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"We are looking to add further independence, skills and knowledge to Newham’s Overview and Scrutiny Committee by seeking 3 independent co-optee members.

For further information please visit https://orlo.uk/CommitteeVacancies_zZsia

Closing date 8 August"

Being Scrutinised at Scrunty

Recently as Cabinet member for Housing Services I was called to answer questions by the Newham Overview and Scrutiny Committee.

This is a statutory committee of Newham Councillors whose role is to hold the Councils Executive members to account and make recommendations. 

As a backbencher Councillor for the previous 8 years, I had been a member of various scrunities (some longer than others) but this was the first time I had appeared as a member of the Executive. 

The Chair asked me to first give an outline of my housing brief for the benefit of the Committee. 

I explained that the present housing structure in Newham had been drawn up by the previous administration who had intended that all Councils services should be "outsourced". The new Mayor, Rokhsana Fiaz, has put a stop to all "outsourcing" and ordered a rethink and corporate redesign.  So things will change.

My housing brief is currently in 3 parts:- 

1. Traditional Council social housing management of our stock: repairs, rents, voids, allocations, residents engagement, Anti social behaviour (ASB), fire safety, right to buy, tenancy and leasehold enforcement. The Mayor has reserved the regeneration, planning and strategic delivery portfolio.

2. Homelessness and temporary accommodation (although not rough sleepers. The published minutes need correcting slightly on this), assessment, advice, support and prevention.

3. Private sector rental licensing and enforcement, including houses of multiple occupation (HMOs), advice and support. We really want to work with and support landlords but we won’t hesitate to drive bad and criminal landlords out of Newham and into the Courts. 

There are still a few grey areas (pardon the pun) about the scope of my brief due to the fragmented nature of the current structure.

Some Key issues

Number one is fire safety in our blocks including the removal and replacement of unsafe cladding. This is costing us a huge amount of money (waking watches) and it would appear that the Government will not reimburse anything like our total costs.

Review our entire allocation policy including the suitability of the offer for homeless temporary accommodation in light of the new Mayoral priorities and also changing Government policy. We have nearly 27,00 households on our waiting list and nearly 5,000 households in temporary accommodation. I suspect due to "sofa surfers", homes with grown up children who cannot afford to find a place of their own as well as all those private sector tenants, who have to spend most of their income on rent that the real figure of those in housing need is far higher.

Reform RMS repairs: (our in house repairs maintenance service). We have a number of good staff but the repair service is currently not good enough. RMS also has a limited new build module housing capacity which could be used more to build new homes on unused areas in estates.

Reduce Homelessness: Prevention is key. We spend far less than other boroughs which may be the reason why we have such high levels of homelessness. We need to educate residents about the scale and the real reasons for the housing crisis. We need more "joined up" thinking between housing and social services on these homeless issues which might result in financial savings to the Council and a better service for the people in Newham

Anti-social behaviour (ASB): While enforcement is not the only tool it is important. Too many residents live in fear of a tiny number of violent and abusive residents.

Fragmented caretaking service: This has been hived off the control of housing management. This has made it difficult to do anything about these services, particularly those services in estates, as I have no authority to manage these services.

Tackling housing poverty by supporting residents getting advice about benefits and support into decently paid work. We need to make sure "that work pays". This will reduce evictions and homelessness.

The need for Culture change and Resident Representation: There had to be a culture change on the part of both Members and officers in the way in which they interacted with residents, if residents were to be "at the heart of everything we do". There are practically no tenant and/or resident representation in Newham and while an annual citizens assembly on housing would be a good thing, it would not be a substitute for a proper democratic and accountable TRA. While we did not want to return to the “bad old days” when in some cases a small number of tenants had dominated the Tenants’ and Residents’ Associations (TRA’s) for their own ends. We need to carry out a review of tenants’ and residents’ representative structures as soon as possible.

Private Sector Housing Licensing - Enforcement: There will be an increase in the number of housing inspections undertaken to ensure that landlords were complying with the terms and conditions of their licences. Inspections and enforcement action are key to ensuring compliance and making landlords aware that non-compliance would not be tolerated. I am not at all opposed to properly managed private rented sector accommodation and I would expect any Councillor who rents property to be an exemplary landlord.

Planned Maintenance: We need to have planned maintenance and refurbishment programmes for Council properties. They are much cheaper than carrying out emergency repairs and better for residents. The “Decent Homes” programme ended eight or nine years ago. Therefore, there was a need for a properly planned programme. A housing stock survey is about to take place which will guide this.

Housing Associations: My own casework had shown me that the management performance of a number of housing associations within the borough had been abysmal. Therefore, if housing associations wished to work in partnership with the local authority, and I welcomed partnership working, it was necessary for poorly performing housing associations to improve.
In the Q&A with Councillors afterwards

In response to a question about the high cost and poor quality of some temporary accommodation I explained long-term lease agreements with decent landlords may provide an alternative form of accommodation and would do away with the requirement to pay a expensive “nightly” rate for private sector temporary accommodation.  Landlords want long term security of income. There are now a greater number of Council inspections of such accommodation. We are also thinking of buying and leasing properties.

Regarding the adverse effects that bad landlords had on their tenants, neighbours and good landlords, I hoped to see an increase in the number of prosecutions of bad landlords and an increased number of costs orders in the Council’s favour. Also, in the case of illegal evictions, I would want to see if necessary, custodial sentences for landlords to change their behaviours.

(picture college of some of the housing visits and inspections I have undertaken in last week). 

"Newham mayor overrules council committee to push ahead with SPV spending"

Check out this report in yesterdays "Professional Pensions"about Newham Mayor, Robin Wales, overturning the recommendation of the Overview & Scrunity Committee, that no money should be spent on a proposed "Special Purpose Vehicle" (SPV) until it had been fully considered by its Pension Committee. The funding to "develop the proposal" will now go ahed.

The Overview & Scrunity Committee had voted 5:1 for this pause before spending up to £500k of public money. The former Chair of Newham Pension Committee, long serving and respected Councillor, Winston Vaughan, had also supported this recommendation not to go ahead.

If the Newham Pension Committee later decide that they do not want to go ahead with this SPV proposal then the money could be wasted.

Newham Councillor and Scrunity Chair, Dianne Walls is quoted in the article as saying  "..it is important to look at the proposal in more depth rather than "spending lots of money without due process".

She said: "It's a matter of principal, mainly because there's a lot of decisions made at cabinet and mayor level that have not been open and haven't been scrutinised properly."

She added: "As we've seen in the past, when decisions are made in haste or without due process, then we make mistakes and we lose money. This is not to say that this actual proposal is wrong - we just don't know - we need to look at it very carefully before we commit half a million pounds."

At a time when the council is being forced to make £50m in cuts, she said that spending public money without investigating properly raises the risk of making costly mistakes, which the council "cannot afford to make".

Call-ins are very rare, with Walls saying only two have been made by Newham's OSC in 12 years".

Check out previous posts on this proposal (Warning: more than 140 Charactors)

here; here; here and

here & here

Speech to Cabinet on “Alternative Finance Proposal for Newham Pension scheme" (Special Purpose Vehicle)

Below is the full version of the speech I gave this afternoon at the crowded Cabinet meeting at Newham Dockside in support of last night's recommendations by our Overview & Scrutiny Committee.

The recommendation was that we should not spend up to £500k on a SPV for the pension fund without the approval of the Pension committee. This meeting was open to the public and I believe a journalist was present.

“Thank you Mayor. John Gray, Councillor in West Ham ward. I apologise that I have not had time to properly prepare this speech but I support the recommendations of the Overview & Scrutiny Committee for the following reasons.

The first reason for further review is "Risk". This proposal appears to be, on the inadequate information I have been allowed to see so far (despite being a Councillor and member of the Investment and Accounts Committee) to be an expensive and I am advised, dangerous, gamble with residents' and pensioners' money. To be clear there are no, I repeat no budget “savings” to be made from this proposal.

It will only be at best a (welcome) deferral of Council “contributions”, which if the pension fund does well may not be needed. But if the pension fund does not perform well, then it runs the risk of plunging it into an even greater deficit over the next 20 years than the £298 million current shortfall.

The second reason is “Process”. To be clear,I bought up this item in the Pension work plan at the Committee meeting in June and was reassured that this proposal was at a very early stage and nothing would be agreed without the agreement of our committee. There was no mention of a 20 page PowerPoint presentation dated April and no mention of spending up to £500k before the pension committee had agreed to this proposal.

Some background to the issues. Newham Council is obliged by law to allow its employed and (many of its) contracted out staff to join the national local government pension scheme (LGPS). To pay for the cost of pensions, Newham and other Councils have their own local pension funds which they, other employers and staff contribute towards. Thousands of former Newham staff are already dependent upon the scheme for their pension, the majority of whom were low paid.

This money is usually invested in British and worldwide government bonds, company stocks and shares, which are intended to grow in value over the long term and pay for the pensions. The value of the Newham fund is currently around £1 billion, but it has a significant "deficit" (i.e. it is estimated that it has promised to pay out more in pensions than it will get in contributions and from investment growth).

The current deficit is £298 million. The Pension fund has been in deficit for many decades. There have been a series of plans to pay off the deficit over up to 20 year periods which have not worked and the repayment period just keeps getting extended.

It should be noted that Newham has decided to adopt a more "optimistic" valuation of the deficit than many other Councils. Other Councils employ advisors who would value our deficit as being far worse.

There are a number of reasons for the deficit but the chief one is that the Council (as have many other Councils) has consistently failed to accurately predict what are the future costs of the scheme and have therefore failed to put enough money into their funds. This means that Newham is currently paying millions of pounds per year extra to make up for the past shortfall.

The other main reason is that unlike other funded public sector schemes such as the Universities and Railways, the LGPS is split up into 101 different funds which means expensive duplication of advisers and managers and that they are far too small to achieve economies of scale to cut costs and improve performance. Size and scale matters in pensions and the Newham scheme is arguably far too small and therefore inefficient.

Past deficits are the responsibility of Newham Council tax payers while the risk from the cost of future pensions is now the responsibility of staff. If the cost of providing future pensions goes up by more than 13% then Government legislation will mean that staff pensions will have to be reduced and/or their contributions raised.

It is now clear from QC legal advice that there is no “Crown Guarantee” to the LGPS. In the unlikely but not impossible situation in these uncertain times that a Council goes bust, who will pay the pensions of our pensioners?

It is imperative to residents and staff pensioners that the recovery plan to pay off the deficit is not to be put at risk. There must be sufficient funding for the scheme and the Council must not continue to underfund it and therefore making the deficit even worse. The Council needs to invest to save.

Finally, we must make sure that managers and adviser costs are reduced and returns enhanced. Newham pension fund is being ripped off by the financial services industry and this is where we should be making savings.

The proposal itself (based on the limited information available)

·Newham currently pays £35 million per year in employer contributions to the staff pension scheme.

· It pays this because it is advised by pension experts called “actuaries” that it needs to pay this amount of money to meet its future pension promises to staff and make up for its failure to pay enough money into the scheme in the past.

· The proposal argues that Newham does not have to pay so much into the staff pension scheme because the Actuary is being too cautious about investment returns and pensioners life expectancy (being “Prudential”). If he or she was more optimistic about this then it could pay less.

· These change in assumptions could mean that the Council will only have to pay £30 million per year instead of £35 million. Therefore “saving” £5 million per year and £15 million over 3 years. Note this is “revenue” and not “real savings”.

· To “safeguard” the Pension fund it will be given a Council owned asset, such as a property or group of properties (for example only the Morrison’s shopping centre in Stratford) as security against the “Prudential” assumptions being right after all. Rents from the asset would then be paid into the pension fund. It is unclear but in theory the building could also be sold by the pension fund to make up the difference.

· The presentation on the Newham website makes it clear that after 3 years the proposal will have to be revalued and if the assumptions made are wrong, then the Council will have to pay an extra £20 million in contributions to the scheme over the next 20 years to make up for this new shortfall. This is on top of the massive deficit/shortfall they are already funding.

· It is of concern that the Newham Council Executive continually stress that they make prudential decisions regarding Council borrowing over the Olympic stadium and Red Doors but don’t want to make prudential assumptions regarding pension investments.

· On the information so far it seems to at best that this is a clever (but expensive) speculative punt to reduce staff pension contributions over the next few years by gambling that the actuaries were just being overcautious and we didn’t need to put that amount of money aside in any case. However, at worse it will make the scheme far more expensive and the deficit even bigger. This needs further investigation by the pension committee.

I finished by asking that the Mayor agrees to let Newham Pension Committee, whose responsibility it will be is to approve the final proposal to agree that they are indeed minded to scope it out before any public money is spent on it - and possibly wasted if we don't agree to the proposal".

There was some further debate at Cabinet and I understand that the Mayor decided to not follow the recommendations of Overview & Scrutiny and that public money will be spent on the developing the SPV.

I am preparing a series of questions to be submitted to our treasury officers and our actuaries which I will post in next day or two once they are submitted.

Overview & Scrunity "Call in" expenditure on Newham "Special Purpose Vehicle"

I was very pleased to hear this evening that members of Newham Council Overview & Scrutiny Committee had agreed to "call in" the Executive Mayor's decision to spend up to £500,000 on developing a  "Special Purpose Vehicle" (SPV) for the Newham Staff Pension fund.  This decision to spend the money was made without the agreement of the Investment & Accounts Committee.

I have raised concerns about this proposal here, "Professional Pensions" have questioned whether it is costing too much here and a "leading financial figure" described it as "bloody dangerous" here.

Many thanks to Cllr Nazeer for requesting the "Call in".

"Dear Members of Overview and Scrutiny.

I am writing to request that you support my application to "call in" the decision by the Executive at the Cabinet Meeting on Thursday 23^rd July 2015 (item 5) to spend up to £500,000 of public money on setting up an “Alternative Asset backed Financing for the Newham Pension Fund”.

I believe that this is the wrong sequencing for this decision because the proposal has not been consulted upon and agreed beforehand with the Newham Council Investment & Accounts Committee. As a member of this committee I am concerned that this proposal may not be in the best interests of the Council nor the staff Pension fund and we might waste this £500,000 if the Committee decide that this proposal is not appropriate. I understand that the alternative asset proposal has significant risks attached to it which I feel merit proper scrutiny. 

It is inappropriate in principal for any such proposal to go ahead without the agreement of the Investment and Accounts committee beforehand.

I request that the Overview & Scrutiny(O&S) should examine the arguments and consider making a recommendation back to the Executive that no further expenditure of public funds is made until the Investment and Accounts committee have had a chance to fully consider the proposal and are made aware of all  the possible costs and benefits of the scheme".

Cllr Farah Nazeer. 

Submission on “Call in” over Pension Provision for Members 22 July 2015

UPDATE2: I have seen copy of advice from LGA solicitors that Pensions for Councillors are not lawful. Check out http://grayee.blogspot.co.uk/2015/08/lga-legal-advice-on-pensions-for.html

UPDATE: Overview & Scrunity voted 5:3 on Wednesday to recommend to Mayor that he postpones the pension provision for some himself and some Cllrs until we can afford it. This is an account by a journalist of that meeting. However, at Cabinet the next day he approved paying the pension.

"This is a report I submitted today as a Councillor to Newham Overview and Scrunity Committee.

"Recommendation
1. Firstly, I would like to thank members of Overview and Scrutiny for supporting my request that this decision is “called in” and reviewed.

2. The decision by the Executive Mayor to award himself and members he appoints as Mayoral advisers (and elected Scrutiny Chairs, Group Chief whip and Secretary) a non-contributory pension of 13.4% costing up to £603,000 at the Cabinet meeting on 25 June 2015, needs to be independently examined and reviewed by Overview & Scrutiny.

3. There is a clear and obvious conflict of interest for the Major (supported by his cabinet appointees) to make this decision without independent scrutiny since he will be significantly financially better off if it goes ahead.

4. I submit that this decision at a time of savage cuts in our Council budget is wrong for the reasons detailed below and that Overview & Scrutiny should consider making a recommendation to the Mayor that no such pension should be provided by Council taxpayers.

5. Newham Council is currently consulting on how to implement a £91 million in cuts including £50 million alone next year. I believe it is wrong that the Council at this time of unprecedented savage cuts to its budget and us closing children centres and community facilities, we should be considering to pay what is in effect an extra 13.4% in allowances for 29 out of 61 elected members.

6. We already have to spend £78,000 per year for the next 20 years to fund the deficit in Council pension arrangements for pre 2014.

 7. This proposal is in my view extremely damaging to the reputation of the Council and all elected members. It will be divisive and damage our relationship with residents who will not understand why at a time we are consulting on cuts, we are paying more to some elected members.

 8. If and when our financial situation improves then this matter could be reconsidered.

 Legal
1. I have sent previously legal advice to the Investment & Accounts Committee, including Mayoral advisers and Council officers, that the provision of any Council funded pension to Councillors is likely to be Ultra vires (unlawful) in the view of the Local Government Association. I have received further advice that this view remains.

2. I have been refused copies of the legal advice in the original report on this provision (I am appealing this decision). As an elected Councillor representing the concerns of my constituents about possible illegal payments and expenditure of public money, I am extremely disappointed at this refusal. This has obstructed my work as a Councillor and this submission to Overview & Scrutiny committee.

3. I suspect from the main report that the legal advice is (as often the case) contradictory and that this decision will be open to challenge by either the Government or local residents via judicial review. In the report it is stated that “The Secretary of State could at any time by order, restrict the use of S.1 of the Localism Act 2011 and by doing so bring a locally introduced scheme to an end”. So it would appear that at any time this proposal if passed today could be struck out by the Government? As a Council facing massive cuts we cannot afford to waste money on costly legal opinions and Court costs.

4. I also think that this report is in contradiction to existing Council policy passed only last year regarding a defined benefit type of pension for all members. This decision has also been overtaken by events following the budget cuts.

5. I would like to make it clear that the decision by the previous government to pass legislation to bar all Councillors and Executive Mayors from access to a pension scheme was petty and politically spiteful. However, we are democrats who believe in the rule of law and therefore have to accept decisions that we do not agree with. This proposal may be well intentioned but it is misguided in the extreme.

6. Even if it was lawful to have such a pension scheme for the Mayor and his advisers, I think in light of the current financial crisis facing the Council, it would be inappropriate to fund this provision.

Evidence
1. The original report on pension provisions is also in my view unclear, contradictory and confusing. It would be unsafe to make any decision based upon it. For example it argues that providing a pension will encourage younger Newham residents to become Councillors and existing Councillors to become mayoral advisers? Where is the evidence for this?

2. I have seen no evidence that the candidates and elected members 2014-2018 are less inclined to become mayoral advisers, part time or full time? I suspect that the average age of the current 2014-2018 Newham Councillors may well have gone down since we were barred from pensions in 2014.

3. The number and selection of cabinet members and those who receive (none Group elected) SRA is purely in the gift of the Executive Mayor, so there is no guarantee or objective process that they would ever be given a Cabinet position or SRA. This in contrast to the appointment and promotion of Council officers.

4. If the reason why the Mayor and only Councillors who are full time or receive a SRA should have a Council pension is because they suffer a determent in their careers by public service then surely it would be logical for all Councillors to receive a pension? Since all of us will suffer to lessor or greater extent in our professional careers by our public service commitments. It is noted in the report that the average councillor spends around 20 hours per week on their ordinary duties.

5. Since I believe that our existing SRA allowances are more than adequate then surely in the light of the unpreceded savage cuts Newham is facing then the Mayor and all Cllrs should pay their own pensions? Since 2014 I have paid 10% of my Councillor allowances into a private pension plan. For which I receive significant tax relief. Council officers could source an appropriate scheme at little or no cost to the council. This could be reviewed when austerity ends and the financial situation improves.

 6. Apart from the Mayor who receiving £81,029 per year, the 10 Full time advisors referred to in the report receive up to £44,672 in allowances. This is more money than I have ever earned or any member of my family. The Council has estimated that 20% of Newham residents earn less than a minimum wage and 50% less than a living wage. I do not think it is unreasonable for Councillors who are full time earning £44,672 to put 10% of their income into their own pension plan.

7. I think we separately need to look very seriously at the number of SRAs for executives and council members in light of cuts. Do we really need to have 10 full time Councillors plus the Mayor and 19 others receiving a SRA? Other Executive models have far less full time and part time Councillors on
SRA.

8. I accept that elected members have to perform important legal functions such as scrutiny, planning and licensing but we employ professional officers and a senior management team to run the Council. Elected members should be concerned with setting strategy and oversight and should not in my view be running operational services.

9. If some elected members are to have a pensions then why has it been set at 13.4% of allowances? It seems illogical to set it at the old defined benefit rate which was an actuarial derived figure dependent on that schemes investment and mortality projections. Defined Contribution schemes should calculate contributions on the basis of replacement income. While I don’t agree with the principle of pensions for some elected members at this time the methodology should at least be consistent.

10. Why is it being proposed that the employer contribution rate being set at 13.4% when new employees of companies controlled and set up by the Council (for example NewhamActive) are only getting I believe a 6% employer contribution?

11. Also, why is the proposed scheme “non-contributory”? There no requirement for the selected elected members to personally contribute towards a pension from their allowances in order to receive an “employer” contribution? This is in my experience a standard requirement for such pension arrangements.

12. Nor do I understand why it is projected that not all members who would be eligible to join would fail to do so? It is unlikely that anyone will refuse to take up this pension if offered. Since it will cost them nothing to join.

13. Since the Council does not have any policies for maternity or paternity leave for elected members on the grounds that they are not employees, I am surprised that what is in effect an occupational pension it is being proposed for some members?

14. I note that there has been no mention of a Sharia compliant pension option.

15. In summary, I am also opposed to this proposal since I fear it is unaffordable and unlawful and will damage the Council’s resilience agenda and our desire to promote a “Strong and Cohesive Community” and as an “Efficient and Trusted Organisation”. We will run the real risk that we will all be perceived (wrongly in my view) in the most difficult of economic times as only be interested in ourselves and feathering our own nest".

John Gray West Ham Ward Councillor (and member of Investment and Accounts Committee) 22 July 2015

My "last" Overview & Scrutiny Committee Meeting...

On the 25th March I went to the Newham Council Overview & Scrutiny (O&SC) Committee meeting at Newham Town Hall.

This is the last such meeting before many Council functions close down for "Purduh" due to the impending elections on May 22nd.

As a Newham Councillor I am a member of the O&SC because I am Vice Chair of the Housing Scrutiny Group.

I am re-standing as a Labour Candidate for West Ham ward (many thanks for the support of ward Party members in my reselection). So if it goes badly in May this could have been my last O&SC meeting.

Check out the publicly available agenda and minutes here.

There was some controversial items about the proposed closure of the Vicarage Lane "walk-in" medical centre and a planned 6% cut (Tory speak for NHS cuts is "over target"). Our local NHS budget is also planned to be "flat" (0%) for the next 2 years. This will mean that in real terms (after inflation and it was confirmed that the cost of health care rises faster than normal inflation) that the cuts to our local health services will be much, much worse than 6%.  So much for the Tory pledge that the NHS will be safe in their hands! 

Next item was the on the Britannia Village Medical practice. Representatives from NHS England confirmed that the lease on the practice will not be terminated early but it will remain under review when it does end.  

There was also an update on "NHS Health Check".

The final item was a written report and presentation by the Newham Council team who are implementing the national programme locally on "Troubled Families". The report was very positive about the teams efforts to turn around the lives of such families. This scheme was introduced following the riots in 2011. Councils are given money to give these families intensive support to change their lives.

I am very supportive of these initiatives but made the point that if families live in extreme poverty and overcrowded homes there is only so much that can be done.

I did ask whether any of the officers presenting this (very good) report had heard of the social housing pioneer, Octavia Hill? Sadly, they said they had not, but said they would look it up. I am sure they will.

I love history and find it fascinating that this new government initiative on "Troubled Families" mirrors very much the work by Octavia Hill  (see picture) more than 100 years ago.  She said that you cannot deal with people and their homes separately. I would of course add that you cannot ignore poverty either in that mix.

If the good folk of West Ham ward repeat what is in my view their very good judgement of 2010, I hope to be back in some Council scrutiny role after the elections in May.