Dec 2007 07

Sentinelthumb_2Stoke and Staffordshire newspaper, The Sentinel, gave the West Midlands TaxPayers’ Alliance some great coverage on Tuesday as their own findings about Stoke-On-Trent Council spin coincided with the TPA’s council spending report.

We found that Stoke has increased publicity spending by 279% over the last ten years, and The Sentinel said that press office expenditure is now hitting over £23,000-per-month.

This is how the lowest scoring council in the country is spending their local taxpayers’ money, diverting funds into positive promotion rather than into failing services.

Ten councillors were asked their opinion on these figures and only three could see any benefits to this huge increase, and the three members of the public questioned all felt that this money could’ve gone towards improving services.

Ironically, the public image of Stoke-On-Trent City Council just gets steadily worse and it’s a simple fact that this will not be rectified by patronising local residents with propaganda aimed at raising their profile without making a concerted effort to raise their game.

It makes it worse that taxpayers in Stoke are shelling out to have the wool pulled over their eyes. Once again, Stoke-On-Trent Council are slapping a Ferrari badge on a Lada and expecting the electorate to buy it.

Many councillors have spoken about the lamentable state of Stoke’s finances, their services also seem to reflect this, so that this council can tend so conscientiously to the superficialities of promotion, rather than reaching for their buckets to bail this council out of trouble, shows an intrinsic lack of consideration and a real propensity toward bad management.

Dec 2007 07

When discussing the education system’s poor performance it is common to focus on the costs to the economy, the children concerned and their chance of making their way in the world or even the waste of taxpayers’ money thrown at an underperforming system.  However, the education system’s failure also wastes huge amounts of the pupil’s time.  Take this story, from the Telegraph:

"Children are making virtually no progress in mathematics in the first three years of secondary education, a major study showed yesterday.

Even the brightest pupils struggle between the ages of 11 and 14 as they "plateau" after leaving primary school.

Some children may even be going backwards – raising fresh concerns over the way they are taught."

Now, I have it on good authority than an 11 to 14 year old will have 4 to 5 hours of Maths in each school week.  A school year has around 34 weeks in it.  That means that wasting three years of education means that each pupil is wasting around 459 hours; perhaps parents worrying about their children wasting time in front of the television have chosen the wrong target for their ire?

Our education system needs real reform so that we can end this waste.

Dec 2007 07

Carbon Trust meets the real world: why businesses don’t implement its carbon reduction measures
The National Audit Office recently reported on the Carbon Trust (here), and this week the Public Accounts Committee questioned officials from the Trust and Defra.
The Carbon Trust likes to describe itself as a private company, but in reality, virtually all its funds come from taxpayers, at a cost of £103.2m pa.
It’s high-flown aim is to help achieve the government’s carbon reduction targets. But in practice that boils down to little more than pestering commercial businesses to switch off their lights, hiring hundreds of external consultants at a cost of £45m pa to do the same thing, spending £9m pa on glossy ad campaigns, making interest free loans for carbon reduction projects, and providing subsidised equity funding from the public purse (aka picking winners in green energy technology).
The Trust’s main activity so far has comprised giving advice to companies and public sector bodies on how they should cut carbon emissions. But only 12% of big energy users have actually taken up the offer. And even among those that have, most have ignored/rejected most of the Trust’s recommendations.

That’s probably because the advice largely consists of the blindingly obvious- eg they "helped" Manchester United FC by suggesting they turn off the lights in the stands at night. Brilliant. No wonder 20 per cent of customers say they would have made exactly the same changes without any Trust involvement whatsover, and 68 per cent would have made at least some of the same changes.

Does anyone actually pay for such advice? Hardly. The Trust’s consultancy services are free to "customers", and while they reckon the "market" for advice is growing by 20% pa, the NAO says "there have been few new entrants to the market… growth is likely to reflect the Carbon Trust’s own market position"

So how do we know we’re getting anything at all for our £103.2m? We have to trust the Trust’s own calculations of how much carbon reduction its advice generates. And as the NAO notes: "Measuring impact in carbon terms is a relatively new area of expertise, robust methodologies for which are still being developed". Quite.

In a highly unsual step, the Trust has also set up a private equity company. A member of the PAC noted that this was the first public sector private equity fund he’d ever come across. The idea was to raise a £75m fund from private investors, leveraging the Trust’s expertise and contacts. That failed, but there are major question-marks over even considering using a public sector resource in this way. Specifically, a large chunk of the rewards would have gone to employees.

According to the NAO: "CT Investment Partners LLP 75 per cent of which is owned by Carbon Trust Fund Management Holdings Limited (which is a wholly owned subsidiary of the Carbon Trust) and 25 per cent by Clean Tech Venture Partners (a partnership owned by two employees of CT Investment Partners). As part of the partnership arrangements, it was agreed that any future carried interest would be split 75 per cent to Clean Tech Venture Partners and 25 per cent to Carbon Trust Fund Management Holdings Limited. Clean Tech Venture Partners paid £50,000 for its interest in CT Investment Partners."

Get the picture? Those two lucky employees have put up just £50 grand, and on a multi-million tax funded pot, would have received 75% of all the Partnership”s "carried interest" returns (which would be 20% of all fund returns above a hurdle return of 6% pa). The head of the Carbon Trust told the PAC that a total £10m fund might generate a 3x return in three years, suggesting that was fine. But on our calculation that would leave the two employees with a return of £2.7m: nearly 300% pa. And on the same basis, a £75m fund would have generated a £20m return. Nice deal if you can get it.

This all looks like another grotesque waste of public money. The Trust talks the talk of "customer offer" and equity returns, but it’s producing zilch pay-off in terms of cold hard cash. And while they theorise about government intervention being necessary to correct "market failure", with oil at $100 per barrel, we reckon the market will take care of energy efficiency a lot more dependably than a bloated half-baked quango.

We were disappointed the PAC let off Defra and the Trust so easily. It may be only £100 mill, but a hundred here, a hundred there…. etc.

Dec 2007 07

Southwark Council have had a nightmare couple of weeks. Last week they admitted that almost every single one of their departments had gone over budget and predicted above-inflation council tax rises for the foreseeable future. After that bad news, this week the TPA’s first Council Spending Uncovered paper revealed that they spend £5million a year on publicity.

Whilst the Council obviously has serious problems in its policies and management, it is encouraging that they resisted the temptation to deny the publicity figure, or to claim the spending was justified (unlike some other councils, but more on those disgraceful examples in later posts). Today’s South London Press reports that:

Councillor Toby Eckersley, executive member for finance, said he was calling for a review on the publicity spending.

He said: "In light of this, all areas of discretionary expenditure need to be looked at very closely."

If a review is being launched, and they genuinely have taken on board the urgent need to cut out their unnecessary expenditure, this is good news. TPA doesn’t just exist to complain; we raise these concerns about waste because we want things to be put right. I hope that Cllr Eckersley’s review goes ahead and finds savings for the hard-pressed taxpayers of Southwark. I’m sure they will thank him for it.

It’s an encouraging sign that TPA’s research is not just reaching and informing the public, but is helping politicians realise that things must change. The figure for Southwark’s publicity spend, which almost equals the amount spent by the GLA, is a shocking one – Cllr Eckersley is to be congratulated for admitting that and, hopefully, deciding to do something about it.

Dec 2007 07

A telling fact came out in answer to a parliamentary question from John Leech MP the other day. He asked Caroline Flint, Minister for Employment, how many Job Centre Plus staff had been sacked for not turning up to work in the last year.

Whilst it would have been safe to assume there would be at least a few – every organisation gets bad apples once in a while – I don’t think anyone could have predicted the real answer: 497.

Jobcentre_2That is a lot. If you consider that these people’s profession was to advise people on how to both get and keep jobs, it is quite worrying. If you then take into account that in the public sector it is more difficult to get the sack than in the private sector, it appears that JobCentre Plus have a serious problem on their hands.

Not only is it worrying for JCP, it is also less than satisfactory for jobseekers and the taxpayer.

If there are so many job advisers who can’t even turn up to work enough to keep their own job, how on earth are the unemployed people they are supposed to assist meant to manage it? That is damaging to the prospects of jobseekers, damaging to their dependents and damaging to wider society. The individual and social harm done by long-term benefit dependency is well-documented, so it is in all our interests for this service to be as effective as possible.

Not only does the taxpayer foot the bill for those who remain on unemployment benefit, this shocking figure also represent an added recruitment bill. In 2006-07, JBC recruited 2,770 people. That means that 18% of all new recruits to JobCentres were replacements for the ineffective staff who had been fired – recruits with all the attendant costs of advertising and training.

Yet again, it seems the mismanagement of our services is letting down the taxpayer and those the services are meant to help.

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