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Tax Con Returns

Tax Con ReturnsWe predict that the final stage of the disgraceful tax con being played on the people of Fylde is about to be unleashed.

We've covered this topic many times since the second counterbalance.

It's been a shameful, deceitful process embarked upon by a travesty of a Council whose Machiavellian aim was always, and only, to bypass the Government's capping limit.

As the chief architect of this proposal admitted at a public meeting "And yes, the agenda here *is* the avoidance of capping"

At its heart is a process that uses gullible Town and Parish councils to money-launder hundreds of thousands of pounds for work that Fylde Borough Council ceases to do.

It began in earnest two years ago - with the introduction of the so called 'Special Expenses' in Lytham St Annes, and Kirkham, and with changes for Parish Councils in the rural part of Fylde. The Parishes raised an additional £300,594 in Council Tax as they took on the maintenance of Parks and Open Spaces in their areas.

Many had expected Fylde Borough Council's spending to fall overall by the amount they started charging.

But it didn't fall. It stayed at £5.062 million - exactly the same figure that FBC would have charged under the old regime.

FBC hid the fact that they had not reduced their spending by introducing the 'Special Expenses' line onto Council Tax bills.

It's right to say that, peddled as a half truth, the line on tax bills that said 'Fylde Borough Council' did go down. But the new line called 'Special Expenses' offset the reduction, and FBC's tax was unchanged overall, despite the gullible Parish Councils having been conned into raising an extra £300,000 in tax.

But Kirkham and St Annes Town Councils didn't enter into the con two years ago.

It would be nice to think this was because they saw through what was going on - and to quite an extent, Queen Elizabeth Oades did see it. She made quite a fuss and demanded more information. But mostly, the absence of both Kirkham and St Annes from the con at that time was because the scale of work in each area was so big that the paperwork to sort it all out couldn't be completed in time.

But now it's back on the agenda.

And this time - if it were possible - it has even more deceit and plotting than before.

We should say here that all the calculations the Borough Council believes are needed for this exercise were completed last month (and probably before that).

There exists a timetable for implementation of this con that started in July 2010 and is due to end in February 2011 when precepts are set. The key remaining meetings are St Annes on the Sea Town Council on 21 December, and FBC's Cabinet on 19th January (which is supposed to approve the item before it goes to Council as part of the 2011/12 budget))

But these details have, and still are, being withheld from the public - we suspect until the last minute just before Christmas to minimise potential for opposition, and in St Annes, they are being considered in secret meetings where the press and public are excluded, and no minutes are published.

If it was such a good idea, why would you need to hide it from public scrutiny? We'd all be cheering if it was a 'good thing''

In this matter, the Borough Council has employed consultants to do what has been, in effect, a sales pitch, to St Annes and Kirkham Town Councils.

If it was such a good idea, why would you need to do that?

We are appalled that St Annes Town Councillors have allowed themselves to be party to secret discussions on this matter, and they only plan to make the information available when the agenda for their meeting on 20th December is published.

Town Councils should be the servant of the people, not Stazi-style holders of secret meetings that hide the truth. Secrecy like this distances Councils from the public and creates distrust.

It may be that St Annes might have been told the documents they were given by the Borough Council's consultant were 'confidential' This might be right, or it might have been a convenient reason to keep the matter from public view.

Either way, we would have refused receipt of documents provided under those terms.

We abhor secrecy like this. It shows that Councillors involved in the decision to close the meeting to public scrutiny do not believe the public can be trusted to know what they, as a public body, are discussing.

Counterbalance readers aren't used to being treated in this way, and, as usual, we can produce - at least the approximate figures that are now under discussion - for our readers.

It's a very convoluted story and difficult to explain, so you'll have to bear with us.

Furthermore, in this case, simplification will diminish accuracy - so with that caveat, we will begin with the simple explanation. We will go into more detail in a future article.

There are actually four interlinked cons being played.

THE FIRST CON TRICK
is to persuade Kirkham and St Annes Town Councils to accept the cost of maintaining a number of parks and open spaces.

Just like the Parish Councils were conned two years ago, we assert this will result in an increased charge to Fylde taxpayers, and we confidently predict that Fylde Borough Council will not reduce its overall spending.

If the plan is accepted by the Town Councils, then in round numbers, we believe this first con-trick will raise another £300,000 or so in Council tax from local taxpayers.

Kirkham Town Council's precept would rise from around £25,000 to £175,000 (or put another way, from about £11 to £76 per band 'D' property on the Council tax)

St Anne's on the Sea Town Council's precept would increase from its current £95,000 to around £330,000 (i.e. from about £9 to £32 per band 'D' property on the Council tax)

So why would anyone be so stupid as to vote for an idea like that??

Take a deep breath and stay with us Dear Reader: it's time for the second and most convoluted part of the con.

THE SECOND CON TRICK
In Kirkham, almost all the open spaces have been earmarked for transfer, but in St Annes only the smaller areas are involved. The bigger more important areas (Ashton Gardens, Promenade Gardens, Town Centre Gardens) are going to be retained in the Borough Council's ownership and probably classed as "Strategic Assets" together with some staff known as the 'Parks Development Team'.

This was heralded in 'Tax Con Backfires' where there's also more background. You can click here to see the section that shows the first plans for 'Strategic Assets' back in January 2010.

The case will be made that these (and probably spaces in Lytham - like Lowther Gardens and Fairhaven Lake and so on) are not 'local assets' and should not be charged just to St Annes or Lytham taxpayers (as they have been for the last two years under the Special Expenses regime). We predict that this year they will be re-classified once again as borough-wide assets (as they always had been since FBC was formed - except for the last two years).

The effect of this will be to re-spread the cost of them over every taxpayer in Fylde, (not just over Lytham and St Annes residents who alone have paid for them since the introduction of Special Expenses two years ago).

This means two things. All parishes - (who thought they were getting a good deal when they assume responsibility for funding 'their' open spaces), are about to be hit with something like 30% of the cost of running the big parks and open spaces in Lytham and St Annes (That sum could be either 30% of £500,000 for St Annes or 30% of £850,000 if Lytham's 'Strategic Areas' areas are included as well).

We've done a rough and dirty calculation, and we estimate this could add (in round figures per band D property throughout Fylde) between £29 and £39 if the Strategic Assets in both Lytham and St Annes are included, or between £17 and £22 if only the areas in St Annes are charged and Lytham retains its Special Expenses.

A lot depends what FBC decide to do about Lytham, (where there is no parish council), and whether St Annes and Kirkham both agree to an 'Asset Transfer' or only one of them does.

So the assessments per band D property should be regarded as a rough guide only.

Assuming a change is made next year, then in the rural parishes there will be an increase in FBC's tax as the 30% (probably between £17 and £39) is charged to them. Otherwise, life will carry on as normal.

In Kirkham, the £56 Special Expenses would be removed from tax bills, and be replaced by the Town Council's precept increase of about £64 (It's probably higher because FBC overspent this year and they expect the contract to cost the same next year, so a higher precept is needed). Then, the 30% of Strategic Asset costs (probably between £17 and £39) would be added in as well. So Kirkham looks to be in for something of a hiding if they agree.

In St Annes, the £70 Special Expenses will go, and be replaced by an additional precept from St Annes Town Council of roughly £21 for that part of the open spaces they would look after, together with the 30% charge (probably between £17 and £39)  for Strategic Assets. So in all probability, the cost for St Annes residents will seem to be lower than at present.

The position with Lytham is unclear, but it is likely to be similar to St Annes.

So in the coastal strip, the 'reduction' from abolishing Special Expenses and re-spreading the cost over a wider taxbase will mask the increase from that arises from the first con trick, if/when St Annes On The Sea Town Council increases its precept..

However, this 'saving' will be no more than a simple reversal of the situation from two years ago when most rural Parishes were foolish enough to agree to the con that seemed to give them individual savings and had Lytham St Annes residents see much higher charges lumped on them as 'Special Expenses'.

Now it looks as though St Annes (and probably Lytham) will be making a 'saving', as the Special Expenses charges disappear, and are re-apportioned over everyone in Fylde again.

But there won't be any saving overall. You can put your shirt on that. Not least because none of the above takes account of the fact that FBC are expected to spend any potential 'savings' they could make on other services.

Like last time, we confidently predict the costs will increase overall if Kirkham and St Annes Town Councils are foolish enough to accept the "Asset (actually Liability) Transfer" on the terms proposed.

We calculate that about £300,000 will be taken in extra tax from Fylde residents if St Annes and Kirkham Town Councils allow themselves to be used as money-launderers to side-step the Government's cap on Borough Council spending..

But undoubtedly there will be winners and losers in the second con trick. Those in Lytham and St Annes will probably seem to win, and those in the rural parishes will lose.

However, the con hasn't yet ended, and that's why we've said those in St Annes will only seem to win.

Time for the third part of the con

THE THIRD CON TRICK
The great argument made to the Parishes two years ago was that doing the work themselves meant they could use local, cheaper contractors and offer better value to their taxpayers. In part, this was true. Some parishes did make savings on payments to contractors rather than paying via FBC's bloated overheads.

But not this time.

We understand that both Kirkham and St Annes have been told they will have to take on the grounds maintenance contract and its staff which the Borough Council set up and currently operates. So there will be limited scope to make any savings.

As well as direct overheads, that contract has inbuilt secondary overheads that contribute to town hall services that are peripheral to the actual open spaces work. Again we understand that St Annes and Kirkham are being told that they must accept these overheads as part of the contract they take on..

Furthermore, because the land areas here are bigger than the small rural parishes, a number of permanent staff will be designated as being 'within' the contract will become liable for rights under something usually shortened to 'TUPE transfer'. In essence this means staff will transfer to the employment of a Town Council on protected terms and conditions, which again removes the possibility of savings being made on contract costs.

In addition, we hear that Fylde is insisting that the Town Councils - because they lack experience in contract management - must pay for the contract management staff at Fylde to oversee the contract that they themselves will be running. (Together with the overheads that attach to contract management staff as well)

If you can follow the logic here Dear Reader, this means that the cost of everything - exactly as at present with FBC - will be borne by the Town Council.

They will also have the risks associated with operating the contract at a surplus or deficit, whilst the Borough Council's staff keep a check on whether the Town Council's (new) employees perform satisfactorily within the contract.

Oh, and the Town Councils must pay the cost of keeping themselves checked-up-on.      Almost forgot that little gem.

The second (very loud) word we would use in these circumstances is 'off'    We can't bring ourselves to write the first word.

There are a host of other things as well. For example, it's quite likely that the contract will have an inbuilt inflationary increase applied to it each year. If, as is likely, this is the Retail Price Index which currently stands at just short of 5% (and is expected to rise in spring), how will a small town council manage to pay a 5% increase (that it is contractually obliged to meet) when it is capped?

We could go on for a dozen pages with similar issues, but space forbids.


THE FOURTH CON TRICK
The fourth part of the con is (thankfully) easier to understand.

At present, all the costs of open space maintenance in Lytham, St Annes and Kirkham are paid by Fylde Borough Council. They might call them 'Special Expenses' on the tax demands, but these bills are still met by the Borough Council as part of the net £11 million or so that they spend every year.

Fylde gets its £11 million roughly half from Council Tax and the other half from the Government - which arrives either as National Non Domestic Rates (the old Business rate which is now run from Whitehall), or as actual Government Grants to local Councils.

It's true that the Government payments have been reducing over the years. In 2004 it was about 60% of FBC's income. Today it is a bit over 50% and next year - after St Eric's Budget cut this week - it will probably be a bit less than 50%. But for the comparison we're about to make, an assumption of 50% will do.

Readers will see that because of this, when Fylde Borough Council spends £1 on open spaces maintenance, it only costs local taxpayers 50p. That's because the Government stumps up the other 50p.

But Town and Parish Councils are not eligible for the Government payments, so when they take on maintenance, they have to find the full £1 from local taxpayers.

It follows that, if the work is done by a Town or Parish Council that raises its own precept, it has to raise twice the amount from local taxpayers just to be as cost effective as the Borough Council so far as local taxpayers are concerned.

This is impossible.

The Borough Council has skilfully managed to hide this fact from the arguments, but it remains the case. Not only do they want to dump the spending onto Town and Parish Councils without reducing what they spend overall, they have also failed to pass on the 50% of the money they get from the Government.

So in effect you can look at it like this: £300,000 extra was raised by parish precepts two years ago. Plus, (if Kirkham and St Annes are foolish enough to fall into the trap being set for them,) this year another £300,000 or so will be raised, giving £600,000 overall raised in extra parish tax. But the value of this to the Borough Council is DOUBLED because of the Government Grant, so their spending power over the three years will have increased by around £1.2 million.

Now Dear Reader, you can see why this con - performed mostly on the Town and Parish Councils, but also on the people of Fylde - has been worthwhile for FBC.

You can also see why the Borough Council - chiefly the Ken Lee / John Coombes administration, but now being followed by the present administration - is willing to selectively distort facts; hold meetings behind closed doors; avoid telling the whole truth, and deceive its residents.

SO WHAT HAPPENS NOW?
Well, for the immediate future, the scene shifts away from FBC to the Town Councils of St Annes and Kirkham.

The question is whether they will be taken in by the con - and take on the assets?

They are being fed powerful arguments to do so by FBC:

  • You would be in control of your own destiny if you owned the land;
  • If you don't take them we may not be able to afford to maintain them anyway and some might have to be sold off;
  • this will be your last chance because after next year it's expected that Parish Councils will also be subject to capping rules;
  • and after next year the public will be able to call for referenda on things that councils do.
  • So it's now or never, all or nothing.

If it was such a good deal, why on earth would FBC's consultant need to use such arguments and threats?

We hear that Kirkham TC are concerned about lack of detail and transparency and are asking many questions. Good job too.

St Annes appears to be potentially more problematic. We get the sense they are being driven toward a yes.

We have heard it said that Cllrs Angela Jacques and her sister Cllr Christine Ackeroyd have spoken strongly in favour of the transfer. Note that they are also Borough Councillors and as such, they potentially stand to generate substantial additional spending for the Borough Council of which they are also a part.

We also hear that Cllrs Arnold and Jill Sumner have expressed serious reservations about accepting the assets on the present terms.

So if, (as is planned in FBC's timetable for this con-trick), on Tuesday 21st December, these folk vote as per their prior indications, these four councillors would effectively 'cancel each other out' and leave the decision to be made by Cllr Bob Fielding, Cllr Barbara Mackenzie and the Chairman, Cllr Tony Ford.

It's just possible they will come to the same conclusion as Kirkham and want more information.

That would be our minimum position because they would be inheriting an existing contract that would leave them little or no room to make savings. It would be a contract with an annual value that is more than double their entire total spending, and from which, an overspend (the like of which has been seen in recent years) could swamp their entire budget, resulting in the need to levy a supplementary precept partway through a year.

This is a serious risk.

In Kirkham, (as alluded to earlier) this year's precept raised just short of £129,000.

The latest projected cost by FBC for the work is just short of £160,000.

That means the contract run by FBC has overspent by around £30,000.

Kirkham Town Council's total spending for this year (on its normal other services) is £26,000.

So whilst the £30,000 overspend can be absorbed by FBC (and probably be offset against savings elsewhere), the overspend alone is greater than the whole of Kirkham Town Council's budget. No wonder they seem to be more cautions than St Annes. It looks like they have a better grip on the figures.

So far as we can ascertain, St Annes Town Council has had no independent professional advice, and they have no idea about running a grounds maintenance contract.

It they take on the work, they will be entirely dependent on the contract management skills of a Borough Council employee whose services they will have to pay for, but whose taskmaster will remain FBC - and we've seen the cons that FBC are prepared to undertake to save themselves money.

So we'd hope for a resounding NO to taking on the costs of open space maintenance on the terms proposed, but we'd settle for a deferment so there can be much more open and transparent discussion, and a proper understanding, both by the Town Council and the people whose vote councillors will be seeking in May, as to the detailed implications of such a transfer.

The political implications of this matter are worth a thought too. The ruling group's powerbase is Lytham, and St Annes. Outside this the independent councillors are the majority. Perhaps it is just a coincidence that the financial effect of these changes (apparently lower tax in Lytham St Annes and higher tax in the rural area) would appear on Council tax demands about a month or so before the election in May.

One final sting in the tail.  If it all goes according to FBC's plan, the changeover would happen on 1 April next year.

Any gardener knows that's the start of the busiest time of year. Transferring a grounds maintenance contract to inexperienced new owners at that time if year is a recipe for disaster. That's just another risk that Town Councillors asking to be re-elected in May will need to consider. It the grass is so long it can hide Tigers, they'll find folk are not best pleased.

The St Annes Town Council meeting is on Tuesday, 21st December at St. Margaretís Church Centre, St Leonardís Road West, St Anneís and it starts at 7.00pm. There's a public session at the start where anyone can just turn up and have a say, so if you'd like to make our views known you can, or if you just want to hear the discussion and see who votes for and against, you can attend and sit in the public gallery at the back of the room.

We'll bring you the result in case you can't attend.

Dated:    16 December 2010


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