Opinion: ‘Why is Peterborough city council’s finance so poor?’

Councillor Shaz Nawaz, Labour Group leader on Peterborough City Council writes...

Sunday, 11th July 2021, 1:30 pm
Finance
Finance

I am an accountant by profession. One of the most difficult conversations I sometimes have with clients is one which spells out that their financial position is no longer viable.

I go through the figures with them, and then present them with the options. Liquidation of businesses usually represents the eradication of a dream. It’s the absolute last resort. Sometimes there are glimmers of the future in these events: the most successful entrepreneurs in my experience learn from what hasn’t worked and use that information to make better decisions next time.

It’s not quite the same with local government. If government is no longer financially viable, there is nothing to replace it: the same people, the same needs still exist. A bankrupt government can lead to chaos: livelihoods are lost, crime can increase, families lose much needed support, the city suffers.

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The council has a huge challenge ahead and the alarm bells are ringing.

Our officers have worked extremely hard and they deserve all the necessary support. I know it can’t be easy for them in light of all the mistakes made by the Conservative administration. A recent report by Ernst and Young auditors indicated that we should be very concerned about our city’s financial viability. We are presently carrying a £37.5 million budget deficit.

Central government has granted us a capitalisation loan package which makes up some of the difference, but a loan is not a gift. It has to be repaid.

The auditors raised the matter of the £23.4 million loan to Empower Community Management LLP, who were tasked with installing solar panels in the city. As is widely known, Empower went bust. It is estimated that the company’s assets are worth only £15.4 million if sold immediately. Altogether, this is far more money than most of us will ever see in our lifetime, and it’s gone.

Furthermore, the report’s author stated to councillors: “If you are asking me am I seriously concerned about your financial position, then yes, I am.”

The Conservatives have run the council for over 20 years. They have no-one to blame for this state of affairs other than themselves. They had free rein to decide what to emphasise and de-prioritise. They could cut and they could spend. For the past 11 years, central government has been led by their compatriots. There is nowhere to hide from this record and the reckoning it portents. They may bluster, they may spin yarns about how they are facing into problems: surely, however, there comes a point when the fluff of rhetoric falls away and we have to look at cold hard facts.

Their financial record is an indication of nothing less than lackadaisical, incompetent management. We deserved better.

All this could end tomorrow: let’s keep in mind that technically our city is in a “No Overall Control” position. The Conservatives are there at the pleasure of another party. I don’t see how it can be in anyone’s interest to keep them there any longer.

That can either happen if all opposition groups unite to form a coalition or it can happen at the next local elections in May 2022. Either way, I know people will soon see the poor management of the Conservatives. It’s only a matter of time.