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English councils poised to make cuts amid loss of commercial income


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English local councils are set to shed thousands of jobs and cut services as they count the cost of lost income from multibillion-pound holdings in office blocks, retail parks, airports and cinemas.

The commercial investments, many acquired in a £7.6bn property spending spree in England over the past four years, were part of councils’ effort to find alternative incomes and protect local services that faced cuts or closure during a decade of deep austerity cuts.

On Monday a group of MPs will warn that some authorities have taken on “extreme” levels of debt to finance their commercial property spree, risking cuts to services and a big bill for local taxpayers. Members of the public accounts committee (PAC) are criticisal of the government for failing to rein in a handful of councils that have each borrowed more than £1bn to build up their property portfolio.

Guardian

What could possibly go wrong when local councils taken on “extreme” levels of debt to finance their commercial property spree?

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This was obvious. Central Govt will also cut funding due to the amount they have spent in this situation.

People  who are unemployed will not have to pay the full council tax level which will also reduce income.  Shops and restaurants will close reducing rate income.  

People are going out less so not using council car parks reducing income.

It never ceases to amaze me and make me chuckle when some people rub their hands with glee at the thought of a major economic disaster.  

They seem bizarrely to think that they will be immune from any such situation.

 

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56 minutes ago, rollover said:

What could possibly go wrong when local councils taken on “extreme” levels of debt to finance their commercial property spree?

Perhaps they should have borrowed to build homes for people.....many homes are now treated as both a place to live, a place to shop and a place to work from....plus a safe entertainment hub.......;)

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5 minutes ago, Gribble said:

They need to cut their pensions for their highest earners. (My pot has gone down by 30%. )Most are useless thick and lazy, Of course will never happen

They would say the perk of the job.....would not have taken the job without all the extra in work benefits, the benefits very many who work now no longer have access to, on top will now have to work longer for any kind of pension.....times we live in.....paid with and live with debt.......tomorrow will have to pay.;)

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1 hour ago, richmondtw said:

 

 

It never ceases to amaze me and make me chuckle when some people rub their hands with glee at the thought of a major economic disaster.  

They seem bizarrely to think that they will be immune from any such situation.

 

Think its not people wishing economic disaster far from it, people are just fed up with the massive rate increases watching it get wasted whilst the local Gov people enrich themselves with salary's far outdoing even our PM. I would imagine all ratepayers would wish local gov just stuck to street maintenance housing schooling etc and their folly into commercial life ends for good and left to the experts.

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1 hour ago, richmondtw said:

They seem bizarrely to think that they will be immune from any such situation.

 

Depends perhaps on what you've done about it to shelter and prosper from it...

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2 hours ago, richmondtw said:

This was obvious. Central Govt will also cut funding due to the amount they have spent in this situation.

People  who are unemployed will not have to pay the full council tax level which will also reduce income.  Shops and restaurants will close reducing rate income.  

People are going out less so not using council car parks reducing income.

It never ceases to amaze me and make me chuckle when some people rub their hands with glee at the thought of a major economic disaster.  

They seem bizarrely to think that they will be immune from any such situation.

 

It's the sheer audacity of these people that leaves me gobsmacked.  For sure the council tax rates will rise to pay for it, but the people who instigate it walk away scott free or worse with a lump sum pay off.  They should be prosecuted and thrown in prison as an example so that next time some lunatic comes up with an idea like that then they think twice about it.  Iceland had the right idea to treat their bankers after the last GFC, we just gave Fred the shred a gold plated pay off.  I wish people in this country would protest more about the accountability of these people. 

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2 hours ago, richmondtw said:

They seem bizarrely to think that they will be immune from any such situation.

To be fair I think many of us do concede there's no free lunch here. 

OTOH having worked (a long long time ago) within the public sector for a year, even I could see there's efficiencies to be made.

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2 hours ago, richmondtw said:

This was obvious. Central Govt will also cut funding due to the amount they have spent in this situation.

People  who are unemployed will not have to pay the full council tax level which will also reduce income.  Shops and restaurants will close reducing rate income.  

People are going out less so not using council car parks reducing income.

It never ceases to amaze me and make me chuckle when some people rub their hands with glee at the thought of a major economic disaster.  

They seem bizarrely to think that they will be immune from any such situation.

 

But houses will cost 50p again like they used to when boomers were young!

 

My guess is that the printing presses will go into hyperspeed and they will just utterly trash the currency to try to keep economic activity going, and give people an illusion of continued wealth (through stellar house prices and inflated salaries).  This means money for everyone, handed out like confetti.

 

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https://www.thescarboroughnews.co.uk/news/people/how-much-scarborough-council-making-purchase-travelodge-hotel-1373668

In 2018, the borough council purchased the 140-room Travelodge in St Nicholas Cliff for £14 million using funds from the Public Works Loan Board.

At the time it said it hoped the investment would help it recoup around £328,000 and, according to a new report released this week, that is exactly what has happened.

In the report, prepared ahead of next Thursday’s Audit Committee meeting, council director Richard Bradley lays out the return on the hotel.

Sooo .. rather than trying to save 300k by getting SBC sick days down a few days, whihc would save loads.

Or quitting any non statutory/legally obliged service, SBC borrow £14m to make ..... 300k/y.

http://nyenquirer.uk/the-travelodge-3-8-million-loss/

Abotu 18months later ... loss of almost 4m. Thats over 10 years ;profit'

No current ctax should be spent on council pensions. They are meant to be fully funded -mainly as its to stop concils doing way too much, employing too many people.

What needs to happen is simple - declare the council bankrupt and default on the pensions, paying 30p in the pound, with a cap of 10k/year.

 

 

 

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Er...yes, but why is anyone surprised? Scarborough Council is the outfit that thought it was a brilliant idea to give the Freedom of the Borough and then name a street after esteemed resident Jimmy Savile...

Edited by Shrink Proof
(to fix lousy punctuation)
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3 hours ago, Sour Mash said:

But houses will cost 50p again like they used to when boomers were young!

 

My guess is that the printing presses will go into hyperspeed and they will just utterly trash the currency to try to keep economic activity going, and give people an illusion of continued wealth (through stellar house prices and inflated salaries).  This means money for everyone, handed out like confetti.

 

There are limits surely.

Are we saying that holders of gilts are just going sit back and get shafted?

HMG may get away with it once but next time they run out of money - about 10 days later - and need to issue more gilts they, or rather we, are going to pay heavily, no?

Following a previous post I think somebody on here pointed out to me that lending to Greece and Argentina is highly profitable. That's why somebody still does it.

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Ah. The public sector bashing and bitterness continues apace on here.

Having worked in both public and private sector, I can confidently say:

1) there is just as much wastage / lazy employees in private as in public; it's just sometimes more well hidden.

2) Yes, councils shouldn't have been investing in property to the extent they did, but mostly it seems driven by the very extreme funding cuts from central government.

3) I don't get the insane jealousy over public sector pensions. The pay in public sector at anything below executive levels is pretty low compared to the private sector for a lot of white collar jobs. The pension helps make up some of the difference.

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  • 2 weeks later...
On 14/07/2020 at 08:40, dpg50000 said:

Ah. The public sector bashing and bitterness continues apace on here.

Having worked in both public and private sector, I can confidently say:

1) there is just as much wastage / lazy employees in private as in public; it's just sometimes more well hidden.

2) Yes, councils shouldn't have been investing in property to the extent they did, but mostly it seems driven by the very extreme funding cuts from central government.

3) I don't get the insane jealousy over public sector pensions. The pay in public sector at anything below executive levels is pretty low compared to the private sector for a lot of white collar jobs. The pension helps make up some of the difference.

1: True

2: The Public Works Board money should only have been used in the council concerned, or for joint investment with neighbouring councils, the reality was some quite small councils using it as a slush fund for questionable investments at the other end of the country.

3: Not sure public sector pay is that bad ONS stats suggest it's pretty similar when you control for experience/qualifications, actually slightly higher on average. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/ispayhigherinthepublicorprivatesector/2017-11-16 Rises are essentially counter cyclical, public sector did better during 2008-13, private sector since, I expect the public sector to do better than the private sector this year.

Public Sector (career average) pensions are worth about a third of salary, employees contribute 10% (range from 7-13ish%) so employer contribution is at least 20%, not a lot of private sector schemes offer that. 

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7 hours ago, Tulip_mania said:

.

3: Not sure public sector pay is that bad ONS stats suggest it's pretty similar when you control for experience/qualifications, actually slightly higher on average. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/ispayhigherinthepublicorprivatesector/2017-11-16 Rises are essentially counter cyclical, public sector did better during 2008-13, private sector since, I expect the public sector to do better than the private sector this year.

Public Sector (career average) pensions are worth about a third of salary, employees contribute 10% (range from 7-13ish%) so employer contribution is at least 20%, not a lot of private sector schemes offer that. 

I work in public sector and have in private in the past.

I don't feel like I am underpaid at all for what I do. In fact the stability and due processes (underpinned by generally effective unions) is a real positive. Lots of moaning from public sector 'lifers' though who seem to think that everyone in the private sector is on 70k.

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Councils have so many tiers of management it's beyond ridiculous. 

I actually feel for those at the coal face, and I know a few, who have to go through umpteen people to have anything approved or decided upon.

Their main focus is on compliance, to be seen to be socially correct, to attend seminars and/or courses on equality and inequality.

The whole a gender is on political correctness, which erodes all ability to achieve anything, with funding eroded and redirected to achieve those objectives.

It's a crazy world we live in.

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On 14/07/2020 at 08:40, dpg50000 said:

Ah. The public sector bashing and bitterness continues apace on here.

Having worked in both public and private sector, I can confidently say:

1) there is just as much wastage / lazy employees in private as in public; it's just sometimes more well hidden.

2) Yes, councils shouldn't have been investing in property to the extent they did, but mostly it seems driven by the very extreme funding cuts from central government.

3) I don't get the insane jealousy over public sector pensions. The pay in public sector at anything below executive levels is pretty low compared to the private sector for a lot of white collar jobs. The pension helps make up some of the difference.

Wrong on all three.

I review the LA and local hospital trust and schools. The sheer nubmer of people doing vague jobs that no longer exist in any form inthe private sector is shocking.

Its impossible to draw any parallel between public and private.  Public sector is still bloated, with ~50% doing jobs that have been eliminated in the private sector.

The 'cuts' were nothing mroe than pulling back Browns splurge. LAs needed to shrink in what they do after expanding massively from 2002.

Public sector pensions are worth around ~30-40% of pay. Its that simple. They are cannot be paid.

In terms of pay for the job, most public sectr jobs pay far higher than private sector. Again, Brown again, who increased public sector pay 'to compete with the private sector' but did not address the pension cost or do the same cyclical job destruvtion that happens i nthe private sector.

 

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On 13/07/2020 at 10:06, Shrink Proof said:

I think this is why the County is being made to looking at becoming a unitary authority with all the district councils abolished. Just one big bailout needed, rather than a dozen not so small ones. I image Woking will be in a similar mess judging by their council funded construction programme.

 

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15 minutes ago, spyguy said:

Wrong on all three.

I review the LA and local hospital trust and schools. The sheer nubmer of people doing vague jobs that no longer exist in any form inthe private sector is shocking.

Its impossible to draw any parallel between public and private.  Public sector is still bloated, with ~50% doing jobs that have been eliminated in the private sector.

The 'cuts' were nothing mroe than pulling back Browns splurge. LAs needed to shrink in what they do after expanding massively from 2002.

Public sector pensions are worth around ~30-40% of pay. Its that simple. They are cannot be paid.

In terms of pay for the job, most public sectr jobs pay far higher than private sector. Again, Brown again, who increased public sector pay 'to compete with the private sector' but did not address the pension cost or do the same cyclical job destruvtion that happens i nthe private sector.

 


I agree 100%.
 

Just look at the local Government level in the scale.

In the levels above Parish/Town Councils (which are just residents opinion groups with tiny budgets) you then have professional and expensive hoards...... District/Borough Councils, County Councils, Local Economic Partnerships, Offices for Police and Crime Commissioners, Regional outposts for Government departments like BIS, and a host of other Quangos. These all have staff, many on £100k plus and mostly doing nothing of much use.

They should consolidate the Districts and LEPs into Unitary Authorities, abolish most of the Regional Departmental outposts and then have the unitary authorities report back into the departments.

 

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