‘We Don’t Know Where We’re Going’ – Scilly’s Councillors Face Up To Looming Financial Crisis

The Council of the Isles of Scilly is facing a financial crisis because it doesn’t know how much it is spending, what it has got in its savings account and its councillors are unable to make decisions on what to do next.

Those were the views expressed at last week’s Full Council meeting, where the authority learned from its independent financial watchdog that its reserves, the savings account for rainy day costs, are half as much as it thought.

At the meeting, several members stated that they had been in the dark about the Council’s spending for most of the year, despite repeated demands to its officers to make the latest accounts available.

Cllr Gaz O’Neill told the meeting, “If we don’t know where we are, we don’t know where we’re going.”

Cllr O’Neill expressed frustration at a lack of progress on the budgets. “We’ve been asking to look at all the options for at least a year and here we still are. Everything we’ve been doing for at least the last year to rectify this has been completely and utterly ineffective,” said Gaz.

That view was echoed by Cllr Colin Daly. “We’ve just not taken it seriously and urgently enough. We’re the ones at fault for not doing that,” he told councillors.

Council Vice Chairman, Steve Sims, asked, “How can we make decisions going forward when we don’t know what the budget situation is? We all really hope that we get as rock solid a position as we can on 26th January because we have a lot of decisions to make.”

But it’s hard to understand why Cllr Sims doesn’t have that information. As the name implies, monitoring the Council’s financial position is the responsibility of the Finance, Audit and Scrutiny Committee, which Cllr Sims chairs.

And Cllr Fran Grottick pointed out that his committee hadn’t met since July this year.

It also emerged at the Full Council meeting that the senior management had, until at least September, been pushing back on requests by the external auditor to do a full month-by-month cash flow analysis, so they know exactly what they’re spending and when.

The management’s response, printed in the auditors report, was: “The Council appreciates the additional benefits of Cash Flow forecasting in such a way however doesn’t believe that at present times this presents best use of its resources.”

Cllr Grottick said she was, “picking up a bit of tension here” and felt the request was “a very sensible idea.”

The auditor told Cllr Grottick that it’s “absolutely crucial” for the Council to review its cash flow and senior management had now agreed to do this.

But Council Chairman Amanda Martin felt the authority should have been borrowing its way out of the situation sooner.

Cllr Martin said: “It’s fair to say for many years we agreed as a council to borrow prudentially, but we haven’t actually done that. We’ve dipped into reserves each time. So we’ve depleted our reserves rather than borrow at low interest, as we should have been doing. We’ve backed ourselves into a financial corner.”

We’ll find out early in the New Year whether councillors can get out of that corner on their own or whether they’ll need outside help.



13 Responses to ‘We Don’t Know Where We’re Going’ – Scilly’s Councillors Face Up To Looming Financial Crisis

  1. John Allsop December 20, 2016 at 3:24 pm

    Amanda Martin seems to think borrowing is a way out. But unfortunatly it has to be paid back. Then there is taking money from the reserve fund, thats ok provciding the reserve fund is not needed for an emergency that appeared out of no where. If a big emergency arrived what can be done without sufficient funds. It should be clear that no more can be spent than what comes in. We have to provide what is really needed as there is a very limited tax base.

  2. Totally disillusioned December 16, 2016 at 8:20 pm

    Linguine, I wholeheartedly agree about the colossal waste of public money over the past few years on needless developments. But remember, these were necessary to justify the jobs and huge salaries of senior officers – some of whom have found refuge here from posts with the RDA on the mainland. It is very sad that Councillors have not reined them in and saved our Council from possible bankruptcy.

  3. Enquirer December 14, 2016 at 4:05 pm

    Apologies my previous comment was cut short! The new now permanent CEO was appointed having no LA experience. He appears to have completely undermined the re-organisation that was being implemented added more senior management and instead of saving money has ended up with a massively higher salary bill and achieved nothing. The Council is still in a mess, perhaps even a worse one, finances are out of control, grand schemes implemented have been disastrous, with outstanding expenditure overspends still liable to be placed at the Councils door.

    With finances out of control, an Airport building not fit for purpose, an Enterprise Centre virtually tenant less the School in melt down and the Council Officers refusing to supply Councillors with necessary up to date information. There is not even an apology from the Council Chairman or CEO. The other Councillors utter platitudes but achieve nothing. One who tried to get answers was forced out of office by the pursuit of a complaint against him by a staff member, which was not upheld but restrictions were still placed on his approaching staff!

    A good start to sorting this whole mess out would be the resignation of the CEO and the Council Chairman, which I know will not happen but really needs to.

  4. Enquirer December 14, 2016 at 3:41 pm

    When Mr Hygate “left” the CEO post an interim CEO was brought in. He was experienced in Local Authority management, had just been interim of Plymouth Council, which he turned around and he set in place a re-organisation of the Council and it’s work force. He was replaced by the present, permanent, CEO who had no experience of the

  5. An Accountant December 14, 2016 at 10:58 am

    Regardless of what has happened in the past the fact is that the accounts prepared by the council were wrong by a huge amount.Writing as an accountant/auditor to get a set of accounts so wrong must be bordering on negligence. Yes councillors should probably have more of a grip of the situation but they also need to ask why the numbers are so badly wrong in the first place.

    • Jonny Exile December 14, 2016 at 12:48 pm

      If you’ve not already seen it there’s a helpful breakdown of the errors that GT found in the original accounts in the link below – page 26 (of the whole bundle). There are in fact four huge errors, two of which compensate for each other.

      http://committees.scilly.gov.uk/documents/b50001453/Statement%20of%20Accounts%20Update%2006th-Dec-2016%2013.30%20FULL%20COUNCIL.pdf?T=9

      • An Accountant December 14, 2016 at 1:25 pm

        Thanks – hadn’t looked for that yet.

    • An Accountant December 15, 2016 at 9:39 am

      Have now looked at the various reports. The sad thing is that many of the issues raised are fairly basic accounting. I can’t understand why these have not been spotted earlier – most should be obvious to someone with experience of accounting or running a business.

      Of course the significant additional time and meetings required from Grant Thornton will understandably lead to a significantly higher audit fee – money which would be much better spent locally.

      • Jonny Exile December 15, 2016 at 5:49 pm

        Yes exactly, very basic things: debtors control not agreeing to the list of balances (by £500k); large balances on suspense accounts; bank accounts not reconciled; and reliance on Excel reports produced independently of and not directly relating back to their accounting system. To make things worse it looks very much like nobody fessed up to GT about the problems and asked for help in advance of the audit. Instead they had GT waste their time and my money finding the problems themselves. Somebody correct me if I’m wrong, but I get the impression that their audit team rocked up on the IOS and then had to pull out because nothing was ready.

        • Paul Linge December 15, 2016 at 10:53 pm

          Not exactly the slick well run ship of state..

  6. Mike James December 13, 2016 at 10:27 pm

    A quick search on ScillyToday brings up a story published in March 2013:

    http://www.scillytoday.com/2013/09/18/council-still-working-on-credible-budget-deficit-plan/

    The then Director of Finance Peter Lawrence Roberts warned councillors that the money would run out by 2016. Looks like he was pretty spot on with his prediction. It also shows how long this council has had to sort their finances out with numerous warnings. Absolutely shocking really. Councillors, what have you been doing in this time?

  7. Linguine December 13, 2016 at 9:34 pm

    I fear the Linguist was in full blame aversion mode, I know she doesn’t do sums but perhaps she should also steer clear of financial retro soothsaying?
    What if councillors had avoided both raiding the reserves or borrowing and instead worked to require their officers held close to budgets and demanded proper, effective oversight.
    What if the council had avoided the worst of its excesses in the shape of ludicrous Enterprise Centres, Airport terminals with colander roofs, needless profligate school building demolitions and rudderless, vacuous reorganisations.
    In blissful arrogant ignorance you just presumed you knew better, ‘wrong’.
    Madam you have sown the wind now reap the whirlwind.

  8. E Nuff December 13, 2016 at 9:28 pm

    Cllr Martin, what was wrong with the Council living within its means? You have failed. Go!
    Allow someone who knows how to lead to assume your role before this Council is taken from these islands and we are treated as just another village in the far South West.