Comment to Policy & Resources Committee 23 October

Here are the words that Mr Mustard will utter this evening shortly after 7pm

Reckless, Richard, is what this loan would be.

For 31 years I have collected debts and provided credit consultancy. I regularly deal in millions. I didn't know when I started in 1987 that I would still be in business today.

Saracens Copthall LLP has accumulated massive losses.

Saracens Ltd has accumulated massive losses.

Ironically, the latest Saracens Sports Foundation accounts show reserves of a quarter million pounds. I admire their good works which take place in Chorleywood, Harrow, Harpenden, Feltham Young Offenders Institute, Hertford, Welwyn and loads of other locations. Those works will continue whether Barnet Council makes this reckless loan or not.

It is reckless Richard to lower the prudency requirements in the Treasury management strategy.

It is reckless Richard to lend for 30 years, a distance into the future that you cannot foretell.

It is reckless Richard to borrow in order to lend.

It is reckless Richard to fail to consult the public about this radical plan.

It is reckless Richard to borrow such a vast sum other than for the provision of local services.

It is reckless Richard to think that Barnet Council know better than commercial banks. The council's history with banks isn't a good one. The Icelandic bank investments didn't turn the expected profit.

It is reckless Richard not to have due regard for the sage advice of CIPFA to 'avoid exposing public funds to unnecessary risk'.

It is reckless Richard not to think of good value viable alternatives, why not just pay Saracens to provide the community benefits you desire rather than this huge risky loan?

There is little doubt in my mind but that my words will be futile and the loan may well get repaid at the start but I seriously doubt that it will endure for 30 years. I will be berating you later if it doesn't.

As I think you should be asking yourself the questions and not me, I will return to my seat.

Please don't be reckless Richard.

Barnet Group - optimistic?

The above is from a report going to the Policy and Resources Committee on 5 September. You can read the entire report, apart from the detailed financial projections which must be in the secret appendix and which would be informative, here.

Here are the supposed key benefits:

That final bullet point is ridiculous. The only way that the Barnet Group could shrug off responsibility for a loss making subsidiary would be to liquidate it and leave the creditors unpaid which Mr Mustard opines isn't how a local authority trading company should, or hopefully is likely, to behave. There is no doubt but that the money of the council tax payer is at risk. Mr Mustard has now read further through the report and found this contradictory statement:

A reduction in your balance sheet comes about by paying a financial liability.

How confident can we be that this venture won't lose more than £400,000 in the first year? (and no private company setting up in the lettings business would budget in such a way, they would start more prudently and grow organically) Let's go back to a previous venture started by the Barnet Group, Your Choice (Barnet) Ltd, the aim of which is to make money out of offering specialist care and support to adults with a range of physical and learning disabilities.

Going back to the original projections given to Barnet Council, at the end of year 4, accumulated losses were projected to be £80,000 but in fact there is a Revenue reserve deficit of £268,000 so losses are worse than guesstimated. How can we trust the scant figures that are in the public domain?

Does Barnet even need another agent in the lettings market?

Clearly not.

Should a local authority even act in this way? using their almost unlimited financial reserves to compete with businesses, many of them quite small ones?

Finally, Mr Mustard asked a contact in the field and this is what they said.

My experience of landlords who have used Barnet to rent their homes is that they have not been happy with the quality of tenants nor the condition the property is returned in.

The agenda item is though bound to be quickly voted through with nary a perceptive question being asked.

Yours frugally

Mr Mustard