26 November 2018

Another massive loan being voted on.

When you first look at this it is a bit odd. You need to understand how savings proposals are noted. A proposal to save costs would be a positive figure and so an income, being the opposite, is presented as a negative. Then you are probably wondering why there is income for only two years from a commercial property? That is because it is assumed to repeat each year and it is only the change in income from one year to the next that is recorded. Thus we have an anticipated income from some unknown commercial properties purchased over 2 years (not sports stadia Mr Mustard hopes or anything at Brent Cross) which will give the council an income of £1.9m a year.

It isn't clear but Mr Mustard thinks the loan interest may get accounted for elsewhere. He doesn't think much of a 3.9% return. You don't want to be looking at anything less than 10%.

The council can borrow for 30 or 40 years at 3% a year. This £50m invested in property would, if there weren't any costs, see an income of £1.9m p.a. against a cost of £1.5m but nothing is ever that simple. The buildings will need to be insured. They will need to be let which will mean a commission has to be paid. They could be empty for a while so there will be security costs. If they are empty for more than 12 weeks then you are looking at a gross loss for that year and you'll still have costs to pay. The council would have to pick up the commercial rates tab, most of which goes to central government. Someone will also have to manage the loans & they will want a big salary because bankers aren't known for their bonuses for nothing. The building might need repairs and there will be initial survey & legal costs.

What with the £23m that is being borrowed to lend on to Saracens, the £50m being borrowed from Cheyne / Touchpoint at a spiralling rental cost to sell and rent back properties that the council bought in the last 12 months and the £304m in long term loans which were in the balance sheet at March 2018 (which includes some old LOBO loans) Mr Mustard thinks we already have enough borrowing and that the reward will not be adequate for the risk that is being taken. There is a dearth of detail, perhaps more will come out at the meeting of the Assets, Regeneration and Growth committee tomorrow evening. 

This is also the exact type of borrowing which is vexing CIPFA at present.

Mr Mustard thinks that a council that can't manage to collect 99.9% of bins on time really should go back to basics and learn how to walk before it tries to run in areas where it doesn't have much expertise. What he expects they will do though is buy some white elephant as is reported by Inside Croydon in their neck of the woods.

Yours frugally

Mr Mustard

Barnet Council propose a green bin tax

Hat tip to Mr Reasonable who assiduously reads council papers and then puts them to the sword if they don't make sense. You can read his excellent blog here. The above snippet is from the papers for the Environment Committee this Wednesday 28 November. Note the 6.30pm start (not the usual 7pm).

Update: 29 November 18. Mr Mustard attended the entire three hour Environment Committee meeting yesterday evening save for the first few minutes as traffic was awful in High Barnet and he couldn't escape. He missed a fraction of the first item about the bin fiasco. Later in the evening four conservative councillors out of 6 expressed reservations about the £50 green bin charge and then voted to go out to consultation on it. Bonkers. Mr Mustard presumes they want residents to give it a good kicking in the consultation so they can say they listen to the will of the people and proceed to make a different stupid decision.

Barnet Council worry more about saving money than value for money. The bin collection service is one that every council has to deliver by law to collect 'household waste' without charge. Doubtless lawn trimmings and the like come outside of that definition and hence why charging is being considered and as other councils have managed to introduce charges for it.

Mr Mustard wondered if the proposed charge was a fair one and to be fair he felt it had to be the actual collection cost + the green waste disposal cost.

He collected the statistics he needed.

Total cost of all waste collection in Barnet is budgeted at £5,909,350
There are 147,063 dwellings.
50% of dwellings have a green bin.
Thus an estimated 73,500 green bins
The North London Waste Authority processed 19,666 tonnes of green waste for Barnet last year.
The gate fee for green waste has been estimated at £60 a tonne.

If only 50% of households have a green bin and the collection frequency is half that of the blue & black bins, for every 100 blue or black bins being collected, there are 25 green bin collections.

Thus the collection cost of green bins is 25/225 of £5,909,350 = £656,594

The annual collection cost of a single green bin is £656,594 / 73,500 = £8.93

The average tonnage per green bin is 19,666 / 73,500 = 0.267 tonnes

Disposal cost of green waste per bin per year = £60 * 0.267 = £16.05 (but see below)

Total green bin costs per year per bin is £8.93 + £16.05 = £24.98

So why do the council plan to charge £50 which is twice the actual cost?

Mr Mustard has over-estimated the costs in the council's favour.

The annual running cost of £5.9m includes collection of food waste which no longer takes place and was intended to save £300,000

The annual running cost includes the collection of waste from businesses.

He has probably over-stated the cost to dispose of green waste. The green waste tonnage included that generated from parks.

If this idea comes to fruition lots of residents will stop having their green waste collected. That will make the collection of lower quantities less economic and rounds will need to be changed again. Bin wars will start and bins with a payment disc on them being 'borrowed' by naughty neighbours. Grass clippings will be dumped into any bin left on or near the pavement at night. Green waste will be put into the bottom of the black bin, under general waste, where it won't be spotted as bins are emptied. Green waste will be dumped all over the borough No-one can prove who put it there unless caught in the act.

What is the point of a council? 
To provide services, such as green waste recycling, to residents at a lower cost than they could arrange it for themselves.

How is this funded?
By council tax, a universal payment roughly related to usage of local services.
How does this benefit society?

Will council tax go down?
No, this extra fee is a disguised council tax, you will pay more for the same services.

Yours frugally

Mr Mustard

Update: Mr Mustard was just throwing away his council tax leaflet for 2013/14 having decided to recycle his 2013 Barnet Council archive box (that will get the recycling rate up) when he noticed something. The budget for Waste Collection back then was £6.36m i.e. £400,000 more than currently, and there was a separate payment of £9.76m to the North London Waste Authority.

Therefore, the costs that the council would save by making you pay for your green waste collection are only £8.93 per bin per year for which they want to extract five times as much from you the long suffering council tax payer.

In all the circumstances Mr Mustard does not see how an extra charge of £50 can be justified.

He also sees what good value we get from our in-house service.

22 November 2018

Barnet Council - another risky loan

There is fair bit of background reading as prep for this blog post in which Mr Mustard highlights the entirely avoidable financial risks that Barnet Council are taking, and which, if CPI rises, you, the council tax paper, will end up footing the bill for.

If you don't want to read the background, here is a summary.

Barnet Council wish to acquire up to 300 properties to use as temporary accommodation.

They will cost up to £50m.

This will be cheaper than paying for temporary accommodation on the open market on an as and when basis (currently all the time as about 2700 families are homeless). So far so good (apart from the number of homeless families).

Where the venture gets risky is that an apple & pears calculation has been done which shows that borrowing the money from an institutional investment firm with which to buy these properties, sell them to the investors and lease them back, saves money on the temporary accommodation bill. Well of course it does as you are not comparing the things which should be compared.

What should be compared is the cost of borrowing the money from the Public Works Loan Board to the cost of renting from Touchpoint (Cheyne) as both end up with Barnet Council owning the properties, either now, or in 40 year's time, but with the right to use them throughout.

A 40 year fixed rate loan is available at 3%. You know your costs for the next 40 years, interest rates are near a lifetime low. What is not to like about a loan at 3%. At any time in the next 40 years it may be an absolute bargain.

The rental cost of 3.4% doesn't look awful, although it is at least 0.4% more than ought to be paid, except for the stinger. The stinger is that every year the rental cost is increased by the percentage rise in the consumer prices index (CPI) which means that Touchpoint get 40 years of extra return on their investment without advancing a single penny more. You try and get 3.5% on your savings. The Halifax are offering you 0.7% for a 2 year fix, which they will then use to invest in properties at mortgage rates of 3.3% to 3.9% which gives you some idea of the profits to be made if you can lend people money at a starting rate of 3.4%. The Halifax won't, of course, increase the amount they charge you interest upon, it will be on the sum borrowed which reduces as you pay, rather than increasing.

Here is a table which shows you how the rental costs rack up.

In the left hand set of columns the £50m capital is also being repaid. It isn't in the second set. If remove that then you can see that interest payments amount to £36m. If the sale and rent back option is taken with Touchstone then they give the council £50m at the beginning so the net cost of that is £64m.

Thus, if CPI stays at the current rate of 2.5% for the next 40 years, renting will cost an extra £28m or 77% 

This does not look like a good deal to Mr Mustard.

The red bar in the chart shows the cash-flow break-even. Renting has less outlay for the first 10 years, so is superficially attractive from a cash flow viewpoint, but after you have crested that hill it is downhill all the way for the  next 30 years.

The only way in which this could save the council money is if CPI gets below 1.2% and stays there for the whole term, which, given the history of the last 40 years, seems unlikely.

Mr Mustard has no axe to grind with institutional investors. He works in money himself (he is overseeing the recovery of a portfolio of mortgages of this quantum). They exist for one reason only. To make money. Touchpoint Housing (LBB) Ltd has not been incorporated yet nor has Cheyne Social Property Impact Holdings LP UK which is a company mentioned in the report. A similar named one was found ('UK' is missing)

Mr Mustard looked at the Accounts of Cheyne Capital Management UK LLP. The employees are ace at making money

and they don't get paid an average salary of £740,000 by being anything less than sharp as a tack. Sadly Mr Mustard doesn't think that the same applies to the project assurance team listed at item 10 in the Barnet Homes business case who are being danced around at council taxpayers' expense.

When you are buying something you have not purchased before, you try and assess what you should be paying. if the organisation you are buying from makes this sort of profit, you are paying too much and need to negotiate harder.

Yes, Barnet Homes looked around at other possible providers but if you cast your net amongst a selection of pike, you will catch a pike, not a goldfish (Mr Mustard would like to state at this point is that he is sure that the Cheyne group aren't doing anything wrong in any way, just doing what they should do, which is to make bundles of money. His comparison is a criticism of Barnet Homes & Council). Mr Mustard is concerned that there doesn't appear to have been a proper tendering process, all he sees mentioned is 'soft market testing and analysis of potential schemes with over 15 private funds...'

One of the aims in the Barnet Homes report is to get 'value for money'. This is not being achieved. He will follow up on all costs next July when the books of the council are open to annual inspection.

One worry is that the Barnet Homes report shows that the 40 year rental does cost more than straight borrowing from the PWLB but still they plough on.

The bigger worry is that the councillors who approved this idea, didn't understand the financial costs of rental as opposed to purchase.

The 'exempt' report (which Mr Mustard downloaded from the council website but doesn't seem to contain any exempt data) is also worrying. The structure of dealing through two intermediate companies adds complexity and unknown problems. The list of risks include potential vat liabilities, possible extra stamp duty (stamp duty land tax as it is correctly known) loss of control and extra administrative burdens & therefore cost.

All things considered, this is not a deal that the council should be doing. They are out of their depth.

Yours frugally

Mr Mustard

21 November 2018

Tilling Road - Barnet Council get it right!

Tilling Road into Brentfield Gardens is a route that many motorists wrongly use to save about 10 seconds going up to the roundabout and they find it costs them £130.

Mr Mustard doesn't usually fight PCNs at that location as there are two no left turn signs, an arrow on the road and a blue go straight arrow so his sympathy runs out.

However, he came across a tribunal decision which held that the vital sign on the left was turned away from the driver, which is why the no entry sign is visible, the sign you need to see is on the back.

He challenged a recent PCN and to his surprise the council made a correct and reasonable decision. He isn't used to those.

Incidentally, in a moving traffic case there isn't a PCN and a Notice to Owner, only a PCN. The danger of cut and paste.

If you get a Tilling Road PCN best check the photographs on line here

Yours frugally

Mr Mustard

20 November 2018

Redbridge Council work to their own rules - wrong ones!

This would be funny if it didn't concern an illegal demand for payment of £110 and a request for data from the DVLA that wasn't justified. The lady who received the Regulation 10 PCN (driving away which prevented service) is a kind and delightful person. She has a daughter* in a powered wheelchair who she cares for and whom Mr Mustard had the pleasure to meet about 5 years ago when he did a home visit to discuss a PCN (which from memory he got cancelled). The lady isn't a serial offender, she just gets the odd PCN as many people do as they aren't hard to collect. She doesn't really like having to ask for help but a PCN would make a big hole in her disposable income and thus Mr Mustard is always happy to help her. (*Oops Mr Mustard made a boo-boo, mind you it isn't as bad as the one made by Redbridge. It is the disabled lady's sister who has this PCN, not her mum who must be a generation older, and she also loves and cares for her sister. They are all people whom it is Mr Mustard's privelege to have met. Councils don't realise when they meanly target people that they are just that, real people, lovely people, not just numbers which is how they regards PCNs).

Here is an extract of the recent PCN

not Mr Mustard's finger in view
The first thing that struck Mr Mustard as odd as about this PCN was that the traffic warden (CEO) was unable to serve it because the vehicle was driven away. That might be fair enough if they had started to prepare a PCN at 11:34 as all a traffic warden needs is 45 seconds from start to finish, but they had observed continuously for 6 minutes. Please! The reason the PCN was not served was because the traffic warden dilly dallied and then when the driver returned and moved the car, they didn't want to let it get away.

Here is a photo of the car in question.

Just look at the time it departed, 11:29 and 33 seconds. 

Where was it at 11:34? Not in Waverley Gardens, that is for sure.

Mr Mustard has been on-line and made the representation that the contravention was not committed, as the car was not parked at 11:34, it was within 2 minutes of home by then, driving merrily along.

Apart from sending an illegal demand for payment of a non-existent contravention Redbridge Council have obtained and processed DVLA data to which they were not entitled.

Time for an apology, a bunch of flowers and traffic warden refresher training.

Yours frugally

Mr Mustard

17 November 2018


Mr Mustard has caused some right consternation. Should he have kept quiet?

On 5th October Mr Mustard was on his way up the street when he stopped to chat to a neighbour for a moment. He saw the NSL / DVLA clamping van stop & decided to watch what they were doing.

What happened next was curious. The NSL van driver got out, ambled up the street to a particular car, put a red notice on the front & took a photograph, moved the notice to the back and took another photograph, removed the sign and ambled back to his van. This was rather odd but Mr Mustard assumed it was gathering proof of the car in use on the public highway and the photos would be evidence of a warning having been served.

Mr Mustard knows most of his neighbours but this car was a new one to the street so Mr Mustard guessed it must belong to the tenants who had just moved in. He knocked on their door, no answer. He knocked on the neighbours' door, went in for coffee and explained the situation as they were likely to see the owner first. Mr Mustard was trying to stop the car from being clamped, a check of the on-line register showing that it had recently expired road fund and no MOT. He also put a polite and helpful, or so he thought, note on the car. Two days later it had an MOT and road fund. 

He thought no more about it until yesterday when Mr Mustard received the below email which came from the senior partner at a local firm of Solicitors (if that was calculated to bother Mr Mustard, it doesn't) being the neighbour in question.

Mr Mustard was a mite peeved at this outrageous lie that he was a DVLA snitch so he emailed back.

Your letter is most unfortunate.

I did not inform the DVLA that you fiancée's car was untaxed, nor as it happens that it didn't have a current MOT.

My attention was drawn to the car by the interest taken in it by the DVLA clamping van as per the below photo.(now above)

My motivation was to be neighbourly and let you know so that the car did not get clamped. I knocked on your door that day (5 October) but no-one was at home.

I made no moral judgment about why the car was illegally parked, unlike yourself who thinks he knows what my motivations are and you know nothing of me as a person.

I strongly suggest that you do not make unwarranted accusations in the future, as it is unprofessional conduct unbecoming of a solicitor, and I look forward to receipt of your unreserved apology.

Another email arrived from from the man who can't spell fiancée (fiancé refers to a man who is engaged - not many people know that).

Thank you for your email Mr Dishman. We have been provided verbal witness evidence of your involvement hence my email. If you were not involved, you may ignore my comments. If you were, then my comments stand and I make no apology for them.

Perhaps you could evidence the date and time of the picture you sent me  because redacted’s car does not appear in that photo?

I certainly do not regard my conduct as unbecoming of a solicitor but you are perfectly entitled to form your own judgement.

This whole episode smacks of some kind of snooper’s charter and I find that unacceptable.

Hold on a moment. You are now calling Mr Mustard a liar based upon the word of an undisclosed witness. That doesn't carry much weight. I have said I did not tell the DVLA (something the DVLA already knew). No-one needs to contact the DVLA to tell them a car has no road fund or MOT as they keep the register (which is publicly searchable). So Mr Mustard is sent a maybe yes maybe no email when he has already said he didn't do anything to cause the DVLA to pop round. They are all over the country all the time and know where to look.

Mr Mustard sent the photo, from which the time and date can be obtained in the properties, along with a renewed request for an apology. 

I did not inform the DVLA.

I would welcome an apology for your false accusation.

Somehow he doesn't think it will arrive.

What would you do in your street, Mr Mustard's road is exceptionally (sorry, make that with one exception) a friendly place to live. Would you have been grateful that a concerned neighbour tried to stop your car being clamped by nudging you to get your MOT sorted and then buy some road fund.

Or would you send an email making an accusation that was untrue?

The joke is that Mr Mustard thinks this has come about due to a misunderstood distant conversation. Yesterday the car was parked on a dropped kerb with a single yellow line. It had been there for days and somehow not been ticketed. A friend of Mr Mustard's saw it and pointed it out from her window across the road to the lady owner who responded that she had a resident permit. It was gently pointed out that they don't apply to single yellow lines. There was some reference to the previous problem which wasn't properly heard and Mr Mustard got mentioned but at no time was it said that Mr Mustard had snitched to the DVLA.

Surely after you accuse someone of something and they deny it you have to take their word for it or produce the witness evidence? As it happens the probable witness is mad as hell and is going to have a word with the neighbours.

Yours frugally

Mr Mustard

15 November 2018

Governors in Barnet Schools are unhappy about the hurried budget consultation

School governors are selfless people who give up many of their evenings for free in the interests of society.

Don't hack them off Barnet Council or they might leave.

Yours frugally

Mr Mustard

12 November 2018

Reject but then accept the same argument - why?

Not the best ever photo but double yellows clearly visible
Mr Mustard's motorist friend spends some of his working life delivering meals for UberEats including from McDonalds (yuk). The delivery in question on this occasion was to Gloucester Rd in New Barnet and the charge for that was £5.42. The motorist told Mr Mustard that he had delivered to Mr Mustard's road which is a 10 minute walk from McDonalds, no wonder fast food makes you fat & apparently lazy as well.

Anyway Mr U as we shall call the motorist drove up in his car, parked outside on the double yellow lines outside McDonalds which is fine as he is a courier and as it was after 6.30pm when the loading restriction at that location comes to an end, nipped into McDonalds and when he came out he found a PCN on his car. The traffic warden had done a ticket and run having observed the car for a mere minute.

Mr Mustard made the informal challenge on behalf of Mr U. Here it is.

 Here is the informal rejection.

'Carefully' possibly means 'for 2 seconds' .

No loading/unloading was seen as the CEO (traffic warden) didn't hang around to see what was happening. That does not mean that loading was not in progress only that the CEO did not see it.

Yes you can wait (=park) on double yellows if any of the following apply:

* loading or unloading something heavy or bulky
* boarding or alighting passengers, including accompanying them if necessary
* told to stop there by a policeman
* broken down
* medical emergency

so what the council wrote is not strictly accurate.

At this point many people worry about the discount, £55 in this case, and the difference between £55 and £110 if you are in the gig economy is huge. Mr Mustard explained the odds to Mr U who trusted Mr Mustard's judgment and so on we went.

The Notice to Owner arrived and the formal rejections were made, in identical form to the previous challenge.

This time the response was completely different

The unanswered question is why it was only at the second time of asking that the challenge was accepted or more importantly, why the first challenge was emphatically rejected along with the 'education' that the council rather self-importantly think they provide to motorists in their rejections, even when they are talking utter tosh.

Possible reasons are:

- lack of knowledge
- lack of application of the rules
- experience, i.e. many people pay at this stage if rejected
- the realisation that if they reject twice Mr Mustard always takes the council to the tribunal where, more often than not, they get found out & every case costs them £30, so they had best accept
- change of person considering the challenge from an NSL one to a council one.

This is wrong though. This is as clear an example as you could find of an informal challenge which has been wrongly rejected. Until such time as there is some sanction against councils for rejecting informal challenges when they should be accepted, the current biased system will continue.

Longer observation periods are also required.

If you are correct, do fight to the end.

Yours frugally

Mr Mustard