Letter: We Still Need More Clarity on GBC’s Finances

Published on: 30 Jul, 2023
Updated on: 30 Jul, 2023

From Ben Paton

In response to: I Still Have Some Questions About GBC’s Budget

There has been little or no effort to disclose the council’s true financial position to the public. Without disclosure, no one can make informed decisions.

Tweets and one-sentence conclusions detract rather than add.

It is not helpful to state, for example, that the council owns £1.1 billion in assets without explaining exactly what those assets are. Nor is it accurate to state that the problems have arisen over the past two years.

Looking back to some now very old published accounts, one can see that the council ‘owns’ some 5,000 council houses. But the ‘ownership’ of these assets is rather special. The council may be the legal owner. But it holds them in trust and, as the chief finance officer said at the last full council meeting, it is not free to sell them.

These assets are valued on an ‘Existing Use Value’ (EUV) as ‘Social Housing’. In the 2013 accounts, the EUV was c £358 million. But the open market vacant possession value was put down at £1 billion (on April 1, 2013).

The vacant possession value is entirely academic as the council has no legal right to sell these assets and the public would be outraged if it tried.

Council housing is held within a separate set of accounts within the overall GBC accounts – the Housing Revenue Account. The council house assets in 2013 contributed a surplus to council revenues. In general, one would expect this portfolio to be self-funding.

In 2013 the council had long-term borrowings of £208 million and investment properties of £84 million.

The council’s financial problems appear to derive from its adventures into projects it has funded with debt – that must be serviced – but that generate little or no commensurate income. The Weyside Urban Village is in that category. To date it has absorbed over £80 million of debt – costing, say, £4 million pa in interest costs.

How will the council recover this ‘investment’? The project is subject to many intrinsic risks – such as Thames Water’s role in removing and replacing the existing sewage works. The site is next to a river in a floodplain. Does the project make ecological and environmental sense?

Plainly the council has not considered that disclosure and explanation is a priority. Otherwise, it might have taken the trouble (as a minimum) to audit and publish its accounts.