Bennett: What got us into 'this mess' is the fraud, errors and mismanagement of the corrupt and still out-of-control financial sector

Summary of Green Party reactions to the Autumn Statement

·         Caroline Lucas MP on Tax avoidance announcement: ‘This is a small step in right direction - but we urgently need full tax transparency’ 
·         Green Party Leader Natalie Bennett: Problems with Autumn Statement start at foundations - deficit cannot be blamed on government spending and welfare 
·         Lucas on cold homes: No excuse left for the Government’s killer complacency on the cold homes 
·         Lucas on Fracking sovereign wealth fund: ‘It’s a cynical gimmick. The best thing for the economy and the environment is super energy efficiency, properly insulated homes and investment  in renewables,’
·         Lucas on Austerity: ‘The people did not cause the financial crash and they should not be punished for it. It’s time to expose the lie is that there is no alternative to austerity’ 

THE Government has shown what is akin to ‘killer complacency’ on cold homes in its Autumn Statement, Caroline Lucas MP has said.

While she welcomed some announcements, she said the Government’s energy policies had been ‘defined by chaos and contradictions’.

There was no excuse left for the Government’s killer complacency on the cold homes she said.

Lucas, Co-Chair of the All-Party Fuel Poverty and Energy Efficiency Group, slammed news that none of the Treasury’s planned £100 billion investment in infrastructure over the next Parliament would be allocated to measures to tackle fuel poverty, noting that allocating just two per cent of the Government’s current annual £45 billion infrastructure budget to housing retrofit would allow half a million low income homes to be made highly energy efficient every year.

The Government had displayed ‘wilful ignorance of the overwhelming fiscal, human and environmental benefits of energy efficiency* and the consequences for families and the NHS are plain to see’, she said.

She added:

“People are freezing in their homes, and it’s preventable. Cold homes cost lives and cost our NHS – to the tune of well over £1bn a year. The UK’s woefully draughty and energy-inefficient housing stock is an urgentinfrastructure priority. It makes no economic sense to ignore, but it’s exactly what the Government is doing. The Government has grossly failed the public today.

“A nationwide super energy-efficiency drive would lower household energy bills,hugely contribute to job creation and the economy, as well as being essential for carbon targets. It’s a win-win – the Government’s continued inaction flies in the face of all common sense.”

Meanwhile, responding to the Statement, Leader of The Green Party of England and Wales, Natalie Bennett, said:

 "The many problems with this Autumn Statement start with its foundations. Osborne is continuing the demonstrably false claim that our deficit problems can be blamed on government spending and welfare.

"But what got us into 'this mess' is the fraud, errors and mismanagement of the corrupt and still out-of-control financial sector.

"But to admit that would require George Osborne to explain why after more than four years in government he has not delivered the urgent action needed is to tackle the still out-of-control sector, the still too-big-to-fail banks and its hulking dominance of our imbalanced economy that sucks capital and skilled people into the City and away from places where they could be helping to improve the wellbeing of all."

On the Government’s flood defence announcement, Lucas said:

“Families have been devastated by flooding and investment in proper flood protection is critical. But the Government is offering a disingenuous, feel-good fix – dig just a little, and it’s perfectly clear that this spending falls far short of what’s actually necessary to protect homes and businesses from increased flood risk due to climate change. We also need prevention – we need concrete action and investment to tackle the roots of the issue, including climate change. This is just another example of the Government’s persistent failure to climate-proof the flooding budget.” 

Tax avoidance
Lucas said: 

 “The extent of tax avoidance, tax evasion and unpaid tax in the UK economy is staggering. The Government’s apathetic policies on corporate tax avoidance have smacked of elitist double standards. Corporate tax dodgers are allowed to get away with not paying their fair share in society, while workers and small businesses are left paying the price. Today’s announcement is a small step in right direction, but if we’re serious about stamping out tax avoidance, then we urgently need full tax transparency.”

Small business

The Leader of The Green Party of England and Wales, Natalie Bennett, said:

 "Measures to help small business are in principle welcome. Another way in which we desperately need to rebalance our economy is away from the tax-dodging, low-paying multinationals back towards strong local economies built around small businesses and cooperatives.

"But the plaster of business rate relief won't heal the gaping wound caused by parasitical multinationals. We need to make the multinationals not only pay their taxes - and it is good to see rhetoric on this, although past experience says the detail of action will need careful examination - but also pay their staff decently and give them stable, secure jobs. And we need to stop big business stamping all over small business suppliers with unacceptable payment terms, and ensure their operations obey the law." 

Lucas welcomed the Chancellor’s acknowledgement that the business rates system wasn’t working but said that whilst a review is welcome news, we also need swift, positive action now.
She said:

 “We need policies with teeth - bold plans that deliver real change for small businesses on the ground.  The vast majority of businesses in my constituency are small or micro-level, and they’re are the backbone of our local economy. As well as forming part of community life, they provide valuable services and jobs. The business owners I meet in Brighton Pavilion tell me they’re struggling with business rates. This Government says it’s pro small business, so that needs to be reflected in its policies.

“We need the local business rates relief to be expanded to benefit more small businesses, who are being crippled by high rents and high rates. The Government has dragged its feet on this for years– and a review is welcome. But Brighton’s businesses need action, now.” 

Fracking

Lucas said: 

‘The Fracking sovereign wealth fund is a cynical gimmick. The best thing for the economy and the environment is super energy efficiency, properly insulated homes and investment in renewables.’

Brent Cabinet will meet next Monday afternoon

One of the many changes instituted by the newly elected Brent Labour adminstration was a change to the schedule of meetings.  The Cabinet, which replaces the Executive, now holds alternate meetings during the day.

The next Cabinet meeing is at 2pm on Monday July 21st at the Board Room, Brent Civic Centre.

The Agenda includes changes to recycling which will see weekly collections of recyclables and the introduction of a £40 annual charge for green waste collection, adoption of the Housing Strategy, and vital updates on the Council's financial position.

The full reports pack can be down-loaded HERE and the Agenda is below:

Further funding cuts unsustainable London Councils tell Government

As Brent Council puts the finishing touches to its budget and Brighton moves towards a referendum on increasing Council Tax to preserve Adult Social Care, London Councils issued the following press release which highlights the unsustainability of further funding cuts.

London Councils has issued a stark warning in its submission to the government’s consultation on the Local Government Finance Settlement 2014/15 that year-on-year cuts to funding are unsustainable.

The response, submitted on Wednesday, raises significant concerns about the long-term sustainability of the local government finance system in London as well as the lack of transparency and coherence in the government’s proposals.

Chair of London Councils, Mayor Jules Pipe, said:

There is nothing to reassure Londoners in this settlement. London is facing the double whammy of disproportionately high cuts along with dramatic increases in demand and costs on multiple levels. By the end of 2015/16 we will have seen a reduction of 44 per cent in central government funding and we have worked flat out to protect and, where possible, improve local services.

London boroughs are now being required to shoulder a disproportionately large share of the overall reduction to local government compared to elsewhere in the country and the government must explain to Londoners why this is the case.

Without significant changes to the way cuts are applied many boroughs will quickly reach an unsustainable position, and that will affect local services.

The response highlights a number of specific concerns. Using the government’s concept of Spending Power per dwelling, it shows that London local government is shouldering a significant part of the government’s deficit reduction programme.

Between 2010/11 and 2015/16 the average reduction in spending power per dwelling in England is £300. In London, the reduction per dwelling was £544.00. This is 81 per cent higher than the national average. In 2014/15 and 2015/16 alone, London will face an overall reduction in spending power per dwelling of £294 compared to the England average of £117. (1)

In addition, unlike councils across the rest of England, London boroughs will lose a proportion of the New Homes Bonus, worth £70 million, which funds the additional costs that fall on local services when new homes are built in a borough.

Mayor Pipe added:

For the past two years the settlement has been announced extremely late. While there may be a number of reasons for this, and it may be helpful for central government, it does little to provide hard-pressed boroughs with the certainty and assurance needed to set budgets and council tax for the following financial year.

View the consultation response submission

Crumbs for Londoners - Darren Johnson on the Mayor's housing policy

The Mayor expects 80% of new housing to be in these 33 regeneration areas

 Darren Johnson, the Green Assembly Member,  has published a thoroughly researched report on the London Mayor's approach to the housing crisis and the construction of  luxury blocks, such as those at Willesden Green Library, which Boris Johnson  supports as part of the solution.  The full report is available HERE

The Willesden Green apartments are being advertised in Singapore with the selling point that they have no affordable housing or key workers on site. Yesterday it was revealed that flats in Stratford are being adverised in a similar way.

Darren Johnson writes:

It is much easier for the big developers behind these projects to get the finance from banks if they can sell lots of housing off-plan (before it is built). Investor landlords are quite happy to buy off-plan and have little difficulty in securing the cash or mortgage.By putting the money in up front they have, in the Mayor’s words,“helped bring forward housing development”. The Mayor estimates that one third of all buyers of new homes are from overseas, and that two thirds of all new homes are sold to investors

.

Whether it is a Londoner looking for a buy-to-let investment,a pension fund investing in new private rented housing,or an overseas investor exploiting the exchange rates, the Mayor is a champion of anything that gets housing built.

After looking at a series of case studies and examination of the evidence Johnson concludes:

National government policy has put local councillors, planning officers and residents in a difficult spot. They are constrained by a free market dogma that says we just need developers to build more homes, and that ignores the potential for other approaches.


The law of supply and demand works with things we consume. If the price of TVs is high, produce more TVs to meet demand and prices will fall. But private developers are very unlikely to meet the demand for housing. If the supply of TVs doesn’t increase and prices stay high then demand should fall off.


But when house prices rise people see an opportunity to make money so demand can keep rising, especially if investors from around the world join the feast.


The Government is encouraging buy-to-let mortgages with tax breaks; helping people take out unaffordable mortgages with Help to Buy; encouraging overseas investors to buy new homes off plan.


The Mayor supports these policies because he says they increase supply, but of course they are also increasing demand.In fact, they are probably more successful at increasing demand than they are at increasing supply, so they are actually making the problem worse.


Councils and residents can’t do very much about this.


But the Mayor of London is in a unique position to advocate bold changes to housing policy. He has recently argued that stamp duty revenue in London should be devolved to City Hall, giving him a large budget for affordable housing.


He could go further and call for a housing policy that:


1. constrains demand by putting controls or extra taxes on overseas investors and second home owners, or by putting a tax on all land values to dampen speculation and stop developers sitting on large, unused land banks
2. gives councils, housing associations and co-operatives the money and powers to build affordable homes that stay affordable forever whatever the market is doing, instead of expecting the private market to build them
3. puts ordinary people in a better position to weather the crisis while it is tackled, for example with continental-style stabilising rent controls and protections for private tenants, ideas backed by the majority of the Assembly in its own reviews of housing and its majority support for the Let Down campaign

Comments can be sent to: darren.johnson@london.gov.uk or the researcher tom.chance@london.gov.uk

E-ACT scandal should make Brent Council pause for thought on academies issue

As the Ark academies chain announces its takeover of Kensal Rise Primary School, renaming it Ark Franklin Primary Academy and appointing a new headteacher fresh from Dubai, LINK there is news of another academy chain, E-ACT,  which runs the Crest Girls' and Boys' academies in Neasden.

I would hope that the report below will give headteachers, governing bodies and councillors pause for thought before rushing into academy conversions or supporting forced academies. Conversions are often undertaken for financial reasons with governing bodies and headteachers saying they would let pupils down if they did not go for the extra academy funding - instead much of it may end up lining the pockets of the sponsors through high salaries for the chain bosses or 'extravagant expenses'.

This report is from the BBC:

A leading academy chain has been criticised for widespread financial irregularities in an official report. The Education Funding Agency report highlights a culture of "extravagant" expenses, "prestige" venues and first class travel at the E-ACT group. The report obtained by the Times Educational Supplement and seen by BBC News adds that E-ACT spent public money on unapproved consultancy fees. The group currently runs 31 state-funded free-schools and academies around England that have opted out of local authority control.

E-ACT was set up in July 2009 as an independent educational charity and company with the principal purpose of "establishing, maintaining, managing and developing schools colleges and academies". Its director general, Sir Bruce Liddington, resigned last month. The report found that E-ACT's systems of internal financial control were "weak" and lacking "rigour" - and noted that the governance of the group was "unusual". In particular it notes that "the controls around expenses for trustees are weak".

"Expenses claims and use of corporate credit cards indicate a culture involving prestige venues, large drinks bills, business lunches and first class travel, all funded from public monies," says the report. The report says the director general's expenses may not have been "subject to proper scrutiny". "Expenses claims and card payments by senior managers in E-ACT have occasionally stretched the concepts of propriety and value for money. Controls have been lax and some payments have tended to extravagance... however we found no evidence of fraud."

The report also highlights a wider "culture of acceptance of non-compliance with E-ACT's own policies for awarding contracts." The investigation found that hundreds of thousands of pounds of public money was spent by E-ACT on purchases that were not in line with its own spending policies. Many purchases were made by Sir Bruce himself. "Our review of the director general's cost centre indicates that £361,000 has been spent on consultancy fees from 2008-9 with £237,000 of this not having an order," note the authors.

The report also raises concerns that trustees on the E-ACT board were paid for consultancy work, stressing that "payment to trustees is unusual in the charitable sector, where the basic position is that trustees should not benefit personally from their position so that they can exercise independent scrutiny over the charity's operations." ”Around half of the 13 current board members have or have in the past had contracts for service or services provided." The investigation came after the group's auditors KPMG raised concerns that its financial administration was "playing catch-up" with its rapid expansion.

In particular the report notes that some of the group's financial practices were inappropriate for an organisation with a turnover of many millions of pounds and that the boundary between E-ACT and its money-making subsidiary E-ACT Enterprises Limited (EEL) was blurred, with some EEL expenses being paid out of public money.

E-ACT stresses that it has taken swift action to address the report's concerns. Chairwoman Ann Limb, who joined the group a year ago, said: "We have overhauled both the governance and the culture of E-ACT to ensure that this can never happen again. As well as the departure of the director general, the finance director and two trustees have also left the organisation. E-ACT is about educational excellence and the changes we have made will ensure we have operational excellence to support that.

"We are implementing a robust action plan which addresses all concerns raised and are working closely with the Education Funding Agency to ensure these changes are embedded throughout the organisation."

A Department for Education spokeswoman said "Any misuse of public money meant for schools is completely unacceptable. Academies cannot hide from their responsibilities. All their accounts must be externally audited and they are held to account by the Education Funding Agency so any issues of impropriety are immediately investigated.

"That is exactly why the EFA has written to E-ACT requiring them to take swift action to improve financial management, control and governance. We are monitoring the situation closely and will take any further action necessary."

Major concerns on academy funding and oversight raised by Public Accounts Committee

 We are sceptical that the department has sufficient resources to properly 

oversee the expanding programme

The BBC reported yesterday that the House of Commons Public Accounts Committee has issued a critical report on academies financing:

Committee chairman Margaret Hodge said inefficient funding systems and poor cost control had driven up the cost of the programme.

"Of the £8.3 billion spent on academies from April 2010 to March 2012, some £1 billion was an additional cost which had to be met by diverting money from other departmental budgets.
"Some of this money had previously been earmarked to support schools struggling with difficult challenges and circumstances. £350 million of the extra £1 billion represented extra expenditure that was never recovered from local authorities."

Part of the overspend will be due to the increase from about 200 open academies in April 2010 to more than 2,886 in March 2012.

But the committee warns the "oversight of academies has had to play catch-up with the rapid growth in academy numbers", and heard concerns of money being allocated twice in some cases.

The report also notes that much of the extra costs of the programme were met out of existing budgets - most notably £95m from a fund previously earmarked for improving underperforming schools.

But it warns that because so many converters were high-performing schools, those that might have needed the extra financial help more had arguably lost out.

The report also warns that the present system makes it hard for the department to prove academies are not receiving more money than they should. Ministers are still unable to convince those interested that academies do not get more money than regular schools.

It says central government may be "too distant to oversee individual academies effectively", and suggests that things will get tougher as the programme expands further in the future.

"We are sceptical that the department has sufficient resources to properly oversee the expanding programme, especially as schools now joining are less high-performing and may require greater oversight and scrutiny."
It notes that the number of central staff overseeing academies' finance and assurance has doubled since May 2010, while the number of academies has increased tenfold.

It points to some "serious cases of governance failure and financial impropriety in academies" that went undetected by the department's own monitoring.

It warns that oversight systems have not kept pace with academy numbers and expresses concern that only now - more than two years into the expansion programme - has the department started to address value-for-money issues.
'
The committee also says there is too little public information about finances at individual academy level.

It calls on the department to publish school level expenditure, including per-pupil funding, for academies and to subject them to the same level of public scrutiny as experienced by regular state schools.

A plethora of Brent budget discussions the week after next - but will they make any difference?

The dates for the Brent Budget 'Discussions' (note NOT 'Consultations') have now been sent out in an invitation letter  (see below). The Labour Group is discussing the budget on the evening of Monday February 4th and the Finance and Budget Overview and Scrutiny Committee will be discussing it at 7.30pm on Tuesday February 5th.  It is not clear where that leaves the February 7th meeting in terms of influencing the budget but presumably more details should be available by then following the earlier meetings

Budget Discussion – Invitation to a Public Meeting

Cllr Muhammed Butt, Leader of Brent Council would like to invite you to one of two public meetings about Brent Council’s budget proposals for the forthcoming year.

Both meetings will take place in Brent Town Hall.

Date	Time	Venue	Chair
Mon 4th Feb	2.30 to 4.30pm	Committee Rooms 1, 2 and 3.	Cllr Aslam Choudry
Thur 7th Feb	7.00 to 9.00pm	Paul Daisley Hall.	Cllr James Denselow

Everyone is welcome to attend. These meetings will give you an opportunity to question and raise issues of concern with Cllr Butt and members of the Council’s executive.

You can also hear about the difficult choices facing local government in the current economic climate and Council’s proposals to continue to maintain high quality services for our residents.

I do hope you be able to attend one of these meetings? If you need any further information please do not hesitate to contact me.

Kindest regards

Owen Thomson

Community Engagement Team

Customer & Community Engagement

Brent Council

Tel: 020 8937 1055

The background to Brent's 2013-14 budget

Mike Bowden. Assistant Director of Finance for Brent Council, gave a PowerPoint presentation to the Budget and Finance Overview and Scrutiny Committee on Thursday setting out the background to Brent's 2013-14 Budget. This does not appear to be available on the council website so I have extracted some of the key points below.

For clarity any explanations or comments from me are in italics (ie words in italics are not Mike Bowden's responsibility).

BUDGET MONITORING 2012/13

• Quarter 1 forecast was overspend of £2m
• Latest forecast is small underspend of £0.1m
• Departments are on track to deliver within budgets
• Need strong foundations to manage risks from 2013/14 onwards (this implies radical actions including cuts and possibly council tax rise)

 NON-EARMARKED RESERVES

Target for 2013/14 of £12m

• Reserves at 31/3/12                £10.3m
• Budgeted increase 12/13           £1.0m
• Projected increase in 13/.14       £0.7m

External audit - acknowledged improved financial resilience and recommended that we should should continue to build level of reserves (It was revealed more than a year ago that Brent had some of the lowest reserves in London and Audit Commission followed this up with recommendation for increase)

BUDGET GAP:

Medium Term Financial Projections:

• 2013/14      (£0.2m)
• 2014/15        £2.5m
• 2015/16        £7.5m

BUDGET GAP - July 2012

Assumptions for 2013/14 included

• Council tax increase 3.5% (it now looks as if Eric Pickles will trigger local referenda for any increase over 2%. Any rise will impact on the poor as well as meaning more people default on payment)
• Existing planned savings of £7m are delivered
• Cost avoidance included through one council projects
• New Council Tax Support Scheme would meet shortfall in Council Tax Benefit Funding (scheme going before Special Council Meeting on December 10th)

UPDATE ON 2013/14 BUDGET

• Government Autumn Statement will not now  be delivered until 5th December 2012
• Provision Local Government Settlement will not be known until 20th December 2012 ?? (subject to confirmation)
• Impact on council's  decision making timetable
• Government's regular announcements - uncertainty over true impacts

Developments

• Council tax free - New one off grant offered by Government
• Top -slicing - EIG (Early Intervention Grant) £4m (includes provision for 2 year olds but see Muhammed Butt's statement LINK) Academies£7m (partly to council and partly to schools)
• Census - £4m (due to increase in Brent's population but it is not certain we will get it)
• Council Tax Surplus - £1.8m (one-off) (Council more successful in collection this year - uncertainty that will continue after council tax benefit changes and increasing economic pressure on families).

Uncertainties and risks

• Further changes by central government
• Housing Benefit subsidy regime/Temporary Accommodation (shift of costs of housing crisis to local government)
• One Council Savings (presumably whether they are successful)
• Review of pressures (housing, adult and children's social care)
• Opportunities for additional savings  (I interpret this as 'What's left to cut without causing damage or merely shifting pressures within the council's budget)

COUNCIL TAX

Temporary council tax freeze spending:
2011/12   £2.6m for 4 years
2012/13   £2.6m for 1 year
2013/14   £0.8m for 2 years

Ongoing income foregone of 3 year tax freeze = c£7m per annum (what will lost if council puts up Council Tax. Previous reports by Clive Deaphy (ex Director of Finance) referred to the need to strengthen the council's Council Tax base)

KEY ISSUES FOR 2013-14

• Late settlement = decision making later than usual
• Need to maintian focus on long-term position > Recognise that funding will continue to diminish > Fundamental change to Council's approach and services required (this again implies cuts, decision to no longer deliver some services, more out-sourcing etc. Bowden commented that a 'resilience budget' was required and the council needed to ensure that short-term decision did not affect long-term prospects)
• Flexible approach to ensure capability to withstand risks
• Opportunities for tactical savings that do not undemine future prospects
• New commitments to be funded by offsetting savings

______________________________

Readers will see that there are plenty of issues to raise questions about here and hence the public's disappointment at the Scrutiny Committee that councillors failed to ask searching questions. Labour councillors had probably been briefed already so thought it unnecessary to question in public. Conservative councillors did attend and Lib Dem Alison Hopkins was in the chair.  However Cllr Brown did not attend and nor did his Lib Dem alternates Cllr Green or Lorber. There were no questions about how the compressed timetable would now include consultation with the public, community organisations and trades unions. Councillors asked only one question of Muhammed Butt who, along with Cllr Ruth Moker, specifically attended to answer questions after Bowden's presentation.

BUDGET DECISION MAKING TIMETABLE

Before funding announcement:

19th November - Full Council - first reading debate

10th December  - Executive - council tax surplus

10th December -  Special Council - council tax support scheme

After funding announcement

22nd January 2013 - General Purposes Committee - Council tax base - business rate base
5th February - Budget and Finance Overview and Scrutiny Committee

11th February 2013 - Executive - council tax level recommendation
25th February 2013 - Full Council

Brent Council warns governors on headteachers' pay and procurement

Brent Council has written to governors, clerks to governor bodies and school leadership teams warniong them of the need to comply with regulations on the pay of headteachers.

Clive Heaphy, Director of Finance and Corporate Services, wrotes that the Council's recent survey has:

...revealed that a significant proportion of (Brent) Governing Bodies have approved salaries for head teachers that exceeds the levels permitted by the school's head teacher group as defined by the school's pupil numbers...

He goes on to say that schools that have set an Indiivudal School Range above the headteacher groups are:

 ...on average remunerating headteachers in excess of an additional 10% per annum - much more in many cases. While some schools have provided acceptable reasons for paying above the cap, the review has demonstrated that a large number of Governing Bodies have allowed incremental increases in head teacher pay either without good reasons or  factors outside the  criteria set out in the School Teachers Pay and Conditions guidance.

 Heaphy says if the Governing Body becomes aware that this is the situation it is incumbent on them to take appropriate action to remedy the situation within a reasonable period of time.

He concludes:

I apologise if this letter is direct but the situation within Brent schools is a serious one and I need to be sure as the person ultimately responsible for all school spending in the Borough, that Governors, Clerks and Leadership Teams are fully aware of the framework under which you operate.

Last week Heaphy and the Brent Audit Team experienced close questioning at the Children and Families Overview and Scrutiny Committee over this issue and the problem of excessive and exploitative procurement and leasing agreements entered into by schools.

Clive Heaphy frankly told the meeting that he was not confident of schools' capacity to take action on these issues. Stating that he was 'not happy with the state of things'  he said he would continue to put pressure on schools.In future he would be requiring local authority schools to make an annual return on headteacher pay. Brent had no statutory authority over academies or free schools.

Cllr Michal Pavey asked if this amounted to a admission that before these actions the authority's monitoring had been 'inadequate'. Heaphy denied this stating that other local authorities, uncovering similar issues, were coming to Brent for advice. Lesley Gouldbourne for the teacher associations welcomed the 'very full' report given to the Committee and congratulated the council on its proactive approach. She warned if the impact of financial mismanagement on both on schools' reputations and on taking money away from children's learning resources. Gouldbourne asked for more resources to be devoted to auditing but Cllr Mary Arnold (lead member for Children and Families) said Brent already devoted more hours to school audits than other boroughs.

Several councillors declared an interest at the beginning of the meeting as they were governors of various schools in the borough. Cllr Michael Pavey was particularly forensic asking if the headteacher's responsibility to advise governors on the regulations about headteacher pay was not in itself a conflict of interest.

It emerged that no secondary school and only half of Brent's primary schools now use Brent Council's  in-house payroll system and so early clues to over-renumeration could not be spotted through HR officers' monitoring when glaring discrepancies, such as a head of a small school being paid more than the head of a much larger one, became apparent.

Additionally in the Copland case, as a  grant maintained school it had appointed its own auditors and checks had been much less in-depth than those of the Brent Audit Team. The Copland case, involving additional payments, was different from the headteacher pay scale issue. Members expressed concern that, as more schools became academies. or free schools were set up, the possibility of further such cases in terms of both pay and procurement would increase.

The second major issue, procurement and leasing,  produced more searching questions from the Committee members. They were told that a small number of schools had entered arrangements with Finance Companies and that the amount involved was 'very material' in a small number of schools. In five schools the amounts were such that it could affect their financial future.Brent Council was taking group legal action on behalf of a number of schools over leasing arrangements in a process that could take 10 months.

Asked about what action the Council could take on such issues officers replied that when schools went into deficit the Council would agree a Deficit Reduction Plan requiring the school to return to a balanced budget within a reasonable period.. Challenged on what action could be taken if a governing body were uncooperative or did not agree with what had been requested Simon Lane explained that the Council did have powers but these were draconian, employing a sledgehammer to crack a nut. The governing body could be removed but this needed the permission of the Secretary of State,  or delegated financial powers taken away from the governing body with the council running the finances. The schools could challenge the latter and  the council didn't  have the resources to run the budget themselves.

There was further discussion about financial training for governors and whether that should me mandatory, at least for chairs, and on recruiting governors with financial expertise. No information was produced on how many governors had taken advantage of the financial training on offer and whether all schools had been involved.

In terms of a time line Simon Lane from the Audit Team said that headteacher pay should be regularised within 3 months; the legal case resolved in 10 months and that individual school investigations were ongoing but an update would be produced in six months.

It was good to see a Scruitiny Commiitee doing its job thoroughly. I  fact time ran out and the very important issue of Children's Safeguarding was postponed until a later meeting. 

Serious concerns must remain over financial mismanagement, particularly as council staffing is reduced, schools become more autonomous, and out-sourcing become more prevalent. I think what concerns me most about this is that these issues take way from the main function of headteachers, governors and schools: improving teaching and the learning of pupils.

Brent Reserves the Lowest in London

Figures released last week show that Brent Council's reserves (as a proportion of revenue expenditure) are the lowest  in London, although Harrow's are only slightly higher. The reserves are used for contingencies and also put aside for major projects. They are a necessary part of good financial management. Brent will be in trouble if sudden unexpected expenditure is required but at the same time the Borough faces damaging cuts.

Eric Pickles, Communities Secretary, used the large reserves held by some councils as a stick with which to beat them while anti-cuts campaigner cited excessive reserves as a reason why some councils need not  make drastic reductions in services.

Brent's low reserves show why the council was trawling through the carry forwards of individual schools with a view to clawing back non-earmarked surpluses.

These are the figures for Brent and neighbouring councils.

Borough	Non-school reserves £m	Revenue Expenditure £m	Non-school reserves as % of revenue expenditure
Barnet	43.9	538.9	8.1
Brent	13.3	548.8	2.4
Camden	96.8	474.5	20.4
Ealing	53.4	589.9	9.1
Hammersmith & F	28.3	331.7	8.5
Harrow	10.5	359.1	2.9
Westminster	37.0	418.2	8.9