27 Jan 2012

Stroud District Budget - could have been better!

Poster spotted in shop
A late night last night at Stroud District Council....got there before 6pm and didn't get away until after midnight so do excuse me if this doesn't make total sense in places. It was budget night and we set the 4 year spending plan - the way it all happens is not really democracy at it's best - a Green alternative budget was voted after being presented to not even be discussed on the evening as by that time it was already after 11pm!! More of Green amendments in a mo but want to note that on the whole this Tory budget was not such a bad thing. After all many of the changes we face here in Stroud are the result of a dire Tory government - so much for localism it seems we are being dictated too as much as ever. Anyhow as I'll note in this post the budget could certainly be better and I fear some mistakes have been made.....

Mortgage scheme nonsense

Unlike last year's packed chamber there was only a handful of the public present and no one was dragged from the chamber. Chief among the mistakes was the plan to invest £1 million in the Local Authority Mortgage Scheme to help first time buyers get on the housing ladder. This was supported by Tories and Lib Dems - they hope to help up to 50 house-hunters - the banks lend the mortgage but don't do the deposit - this is where the Council steps in - if all goes well the Council gets their money back plus 4% plus interest - the catch is if it all goes well....several councillors expressed concern that the cash would be recklessly speculated by banks with no assurances it would solely benefit new residents in the district.

As a Council we've been making cuts to services and it will no doubt seem strange to some that there’s £1m available to support these mortgages. It is also clear that this scheme only helps a certain amount of people - and unlikely to reach 50 - more like 30 people.  If you’re poorer or disabled, you’re unlikely to get any help out of this.....It is said that local authority mortgage schemes could alleviate some demand pressure on social housing and assist in the recovery of the housing market but where is the evidence to support this. This is a small scheme and we should not forget it was the housing bubble that played a big part in the economic crisis. As I said during the evening: "Many forecasters have suggested house prices will continue to fall - indeed the Council's report also notes they are likely to continue to slide. The Royal Institution of Chartered Surveyors 2012 forecast is for a 3 per cent fall in house prices - while the economist and investment manager David Kauders, often quoted in the Daily Mail, has suggested that this is actually the start of 'a slow-motion crash - so slow that many commentators will not even see it.' He is predicting a 50% crash in house prices"

Interestingly The Guardian looked recently to a collection of 'experts' and found the majority predicting more than 5% drops for 2012 including one with a 10% drop. Their poll of readers showed nearly 70% predicting price drops of 5% with 27% predicting falls of more than 10%.

As I said during the evening: "Well maybe they are all a gloomy lot. This scheme may offer advantages to a few but by acting as a guarantor for First Time Buyers, the Council is encouraging young people to take on increasing amounts of debt. The president of the Law Society John Wotton sent out a strong warning to first-time buyers last September: "A significant number of repossessions take place against first-time buyers who often do not fully anticipate the nature and significance of the responsibilities they are taking on. As a group they are at the greatest risk of negative equity." It seems to me that the Council is taking on risk that the Bank deems unsafe. The Bank does not lose with this scheme. It is the Council or rather the Council Taxpayer who could lose. If this is such a good idea why aren't the banks taking the risk themselves, instead of pushing it onto councils?"

As I noted during the evening there is no question we are facing a growing housing crisis. Despite the best efforts of this Council to support those who have a difficulty, central government are leading us into a housing timebomb. We see the Government weakening council tenancies, cutting housing and other benefits and raising social rents. In Stroud, homelessness applications and acceptances are up 45% on the last 4 years. Over 3,000 households are now on the District's housing waiting list. However this route is not part of the answer.

I was unable to support this scheme. I really think the risks are far too great. Interestingly the Council's own advisors, I am told, note that this is a money neutral scheme in that they don't expect any of the interest - I still think that is too optimistic - I hope I am wrong.

Empty Homes and energy projects

Consent to freeze SDC’s portion of council tax at £186.93 for Band D properties was voted through.

Greens proposed that the reduction on empty homes be removed - this could have brought in a few thousands each year - and why are we letting people off when we should be 'encouraging' them to get the properties rented - yes there are often good reasons for being empty but I don't think most warrant a reduction in charges in these times. The good news is that the move will be considered further and wasn't ruled out completely.

The plan has £100,000 for energy efficiency projects - but this doesn't go far enough - in the Greens budget which was fully costed and made no increase to the Council Tax - we wanted to see the hydro scheme go forward - this would generate an income of around £30,000 - surely a better way to invest money than on risky mortgages? We must not forget that climate change is already hitting the poorest hardest - see The Guardian's article here.

The Tory plans also had £30,000 more for next three years for homelessness prevention - I am told that this is adequate to deal with the increases in homelessness I note above. I welcome that this Tory budget recognises this issue.

Another Green amendment was to have some more money spent on developing the Core Strategy - where the houses and employment will go - this is vital and it is our view that this is not resourced well enough to get the quality we need in the plan and policies for future development.

More for job creation and creative industries

I could write lots more on various issues but am not sure how coherent all this is after a very busy week at work and late nights....I want to mention the £50,000 for 2012 Olympics and Diamond Jubilee legacy projects....I confess that the Olympics is something about which that I have very mixed feelings. I did however welcome that some of this money was spend on 'Cultural Olympiad' - this is an idea that came from the Youth Council - and of course was part of the Olympics I think until World War II.

I did quote in the evening the Telegraph who once said that 'Stroud is to art what Hay-on-Wye is to books' and Damien Hirst: "The arts sector is huge around here and makes a major contribution to the local economy. That heritage is one of the reasons I set up my workshop in Chalford."

My point was about using the Olympics as an opportunity to showcase our creative industries - see more here about their importance to the county. Anyhow in another Green amendment with support from Independent Cllr Andy Reed we called on money from a reserve account to be used to bring in jobs for the area - in particular support to the Market Towns - some money was in the pot but more is needed to give jobs a boost. Again the Tory administration said they would look at this next month possibly for next year....

Rents and more

There was also disagreement on increasing council homes and garage rents as part of the government’s objective to align local authority and housing association rates by 2015/16. I can fully understand the Tory position but equally understand Labour - the latter put forward an amendment that would mean cutting the expected increase from 6.87 per cent to 6.1 per cent ie 58p a week saving. I supported this as the increase is significant and will affect many people on low income. This was defeated by 24 votes to 22. The arguments in favour of the rise are that we have to converge under Gov rules so we are only delaying the rise - Labour would bank on the formula being more favorable next year - this maybe so but maybe not....

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