build a Hostel for the transient homeless.

But sadly, the Poulton CVMU and vehicle fleet operation costs have gone up by £609,000 and the income they said they would make has fallen by £100,000. So overall, and so far, you're down to the tune of £700,000.

What a disaster.

The previous Ken-Lee-driven White Elephant Town Hall scheme had already cost an abortive £170,000 in consultants and professional fees. Now it looks like you can add another few hundred thousand onto the bill - and that's even before you spend the £7 million on the actual construction.

Fylde simply can't afford to think in terms of hundreds of thousands of pounds. It is a small-time council that ought to think in hundreds and thousands of pounds, not hundreds of thousands.

But that won't do for the image-obsessed Commissar. Desperate to polish his parliamentary CV, he wants to 'modernise' us. He has no inclination to get involved with the details of spending. He has loftier ideals. He is a protege of the disaster that was former Chief Executive Ken Lee, with the same ideals and modus operandi. He too has been, and presently remains, a disaster for this Borough.

£700,000 overspend on just one part of one service, and he doesn't even know why.

Still want to say "This is not down to bad management" Commissar?

And we're only up to paragraph 3.2(ii) of the report.

Time, as he himself might say, to 'Move On' - but sadly, it is to another mess.

Paragraph 5
This section looks at Reserves and Provisions.

As well as it's Revenue (current) account, Fylde has a 'General Reserve' which acts like a savings account. This is money for emergency spending and to cover unexpected shortages, or to receive any surpluses. The recommended minimum balance for Fylde is £530,000.

At the start of this council year, in March 07, it stood at £804,000 (so it included a spare £250,000 or so they had decided not to use for anything during this year)

But Fylde also has some "Earmarked Reserves".

These are completely separate pots of money. We've covered them before (see 'Salting It Away'). These are listed in Appendix D of the report. At the start of this year, they held a total balance of £2.332 million.

The Commissar loves this back pocket. He can slide money in and out to 'hide' it from day-to day 'housekeeping' monies, and only anoraks like counterbalance try to keep track of what he is up to.

These Earmarked Reserves are intended to be used for saving up for a particular purpose. So, for example, there is one called "Borough Elections" which is topped up over the years so there is enough to pay for the cost of holding the election every five years or so.

In recent years however, these Earmarked Reserves have been used for - in our view - rather dubious purposes.

For example one - called the 'Office Relocation' reserve (which was created for "Ad hoc costs in the year of relocation") held £175,000 but the Commissar spent £148,000 of this a couple of years ago, and they haven't moved offices yet.

He also had one called the 'Finance Reserve.' He salted £200,000 away into it. But it seems he couldn't find anything to spend it on for the whole year, so the next year, he gave it a new name in the hope we wouldn't notice he hadn't spend it. So it became called the 'Organisational Development' reserve, and after another year of standing in the accounts and doing nothing, he still hadn't spent any of it at the start of this year. And there it stood, up to Mr Hayes opening Fylde's books and - we imagine - being horrified by what he saw.

However, our sub-contracted Prestonian Finance man is having none of these shenanigans.

He has raided these reserves. Bigtime.

At the start of the year (as we said) they were £2.332 million. His projected end of year balance after the raid will leave just £972,000. (And £875,000 of that is an untouchable sum that developers have paid in toward Fylde providing 'Affordable Housing')

So Mr Hayes has raided £1.278 million out of them and moved this into the General Reserve so he can use the General Reserve to cover the Commissar's predicted revenue shortfall of "£1 million plus" (which includes the £709,000 CVMU overspend).

This is tough medicine, and it means the cash that was being saved up for things like Elections won't be there in the future, but Mr Finance had to find a way to cover what, for Fylde, was a huge sum.

The books will now balance, because the Commissar's predicted deficit of "£1 million plus" can be met from the General Reserve. So there's absolutely no need for him to go round talking about panic closure of swimming pools and theatres. The money to cover this year's shortfall is now sitting there in the General Reserve of his accounts. (Para 5.4 of the report confirms this).

Once he gets a grip of his financial incompetence and keeps his officer's spending in check. Once he stops his own spending on useless research and surveys and non-productive costs. Once he withdraws from wasteful obligations like £200,000 a year paid to Blackpool for 'Human resources' services, he can probably make the money he has for next year go round.


But he will have to change his ways, and that's unlikely. So he's attacking the pools again.

Paragraph 7.3
Goes on to explain that if Fylde does not meet its targets to reduce landfill (tougher from this April), they will incur fines, and those fines will have to be recovered from taxes. It suggests the increases in disposal costs for trade waste 'customers' will drive them to use other services, so over the medium term, Fylde can expect its income from trade waste to go down.

Paragraph 7.4
This is interesting. More evidence of the Commissar's financial mismanagement coming home to roost. It notes that Fylde has entered into contracts with other authorities to provide services (see just one example of this at Human Contracts - where we are now committed to paying Blackpool a fixed sum of at least £120,000 a year for Human Resource services). The report notes that contracts like this set out what we get for our money, but if we want anything extra we will have to pay extra through 'Variation Orders.'

In the 'old days' with directly employed labour, if times were hard, you could match the staff to the budget you had available. For example, when Fylde more or less decided to stop doing Capital Projects, it first cut, and then abandoned, its Architect's Department to make a cash saving. You can't do that so easily with contracted services until the contract period ends.

Like the Private Finance Initiative, as more and more services are contracted out, the ability to escape from or to vary them (or to make savings within them), reduces the room for future manoeuvre.

Paragraph 7.5
Is a similar thing, but from the opposite side of the argument. At present, Fylde is emptying Wyre's bins because Fylde won the contract Wyre had let for emptying its bins (they're all at this lunacy!).

The Wyre contract allows for Fylde to increase its charges as extra (newly built) houses are added to the rounds, and the report says Fylde expects 'significant increases in future years revenue.'

However, Wyre (who have now lost the flexibility to make savings themselves by entering into this contract with Fylde) sound to be griping about the extra costs, and the report to Fylde's Politburo Cabinet notes that, whilst in law they can impose these charges, if they want to push on with transferring staff onto Wyre's payroll and sharing other services with Wyre, they ought not to be ripping them off as much, so Fylde might have to find ways to reduce what they are charging for emptying the bins at new property in Wyre - which might mean less income for Fylde in the future.

What a tangled web of lousy management the Commissar is engaged in.

Paragraph 7.6
This is a split-your-sides-laughing paragraph.

The Commissar is so incompetent; he is even making a loss on the detested parking fines that are driving people away from Fylde's shops. The losses are such that the 'scheme' may not break even over its five year period. On that basis, it would be more cost effective not to have enforcement at all.

Remember: as he says, "This is not down to bad management, it's external influences"

Yeah, right.

Paragraph 8.4
This says the impact of the plan to introduce Equitable, sorry, Differential Taxation (which must already have wasted hundreds of thousands of poundsworth of time) has not been addressed in the report.

We think this is because Preston's Finance Man sees it as the lunacy it is, and he's not even going to build it into the provisional accounts. We've covered this matter ad-nauseum before (see 'Even More Equitable Taxation'). It's a con trick to get more tax from us overall. But as long as the Saint Anne's on the Sea Town Council maintain their sensible and practical opposition to being conned into this by the Commissar and, to a lesser extent, Kirkham (with a correspondingly smaller budget) do the same, this scheme probably won't go ahead.

If it were to, all the small parishes (who would make savings) would join in the scheme, and all the parishes with more facilities (who would lose, because their residents would be subsidising people from neighbouring parishes) won't join the scheme, so Fylde's spending would actually increase, not be reduced. So this plan is still going nowhere.

It's simply another of the Commissar's con-tricks that's costing a fortune to research and devise, but was always doomed to failure.

Another profligate waste of money that could have been spent on proper public services.

Section 9: The Capital Programme
This covers spending on capital items and projects (typically land buildings plant and equipment). The report rehearses a few of the issues and, at 9.3 (Table 1), it shows roughly where the capital money will be spent. There's nothing like enough detail here to work out what is actually going on, but you get a sense.

The bottom part of the table shows where the money for capital spending will come from. Interesting snippets are the "Prudential Unsupported Borrowing" of £1.08 million next year, and the use of "Capital Receipts" which have exceptionally large figures in the years 2009 to 2011

Paragraph 9.3(v) explains that 'Prudential Unsupported Borrowing' seems to be borrowing to make savings. So for example on a domestic scale, it might include borrowing to change your car for one that does more miles to the gallon, or to install double glazing to save on heating costs and so on. They also, perhaps ominously, include schemes that need initial outlay but which will repay the principal and interest costs of the borrowing and generate a surplus. So perhaps say, introducing a warden scheme to give out fixed penalties for dog fouling, or charging for putting out too much waste, might fall within them. £1.08 million is quite a big sum, and unless he's trying to classify part of the new White Elephant Town Hall scheme as an "Invest to save scheme" with reduced heating costs in a modern building, we're not sure what this refers to. We'll keep an eye out for our readers.

Paragraph 9.3(iii) notes the new White Elephant Town Hall is expected to be fully funded by capital receipts. It's interesting that Mr Hayes - (who's obviously no dummy) is using the word "expected" in his description. He knows it isn't going to happen like that, and so do we. Look, there goes another pig flying past the window.

The large figures for 2009 to 2011 are probably this of course. They show large sums of income from capital receipts - most probably the sale of land and other assets, (£3.3 million in 2009/10 and another £3 million in 2010/11). This is probably the income the Commissar expects to raise from asset stripping mostly St Anne's, but also a bit of Wesham.

It also looks as though the expected costs - £2.96 million in 2009/10 and £2.94 million in 2010/11 could be hidden in the 'Strategic Planning and Development' service heading with, perhaps something up to £800,000 in this year (Architects and design fees perhaps?).

Paragraph 9.5(v)
Notes there is presently no revenue (day to day) money used to pay off borrowing, but they are using some of their earmarked reserves for capital items this year (£79,000 worth).

Paragraph 9.8
Explains the risks to the capital programme plans. It notes that guessing what they will get for asset sales in a volatile market is nothing more than a guess, and that grants for disabled facilities are related to what Government provides.

Paragraphs 10 and 11
Are about the technicalities of managing Fylde's money. Financial anoraks can argue about these, and whether Mr Finance should assume an interest rate of x or y for next year, but in real life, they don't make much difference.

Paragraph 12
Gives the overall conclusions of the report.

It has the usual, "I've based these on the best available information at the time"health warning. But it also says, in effect, the financial systems at Fylde were so bad when I looked at them, I'm still having to make changes, and the figures I've given you might change by February (which is only next month).  Regular readers will know we've been saying this for some time.

Remember: as the Commissar says, "This is not down to bad management, it's external influences"

Mr Hayes goes on to say "However, the underlying deficit position is expected to remain unchanged"

Paragraph 12.2
Here he explains that he will fix the deficit this year by using "a significant proportion of the Council's overall reserves" (as we have shown in more detail above).

Paragraph 12.3 goes on to explain that although this year's spending is covered, the Council will have to start to think about cutting its cloth according to its means for future years, because there won't be any significant reserves to fall back on. They've all been spent on putting things right for this year.

This sort of prudent housekeeping is a concept that appears wholly alien to our image-obsessed, parliamentary-CV-compiling Commissar.

  • He has allowed his Street Scene officers to overspend this year by £709,000.
  • He has added at least £200,000 onto the salaries and wages bill.
  • He has committed us to £120,000 a year in fixed costs, together with a per capita sum totalling £200,000 paid to Blackpool next year for 'Human Resource' services, and a £70,000 increase in payments for waste disposal - also to Blackpool - for exactly the same level of service,
  • He has spent another £150,000 on "items omitted in original estimates" (i.e. things he forgot to budget for)
  • And he is wasting a fortune on research and consultancies and abortive schemes that Fylde simply doesn't generate the money to pay for. We can't afford big-time spending like this.

That adds up to £1.4 million of nothing more than bad management arising either from gross incompetence or from fraud - the intention to deceive..

And he tries to cover his tracks and con-us by blaming swimming pools, and parks, and theatres.

His plan now is to close these, rather than address the fundamental underlying problems of bad political direction and bad financial management which he, as Leader, now takes sole responsibility for.

This detestable Cabinet system concentrates power into too few, inexperienced, hands. It allows bad news to be hidden from other Councillors and buried by scare-tactic headline spinning.

It will yet be the ruin of Fylde.

Dated:  27 January 2008


To be notified when a new article is published, please email