Scilly’s Council Will Need Temporary Loan To Pay Staff And Suppliers

Scilly’s Council has been issued with a formal notice to improve its financial controls and has been told it will need to borrow up to £3m to pay its staff and suppliers in the last two months of the financial year.

It will also use surplus money raised by services such as the airport and water to stay solvent.

The so-called section 24 notice issued by the authority’s external auditors, Grant Thornton, under the Local Audit and Accountability Act 2014, says the Council will need to reassess the level of their General Fund Reserves, essentially their savings account, improve financial reporting to members and review their financial strategy for the next few years.

A copy of the recommendations will also be sent to the Secretary of State for Local Government.

At last week’s Full Council meeting, members received a finalised copy of the authority’s accounts for the financial year that ended last March. They were supposed to have been signed off in September, but the external auditors found anomalies, which required further investigation.

As feared, they showed that the Council’s reserves stood at around £0.5m – half of what they thought they had.

But the bad news didn’t end there. New Chief Finance Officer, Andy Brown, told councillors that an analysis of their spending for the current financial year shows that they’ll be overspent again by another £494,000 and that will need to come from reserves.

That means there’s likely to be just £42,000 left in the authority’s reserves by the end of March.

Because council tax is collected for only the first ten months of the year, with no income for the last two, the council could effectively run out of usable cash for its day-to-day running.

They’ll need to borrow up to £3m to cover their costs – essentially taking a ‘pay day’ loan to tide them over until April.

Controversially, they’ll also need to use money raised in so-called ‘trading accounts’ like the airport, housing and water. Any surplus income could now be added to the reserves.

Last year councillors recommend large increases in the airport landing fees because they said the facility needed to replenish its own depleted capital reserves, in order to replace essential equipment and provide for future runway maintenance.

And in 2015, water rates in Scilly were raised by 12% to cover shortfalls in that trading account. At the time, Council Chairman Amanda Martin said there was “no option” but to raise prices in order to start “banking some money” and avoid drawing on reserves.

But money raised from those accounts could now be diverted into propping up the Council’s depleted finances.

At the Full Council meeting, Cllr Christine Savill sought assurances that any money taken from those services would be repaid in the future because they were “key areas of infrastructure for the community.”

Mr Brown told her they could look at that “when we get on an even keel,” although added that was, “some time off.”

Members also approved a list of budget savings for the next financial year, which should cut around £544,000 from their annual outgoings.

These included withdrawing funding for the Tourist Information Centre, raising an extra £200,000 through commercial waste fees and changes to disposal, switching to fortnightly rubbish collections in winter, reducing street sweeping and litter collection and reducing funding for Scilly’s Healthwatch organisation.

Councillors have also been asked to consider changes to the operation of the sports hall and pool and possible disposal of the Wesleyan Chapel.

Cllr Richard McCarthy thanked Andy Brown, saying he deserved “a pat on the back for making us face up to this situation” and describing the report as, “not a terribly healthy read.”

Council Chairman Amanda Martin also thanked the Council’s new Head of Finance, Diana Mompoloki, for “some extremely hard and thorough work finding these figures out.”



30 Responses to Scilly’s Council Will Need Temporary Loan To Pay Staff And Suppliers

  1. Adam Morton, St.Martins February 12, 2017 at 10:54 am

    If we borrow £3m this year and take £3m out of next year’s income to pay it back then surely we would be needing £6m by next year? No idea what council borrowing rates are but even at a modest 5% pa, for three months would be nearly £40k- enough to fund the TIC for instance.
    It will be something if we even get an election- you need enough candidates to be opposed which frankly looks pretty unlikely even with the reduction in seats!

    Reply
    • Very Vexed February 16, 2017 at 11:49 pm

      Adam, they couldn’t run a whelk stall.
      Today we learn adult social care is “officially” approaching meltdown through inadequate staffing; not surprising given the way they have comprehensively mismanaged and demoralized staff.
      Come along now chairman for the sake of the Islands just go, after all you are properly responsible for this deplorable mess!

      Reply
  2. A visitor writes ( again ) February 11, 2017 at 2:34 pm

    Leafing through some back copies of Scilly Up To Date, I came across the issue for August 2003. Those who remember the magazine ( published on St. Marys by A H Read ) will remember the the quotation box, top right on the front page. This particular edition,
    which I had picked up at random, contained a quote from G.H.Chesterton : ” It isn’t that they can’t see the solution. It is that they can’t see the problem”. Discuss….

    Reply
    • Hudson February 13, 2017 at 12:59 pm

      I think we can all identify the problems, they are in descending order the chairman, the chief executive and the vice chairman. Through their ineptitude and folly the council has been placed in a truly precarious predicament, foolhardy financial undertakings have been the norm and fiscal oversight has been remarkable only by its absence.
      A campaign of strenuous boat rocking orchestrated by the then gang of five ushered in the utter disaster that has been the experience of our community in recent years.
      Adam has a valid point when he mentions the risk of not enough candidates standing to bring about an election let alone change, after all who wants to step into the morass that is the Council of the Isles of Scilly?

      Reply
  3. Adrian another visitor February 5, 2017 at 9:32 pm

    As an interested, regular(ish) visitor I’ve been watching this debacle unfold with a grizzly sort of fascination. The 2 hours plus of the youtube broadcast of the full council meeting was compelling viewing. You probably know your councillors too well already to need to watch it, but I hope you did anyway. The auditor summed it up nicely – something along the lines of “couldn’t run a whelk stall”.

    The auditor and Mr Brown tried to hammer home the one key message, probably too politely, so I’m unconvinced your councillors really believe it. That message is – councillors – you’ve got to take your budgeting seriously. Do the basics thoroughly, identify all your essential and unavoidable expenses, only then think about the nice-to-haves, and don’t squirrel away pots of cash in your “trading accounts” because you can’t afford to have money lying around doing nothing. And you’ve got to keep on doing it year-after-year.

    It’s not sexy and exciting but it stops you going bust!

    Lets hope that the finance committee meeting on Feb 16th takes up the challenge and the council stops avoiding the inevitable. Having said that I feel sorry for the people on the receiving end of the cuts who will feel the pain of others’ mismanagement.

    Reply
    • Simon February 6, 2017 at 4:51 pm

      Adrian AV, the sad reality is that the chairman is many leagues out of her depth and too arrogant and convinced of her own ability to seek advice from competent sources. The CEO has no background in local government but is quite content to muddle on at our expense taking an eye watering salary until the council goes belly up whereupon he will quickly move away and retire. The council has never in the last fifty years had an elected membership so lacking in business acumen or with a lower collective intelligence quotient.

      Reply
      • concerned February 8, 2017 at 12:05 pm

        not in defence of the chair, but i personally think that the CEO is much more to blame

        Reply
        • Simon February 8, 2017 at 11:39 pm

          Perhaps you are right, however this chairman ushered in the current leadership and was a very significant player in setting the climate that brought into being the disastrous changes and chain of events that have been the very hallmark of her reign. She knows she has failed however she in her turn has been inveigled into participating in operational decisions that now prevent her from once again weilding the axe.
          She is just not capable of conducting her role effectively.

          Reply
  4. Pete February 5, 2017 at 12:49 pm

    The Citizens Adive Bureau is offering advice on fuel poverty. Maybe the Council could ask the Citizens Adive Bureau for advice on how to get out of the mire that they have got them sells in.

    Reply
  5. Salop Dave February 3, 2017 at 8:43 pm

    Too busy working on the next madcap enterprise, Smart Cities, to bother about yer money. Bet it won’t be that smart either. Wind factories (and bio houses) dotted all around to trash the tourist business. All burning brightly at night, lit up with aviation lights to kill of any ideas of Dark Skies. Perpetrators all off soon to retire in Bahamas (or wreck another unsuspecting archipelago) leaving someone to pick up the pieces. A volunteer, as no money to pay them.

    Reply
    • Ewart Less February 10, 2017 at 3:24 pm

      I think you are right on the mark, if they designed to ask I think the population would tell them just where “Smart Islands” could be installed though admittedly it would require the services of a proctologist.

      Reply
  6. John Allsop February 2, 2017 at 2:21 pm

    I hope we can pay it back. I am 80 later this year and i have just been informed by the Goverment Pension Service that my Pension will go up by 25 pence per week after my birthday, Perhaps i can transfer this to the council coffers.

    Reply
  7. a visitor writes... February 2, 2017 at 10:24 am

    Will there be enough money left for ( at least ) two one way tickets off of Scilly?

    Reply
  8. Jonny Exile February 2, 2017 at 10:21 am

    Key questions to ask candidates in next May’s election: a) in the event of Sims and/or Amanda being re-elected will you do everything you can to prevent them taking leadership positions; and b) will you do everything you can to remove Leijser?

    Reply
    • concerned February 3, 2017 at 10:33 am

      i think B is the real key to this mess being solved. This whole mess seed to rapidly accelerate the moment he appeared

      Reply
      • Maxine February 11, 2017 at 11:49 am

        The rules are clear as to where the buck stops. “Councillors have personal, individual and collective responsibilities for their council’s activities.”

        Reply
  9. Hudson February 2, 2017 at 8:33 am

    Our Chairman must be uncomfortably and profoundly aware that she is the architect of our Council’s decline. The Vice Chairman must be equally starkly aware that through ignorance and ineptitude he has brought nothing of any value to the authority during his tenure.
    The Council of The Isles of Scilly has never been so amateurly run by its senior management and councillors; moreover and as a result of the continuing failure of both senior staff and members the community has never been so poorly served.

    Reply
    • Marge February 2, 2017 at 9:45 am

      Have to say I agree, although these problems have been below the surface for years, with funds being diverted from the school budget to other council projects.

      Reply
    • Mike James February 2, 2017 at 10:20 am

      Hudson, you are assuming that our Chairman has any self-awareness of the damage she has done to the council finances over the past four years. You only have to listen to one of the webcasts to realise that everyone else is to blame for the dire mess – not her.

      Reply
  10. Enquirer February 1, 2017 at 3:49 pm

    If this happened in a commercial setting the CEO and Chairman would be expected to resign if they did not the shareholders would carry through a vote of no confidence. Does this happen when the Council of the Isles of Scilly is involved? NO!! Not even an apology from either the CEO or the Chairman
    .
    So we borrow a huge amount to rectify the already proven complete lack of any form of financial control, that seems to be a really sensible thing to do, I don’t think! Surely a rapid and meaningful management review, cut back on staff and staff costs, and ceasing to pursue grandiose schemes (Smart Islands) whilst concentrating on sorting the organisation out would be the correct course of action.

    Also I heard the Chairman our Finances Committee (Steve Sims) being interviewed on Radio Cornwall this morning and may I say the performance was pathetic, but unfortunately what I would expect from this “senior councillor”.

    How long before the Council goes bust or the Government are forced to step in?

    Reply
    • Pete February 3, 2017 at 10:12 am

      Enquirer. Why should innocent staff, pay for another ones incompetence.

      Reply
      • UB40 February 8, 2017 at 9:02 am

        Pete, the staff have and are still paying for this tragedy. Some are already redundant, others waiting for their letter to arrive ( or rather for their family to discover the news on the grapevine because the system in place no longer affords courtesy to its employees), the rest fearful that it can’t be long before the bell tolls for the entire organization.
        I realize that those of us working for the Council are not necessarily held in great esteem by our fellow islanders, on the whole, however, we do work hard for our community and try our best but, know this, since the much lauded change of regime we have been victims of by an uncaring, cavalier, incompetent, commercially inept, arrogant and, in some cases, deluded council who in their turn have been led like cattle to the slaughter by the officers.
        I’m pretty sure I will be unemployed by the end of this year, wish me luck as you wave me goodbye.

        Reply
        • Pete February 9, 2017 at 10:14 pm

          UB40. Let’s hope that those concerned read your response, and it pricks there conscience. I have my doubts, as those concerned are sitting on a Golden Throne.

          Reply
  11. simsply awful February 1, 2017 at 2:14 pm

    Abiding in the midst of ignorance, thinking themselves wise and learned, fools go aimlessly hither and thither, like blind led by the blind.

    Reply
    • Chez Barking February 2, 2017 at 5:12 pm

      Common sense is like deodorant, those that need it most don’t use it.

      Reply
      • A Martian February 4, 2017 at 4:25 pm

        I am doing a truly wonderful job and I don’t know what you all think you have a right to complain about?? After all it’s only money!

        Reply
        • Ewart Less February 5, 2017 at 8:38 pm

          Surely the chairman should have also thanked the new head of finance during the meeting for working so very hard to bring the Porthcressa and airport projects in so close to budget, after all can you imagine where the finances have been without such diligence?

          Reply
          • Ewart Less February 5, 2017 at 8:54 pm

            Would have been!!

  12. E Nuff January 31, 2017 at 11:18 pm

    Oh my word! Nuff said.

    Reply
  13. High Lanes Drifter January 30, 2017 at 11:49 pm

    If Mr Brown deserves a “pat on the back”, what does the councillor from St Agnes and other AM acolytes deserve for allowing this miserable and utterly avoidable turn of affairs to happen in the first place? Moreover given her penchant for disposing of far and away more effective and capable CEO’s how on earth has the present incumbent still retained her confidence?
    The report to the Secretary of State is not an action the auditer will have taken unless he was very concerned about just how badly the council has been and is beiñg run.

    Reply

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