Have LOBOs contributed to the “bankruptcy ” of Tory Council?

This is of relevance to Newham - it has a host of RBS LOBO loans including a 2010 RBS inverse
floater. We have £563 million exposure in Newham to LOBOs. Hat top Debt Resistance press release

"Northamptonshire County Council Joins CAPITA In Crisis

DEBT RESISTANCE UK

Major LOBO loan borrower Northamptonshire County Council lurches into crisis as s144 declared with Council unable to balance its budget.

Capping off a turbulent week for financial markets in which CAPITA shares collapsed by 50% into crisis territory, Northamptonshire Council Council (advised by CAPITA) issued a section 114 notice on Friday, meaning the council cannot set a balanced budget, has exhausted its cash reserves and no new spending decisions can be made until a full Council meeting is convened to solve the crisis.

Debt Resistance UK have been warning for several years that the toxic combination of austerity cuts, lack of scrutiny and independent oversight of council finances, conflicted financial advice from firms like CAPITA and ICAPand growing debt loading would soon lead to financial disaster in town halls.

Now, with the first Section 114 notice in almost two decades being registered at Northamptonshire - it is increasingly clear that local government finances, shredded by austerity are beginning to unravel.

Northamptonshire County Council borrowed £150 million in LOBO bank Loans, including a toxic 'inverse floater' LOBO from the bailed out Royal Bank of Scotland, signed in 2010 where the council are currently paying the astonishingly high interest rate of 7.22%. View source.



On Thursday, following the crisis at CAPITA, The Conservative Government was forced to concede it had contingency plans in place at Councils like Barnet, should CAPITA fail.

Commenting for Debt Resistance UK, Joel Benjamin said:

"It appears Northamptonshire County Council has fallen victim to a lethal cocktail of cuts, opaque and poorly run shared-services and outsourcing arrangements, and high interest, risky LOBO borrowing from banks including the bailed out Royal Bank of Scotland."

With Councils now joining struggling outsourcers on the rocks - taxpayers deserve to know what contingencies Government has in place for bankrupt councils?

The only benefactors from the financialisation of town halls are the conflicted advisors (in this case CAPITA) and the financial firms paying their wages. When services collapse and Councils fail to set budgets, we will quickly find it is the British taxpayer who assumes these costs, while the auditors KPMG yet again wash their hands of any responsibility for failure."

In a month in which Carillion has imploded, CAPITA is teetering on the brink and councils look set for join them, it is high time for Government and Treasury to reassure the local government sector that lender of last resort facilities via the Public Works Loan Board will be continued and the failed austerity cuts and the fetishisation of outsourcing will now be halted."

Find out more about LOBO loans and if your council has them on the Debt Resistance UK website.

For press inquiries email: press@debtresistance.uk Phone: 07429637423

Links to further information:
UK Local Authority Debt Audit website: http://lada.debtresistance.uk/
Interactive map of local authority debt: bit.ly/LADAmap
What is a LOBO loan? http://bit.ly/LOBOLoan
LOBO Loans are potentially illegal http://bit.ly/DebtTrap
The conflicts of interest http://bit.ly/LADA3

copyright © 2015 Debt Resistance UK, All rights reserved.

Open Letter: Cancel KPMG Appointment as Advisors to Grenfell Tower Inquiry (Update: We Won!)

In a victory for common sense never mind simple decency, KPMG, the controversial auditing & management services provider have withdrawn as advisors to the Grenfell enquiry following an open letter to the FT and The Guardian on Sunday 7 January criticising their involvement.

How on earth could KPMG, a company that audits Kensington & Chelsea Council AND the producer of the Grenville flammable cladding AND the principle Grenfell refurbishment contractor be an advisor to the "independent" judicial enquiry?

This sort of thing makes the UK an international laughing stock and seem completely hypocritical. Our Government and tabloid press are the first to make claims of corrupt governance overseas but fails to see how rotten we can be nearer to home.

Well done to Research Action for organising this letter. I signed the letter alongside Newham Councillors Rokhsana Fiaz OBE and Cllr John Whitworth.

https://researchforaction.uk/open-letter-cancel-kpmg-appointment-as-advisors-to-grenfell-tower-inquiry

A Living wage for all Newham Council workers?

At the last meeting earlier this month of the Regeneration and Employment Scrutiny Commission, Councillors considered a "Living Wage" for all Newham Council workers.

We had a presentation by Emmanuel Gotora and Paul Regan from Newham citizens on behalf of the Living Wage commission.

Our Scrutiny meetings are open to the public and recently the Council constitution was changed to allow photographs to be taken during such meetings.

At our first meeting following the election in May we had agreed the work plan for the next year. This included an examination into whether Newham Council should be a Living wage employer, which was a manifesto commitment and Labour Group policy. In order to scope out how we will investigate this our Scrutiny officer had contacted the Living Wage Commission who had recommended we invite Newham Citizens to come in and present to us on this subject.

Paul was a retired Methodist minister and long term Newham resident who is a Board member of the Living wage commission and Emmanuel is a paid senior organiser for Newham Citizens.

The Living Wage is now £9.15 per hour in London and £7.65 per hour in the rest of the country. While the National Minimum Wage is £6.50 per hour.  All directly employed workers for Newham Council are paid at least the living wage but not indirectly employed staff such as care workers or agency cleaners. To be an accredited Living wage employer, there must be a plan in place for all staff, direct and indirectly employed, to be on a living wage.

Low pay is a huge issue in Newham, which according to these statistics "the proportion of residents paid less than the London Living Wage was highest in Newham (37%) followed by Brent (32%). while the borough with the lowest proportion of residents in low paid work was Richmond upon Thames (11%). Nearly 20% of Newham workers are also estimated to be paid less than even the National Minimum wage. 

Paul and Emmanuel explained that the number of living wage employers was now over 1,000. There are also now 19 FT 100 companies who pay a living wage compared to only 4 two years ago. You have up to 4 years to complete the process to be a living wage employer.

11 London councils (out of 33) pay a living wage and in total 30 councils nationally. There are about 600,000 predominantly black and female workers in London who somehow exist on below a living wage. The taxpayer is forced to subsidise these poverty pay employers with housing benefit and tax credits.

Being an accredited  living wage employer only costs a maximum of £400 per year for a local authority (£50 for a small employer) and there is very little ongoing compliance costs since unions and workers are relied upon to "whistle blow" if they are being cheated out of an agreed wage.

Over 80% of businesses report positive economic benefits of a Living wage.There is greater retention of workers, which means spending less money on recruitment and training.  There is also less time reported off for sickness. A living wage also builds individual economic resilience and helps "make work pay".

They suggested that perhaps the Royal Docks ward should be the first Living Wage zone in the Country. Beating the plans of Canary Wharf in Tower Hamlets who are actively thinking of doing this.

When business consultants KPMG introduced a Living wage for their office cleaning contracting staff, they redesigned the contract and improved quality while also reducing costs. Bins were taken away from individual desks and offices were given collective bins. Cleaners were asked to work during the day rather than early morning or late at night. This meant that cleaners felt they were part of the company and were also available for spot cleaning during the day. This saved money and improved quality.

Paul and Emmanuel also talked about their campaign elsewhere in Newham. They have met with London City Airport who won't pay their cleaners a living wage. They say that they would look into it if their partner Newham Council, also became a living wage employer. Newham council has a powerful voice and could be an important exemplifier to other local businesses.

This was a positive and constructive meeting but we cannot forget that due to the savage Government spending cuts in Council grants, Newham is facing unprecedented financial challenges. Further commission investigations into the Newham Living Wage will be held in the New Year.

Offering a Living Wage is good business sense

"At KPMG, we believe that paying people a decent wage is the right way forward for responsible business. Indeed, we’ve ensured for more than 8 years now that all employees and contractor staff working out of our buildings are paid a Living Wage. Regrettably though this is far from universal in our economy. Our recent research suggests that there has been a substantial increase in the number being paid less than the Living Wage, which now stands at 5.2m people.

Disappointing though this may be, it can be tackled.  That’s why KPMG has helped establish the Living Wage Foundation, whose kite-mark is fast becoming recognised by forward thinking employers. It is great to see that the TUC is one of those organisations. There are now well over 600 accredited organisations but I look forward to the time when this is 60,000.

There is, after all, a responsibility on all of us to recognise and applaud organisations doing the right thing, as often the easiest course of action is to avoid making a choice at all.

But it’s not just about “being nice”, offering a Living Wage makes sense for business because, to have an efficient and effective operation, firms require staff who are motivated, rewarded and incentivised to go that extra mile in servicing customer needs. By way of example, since introducing the Living Wage, KPMG has seen a significant increase in the motivation and loyalty within on-site supplier staff over the last few years.  

We also found that staff turnover has more than halved, staff require less supervision and have also been trained to perform other activities which provide a more stimulating working day. There has been a marked improvement in the quality of service: our help desk gets far fewer complaints. And – perhaps the strongest business case for paying the living wage – there has been increased productivity, as attitudes are more flexible and positive. Staff are willing to give it that bit extra in terms of exceeding our external and internal clients’ expectations.

KPMG is proud to be a leader in paying all our staff the Living Wage, directly employed or contracted. This is one of the key components of our sustainable procurement programme, forming one of three core “pillars” of carbon, supplier diversity and the Living Wage.

In my view it is important to be clear this isn’t about whether services are outsourced or run in-house. Organisations outsource because the service is not within their core skill set. The organisation that outsources sets the parameters around which the contract arrangements are agreed. I am seeing for instance, suppliers increasingly interested in Living Wage recognition; this requires them pay it to all the people working on their own business premises e.g. cleaning, catering and admin staff etc, and they also commit to submit a Living Wage compliant bid alongside the regular bid.

The fact is that, increasingly, Living Wage accreditation and recognition differentiates decent organisations in the market place, from those with different values. Paying the Living Wage is not altruism but a sensible commercial position regarding the benefits of staff retention and productivity. So much evidence now exists to suggest that suppliers have found contract retention levels are higher, due to the improved level of customer service. As we come out of recession, customers will have higher expectations about receiving a quality product and service, which in turn requires a stable and motivated workforce. It is hard to see how this can be achieved whilst not paying a Living Wage.

In summary, paying the Living Wage makes sense – as it benefits workers, their families, communities, and also the businesses for which they work. Although it might not be appropriate for every business, KPMG encourages our contractors and suppliers to follow suit and every employer to consider whether they can make the change to pay the Living Wage. For us, the last eight years have been an exciting journey with the Living Wage changing from being an initiative that was not really understood by business to one that good employers wish to embrace".

A Minimum Wage, A Living Wage or Fair Pay for All?

The introduction of the National Minimum Wage was one of the great successes of the last Labour Government and trade unions such as UNISON who had pushed long and hard for it.

So successful that we now take it a little for granted and forget the huge opposition from the Tories who claimed that it would lead to business failures and mass unemployment.

While a national minimum wage of £6.19 per hour is far, far better than no minimum, it is simply not enough to live on. It is poverty pay. The vast majority of workers on minimum wage will also need to have their wages topped up by the State in housing benefit or family tax credit.  

The idea of a "Living wage" is the amount needed to "let workers lead a decent life". It is currently £7.45ph (and £8.55 ph in London).  Accountancy firm KPMG recently estimated that 20% of workers (5 million) are paid less than a Living wage.

Labour Leader Ed Miliband is in favour of making the Living wage compulsory in the public sector and in their procurement practices. He also believes in naming and shaming other companies that don't pay a living wage.

If this happened it would be a fantastic news for the low paid and also the British tax payers since we will not have to subsidise many poverty pay employers. It would also result in a welcome boast in demand for the British economy.

Yet, at the risk of being churlish, is even a "Living Wage" - not enough?

If you are on a Living wage but become sick and have no income protection you will immediately fall back into poverty. If you retire and have no company pension you will also fall back into poverty in old age. If you are on a Living wage but are on a Zero hour (or Bank) contract and have no employment protection, how can you live a "decent life" with no security? Ed Miliband is also  in favour of restricting Zero Hour Contracts. It has been estimated that there could be as many as one million workers on such contracts. 

What about those traditional low pay sectors which can actually afford to pay more than just a living wage and also pay decent sick pay and a pension?

So what about the concept of "Fair Pay". This is a recognised goal of the International Labour Organisation (ILO). Your pay should not be just about your wage but also about sick pay, holidays, overtime, pensions and employment protection.   There are some private companies competing for public sector contracts who would quite happily pay £7.45 per hour if they did not have to pay for decent sickness protection and pensions.

On the other hand today I met up with my lovely niece, her partner and their young family.  She works as a care assistant in a privately run mental health project. She loves her job but is on the minimum wage and on a zero hour contract. She does not receive holiday pay (which I need to check) and also cannot get family tax credit because she is on a zero hours contract.  She only gets statutory sickness benefits and no pension. Due to her income she is likely not to be eligible to be auto-enrolled into a pension. 

If she was to get a Living wage and an extra £1.26 per hour it would transform her family finances but since she does not know from day to day what hours she will work and has no security of employment, it would still be practically impossible for her to make plans for her future. 

The answer to such poverty pay and conditions is that the next Labour Government must be as brave and as radical on this and other issues as its predecessor in 1945.  While in the long run the best protector of decent pay and conditions are the trade unions. Post 2015 Labour should impose Fair Pay for All.  A living wage, living sickness benefits, living pension and employment security for all. While at the same time introduce binding sectoral bargaining agreements between unions and employers for those sectors which can afford to pay more than a Living wage.

While this will save the Government money by reducing the state subsidy on poverty employers and increasing demand in the economy, it will lets not fool ourselves, cost more, especially in the public sector. This is a price worth paying and will need to be paid for by increases in progressive tax rates on those who can afford to pay more. 

I think to win the next General Election and get rid of the Tories we need to be honest with the public and also offer a genuine alternative. I asked my niece today if she voted in the last General Election. She admitted she didn't. I also asked if she thought the next Labour Government would ensure she would get a Living wage and security in employment would she vote for them? She said Yes. Her current MP is a Tory with a majority of just over 3000.

Hat tip picture to Pay Up Sainsburys.