Thursday, 25 May 2017

Back to the future at Cornwall Council

On Tuesday Cllr Andrew Mitchell proposed Cllr Adam Paynter to lead the 'Lib Dem/ Independent Coalition of Losers at County Hall.

Cllr Paynter (Lib Dem Leader) and Cllr Andrew Mitchell (former Lib Dem and now Independent Leader) are the rump of the old Lib Dem administration which ran Cornwall County Council until 2009.

Cllr Paynter was the Executive Member for the Environment (his brief included the signing of the controversial contract for the incinerator) and Cllr Mitchell was the Executive Member for the Economy.

During that administration:

The Council borrowed £400m on horrendous terms for periods of up to 60 years;

Cornwall's money was invested in the Icelandic banks;

The airport closed in November 2008 without notice; and

The Lib Dems tried to foist a new (Lib Dem ish) logo on the Council when it became a unitary authority.

When the new councillors turned up in June 2009 the CEO warned us that things were so bad the

Council could end up in Government intervention (thankfully avoided other than for a shortish period in relation to children's services).

Cllr Mitchell remarked this week that he and Cllr Paynter had been Councillors for 17? years.  Perhaps most of their adult lives.

It just seems a bit regressive to go back to those 'heady' Lib Dem days of 2009 and before.

All the (46) Conservative councillors, who have been forced into opposition by the Coalition of Losers, can do right now is ask searching questions as to what goes on at County Hall.  On day 1 they forced the Lib Dem/Indys to bin the European Union Culture bid, saving up to £536k.

Better Leisure for who exactly?

It is being reported that the group to which the Lib Dem/Indy administration at County Hall offloaded the Leisure Centres ('Better Leisure') (group CEO on £200k from memory) plans to reduce the pay of Leisure Centre staff.

I wonder if Cllr Adam Paynter, the new Council Leader, who led the project to outsource Leisure Centres, will try to wash his hands of this?

It sits very badly with the Lib Dems/Indy's recent recruitment of  additional senior Council staff on up to £140k a year.  Will his new Head of Communications and PR (joint overall cost £200k+ a year) be able to explain this to us I wonder?

Tuesday, 23 May 2017

Can Cornwall Council make the Pandora more perfect?

Yesterday my hubby and I were out walking our dog and had a drink at the Pandora.

A man from West Country Rivers Trust asked if we would participate in a survey they were doing for Cornwall Council. It would take 5 or 10 minutes.

So we did. Obviously, I appreciate that this man is just doing his job but I am bound to ask the Council what is going on.

The questions meandered around issues such as why did we come to the Pandora , what did we do when we got there, what time of day did we tend to come and what would make it nicer for us. Frankly, I think it is pretty idyllic as it is and alarm bells rang at the idea of the Council stepping in.

 Would we like better footpaths or, perhaps, more dog bins, he asked?

I explained that I had been a Cornwall Councillor for 8 years. The way to get dog bins under the last administration was by looking in existing dog bins and if not much poo, councillors might apply to have them moved to another place more in need. This saved the cost of a dog bin and £150 a year to empty it.

This survey must be a hang over from the previous Indy/ Lib Dem administration as we do not yet have a new one. I am struggling to connect it with reality. I think we need new people at the top in charge of dog bins (and a lot else).

It is clear today that we are not about to get it.

Monday, 22 May 2017

Vote Independent, get Lib Dem?

 'Independent' councillors at Cornwall Council have three choices if they want to be independent. They can join:

1. No administration and vote on each issue as they think fit;

2. The administration of the largest group, on the basis that it has the most councillors and so should produce a stable administration for Cornwall; or

3. A 'rainbow' coalition to reflect the views of as many voters as possible.

Instead it appears that they are doing a deal to create a coalition of losers with the Lib Dems.

I cannot say that I am surprised.

In week 1 of negotiations they fielded a team that excluded key Independent members.  Do I think Andrew Mitchell, the Leader of the Independent Group, was ever going to allow his future to be determined by councillors who had only just been elected? They also briefed that they thought Cllr John Keeling (the Conservative Group Leader) was not up to leading the Council due to health issues.

In week 2, after Cllr Keeling had been replaced at the Group's AGM by Cllr Seeva, they said they could not work with the Conservatives as they did not trust them.  This suggested a touching concern for 'Tories' not previously seen and frankly incredible from (former Lib Dem) Cllr Andrew Mitchell and (current Lib Dem Leader), Cllr Paynter.

There is still time for Independents to be independent. I hope they are.

My fear is that they will put up their hands for another Indy/Lib Dem coalition.  So more more vanity projects like the EU Culture Bid. It seems that if you vote Independent,  you will get Lib Dem.

Thursday, 4 May 2017

Standing Down

I am not standing today for Cornwall Council.

It has been a tremendous privilege to represent Truro and indeed Cornwall over the last 8 years. I am extremely grateful for all the support I have received. At least some of the challenge has been valuable too!

I wish all those standing today for Cornwall Council and for the town and parishes too, my very best wishes. As you would expect I advise you to vote Conservative.


Monday, 1 May 2017

Royal Bank of Scotland; LOBOs

Sir Howard Davies
Royal Bank of Scotland

Dear Sir Howard,

I am a Cornwall Councillor and I currently shadow the Finance Portfolio. My background is I am a retired partner from one of the largest London law firms. So, I am reasonably familiar with complex financial products. I am not standing in the local elections on 4th May but I will brief and assist my successor on this important matter.

It came to my attention that the former Cornwall County Council (now Cornwall Council) had entered into a very large number of so called Lender Option Borrower Option ('LOBO') debts up to 2009. Serious questions have been raised as to whether these debts represented value for money for the Council and whether members of the County Council understood their terms and the risks undertaken.

For example, there was a Channel 4 Dispatches programme on this. ('How Councils Blow Your Millions').  Further, apart from the programme and the concerns that I have expressed from my own investigations, objections have now been made to the Council's accounts. The objector alleges that the LOBOs are such poor value for money, they are 'irrational' and possibly illegal.

According to the response to a Freedom of Information request the only advice the Council received on these transactions was from the in house Treasury team.  I have to say that in all my dealings with the members of the Council it seems clear to me that they do not understand that the Council generally secured a small reduction in its introductory interest rate (the so called 'teaser rate') for these loans (as against Public Works Loan Board fixed rates- then around 4% ) but in turn exposed the Council to the risk of paying up to (in the case of the loans from RBS) about 8% for up to 60 years. If officers understood this, there is no evidence that knowledge was shared with members.

The two 'inverse floater' LOBOs entered in to with RBS give rise to particular concerns around understanding by councillors and value for money.  Overall, the Council was betting that interest rates would climb quickly and steeply and stay high.  Then it would benefit from a low interest rate as the interest rate on the loan goes down as market rates rise.  However, if this produced an unattractive rate for RBS then it was only exposed until the next option date (generally every five years) when it could reset the interest rate.

On the other hand, if rates stayed lower for longer then RBS would not call for a rate reset. In that case, the Council could be exposed for a period of up to the duration of these loans (60 years).

So, the financially sophisticated bank took a 5 year risk horizon and perhaps hedged out its exposure but the Council took a 60 year risk horizon and did not (and possibly could not except at a huge cost).  I note that the liability under these loans is currently valued by the Council at £164m (as opposed to their face value of £85m).

I have not been told the precise interest rate currently payable on the RBS inverse floaters but I understand that it is around 6.2%. The difference of over £1m between that and the Council's average long term borrowing cost from the Public Works Loan Board would, for example, pay for the maintenance of all public toilets in Cornwall every year. The Council says it cannot afford to maintain these and is trying to transfer them to others or close them.

This matter is now being examined by the Council's auditors, Grant Thornton, in conjunction with the National Audit Office in an investigation that is likely to take a year.

I understand from the Council that Barclays, who had a similar size of portfolios of LOBOs with Cornwall Council (but not 'inverse floaters') has recently volunteered to 'detoxify' their loans.

I noticed in the press recently that the mis-selling of mortgage backed securities by RBS is still an ongoing issue. In that context, £85m of loans to Cornwall Council is a relatively small matter to RBS but it is a huge issue to Cornwall.

May I urge you please to include us (on a without prejudice basis) in your 'detoxification' exercise so that the proud Royal Bank of Scotland may have a fresh start and we can fund our vital public services.

Yours Sincerely,

Fiona Ferguson
Cornwall Councillor