Alan Brown RIP

Sad to hear that long standing UNISON member, Alan Brown, (see picture 2nd from left 2011) has passed away. Alan was a Caretaking Chargehand in Old Ford Housing Association since being TUPE'd transferred in 2007 from Tower Hamlets Housing.

I have known him for some 20 years. Alan was hardworking, thoughtful and had a wicked and self- deprecating sense of humour. He will be missed.

His funeral is this Thursday 24 March 2016. It will leave his home at 34 Sebright House, Coate Street, London, E2 9AD at 11am then going to Manor Park Crematorium for 12.30 returning to Sebright House afterwards.

His sister Jill says everyone who knew him is welcome. Alan had diabetes for many years and if you wish to send a donation instead of flowers she has set up a Just Giving Page https://www.justgiving.com/Jill-Brown13 for DiabeticsUK

West Hammers out Khanpaigning in Green St, Plaistow & Custom House

It has been a busy weekend for West Ham Labour. Yesterday I was out with a Labour canvass team for Sadiq Khan as mayor in Green Street. See Vice Chair Campaigns, Julianne Marriott, briefing the team beforehand on what to do. Highlight of the morning was calling at a Roman Catholic nunnery.

Then we met our MP Lyn Brown, at the East Shopping centre which was celebrating its first birthday. Some members also attended the anti racism rally in Trafalgar Square.

In the afternoon we were in Plaistow South ward with City & East GLA candidate Unmesh Desai.  As you can see from the photo outside the fire station, we had a number of (very) young socialists with us. I was with the team led by Stratford Cllr, Charlene McLean, who used her daughters pram to hold spare leaflets and sheets. Picked up some repair and school issues which were dealt with by local Cllr Neil Wilson. Picture of excited staffie, stalking cat and CLP secretary, Alan Griffiths.

In the evening there was a meeting of City and East Momentum followed by a social in Forest Gate. This morning there was another canvass team out in Custom House led by local Councillors Rokhsana Fiaz and Pat Holland. This evening there is Sunday Night Live at the Stratford Picture House on "Does Feminism Need a Upgrade" (5pm-6.30)

Click on picture to bring up detail.

The Big UNISON Prize draw - calling all UNISON members!

I have just (belatedly) taken part. It is really vital that we have up-to-date contact details of members for the forth coming battles ahead. All you need is your UNISON membership number or your national insurance number. It took me 2 minutes.

Enter the draw here https://www.unison.org.uk/prizedraw/

You can down load here paper forms for members who do not have access to the internet. Click on picutre above to see details.

 "From 15 February until the beginning of May, UNISON will be running a major prize draw – with a top prize of £10,000 cash for the lucky winner.

Entry is open to all existing members – and new members too – but we ask that they update or verify their email address and mobile numbers to enter.

This data will be essential for the union in the year ahead, given the current threats in the Trade Union Bill and the increasing need to be able to contact our members quickly and easily. Because of this, we’ve asked our UNISONplus partners to contribute prizes to help ensure the success of this draw, keeping costs to UNISON at a minimum.

To make it a success, we’re asking branches to visit or contact as many members as possible – particularly those who we don’t already have email or mobile phone details for – to get them to enter. There’s even a range of great prizes for the most successful branches". 

LOBOs and debt servicing of Council Tax Income

I am astonished at this graph. More evidence that LOBOs are indeed a National Scandal.
Hat tip https://twitter.com/DebtResistUK

Unison's Labour MEPs are in for services, rights and jobs

Some great reasons from UNISON MEPs on staying "IN" the European Union. Check out also the website "Another Europe is Possible".

"Unison's Labour MEPs: Theresa Griffin, Jude Kirton-Darling, Richard Howitt, Mary Honeyball, Linda McAvan and Claude Moraes are all in for services, rights and jobs. The only way for UNISON members to protect services, rights and jobs on June 23 is to vote in favour of remaining in the EU"

Mary Locke for Bournville (and Birmingham City Council)

The picture collage is from Saturday when I went to Bournville in Birmingham to help campaign for UNISON NEC member and NHS worker, Mary Locke, who is standing to be a local Ward councillor in the May 5 elections.

Yes, Bournville is the home of the Cadbury's chocolate factory and residents told us how they can sometimes smell the chocolate beans being roasted depending on the wind direction.

Mary is the nicest, most sincere and hard working UNISON rep I have ever met. She will be in my opinion, a brilliant local Councillor.

The ward currently has 2 Tory Councillors and one Labour (who is standing down due to ill health). Only one seat is up for election this year so it will be a straight fight between Mary and her Tory opponent.

Over 20 Labour Party activists turned up to help, including UNISON Vice President, Carole Sewll and the West Midlands Regional Secretary, Ravi Subramanian.

We were carrying out a survey of residents on local issues. It went down very well and I will think of suggesting doing something similar in West Ham. There was some 750 contacts made that day.

I enjoyed chatting to local residents, who by and large, were pleased to be asked their views on local issues. They were not shy in expressing themselves either!  I like coming to Birmingham and have been to see union members here fairly often in recent years and always look forward to it.

Apart from the Chocolate factory, Bournville is famous for being a "model village" built by the original Quaker owners of Cadbury for its workforce. As someone who works in housing I was impressed by the well built family sized homes with decent gardens. There is still no pub in Bournville due to its Quaker tradition.

After the canvass, many of us went for a meal at a local restaurant, which I think is a marvellous way to end such a day. Another thing I will suggest that we adopt in West Ham.

Check out Mary's website https://marylockelabour.wordpress.com/ and contact her to volunteer to help.

"What I learned when I visited a refugee camp in Greece"

Last week I went on a (self funded) delegation visit organised by the Greece Solidarity Campaign to Athens. David Lammy MP was a member of the delegation.

I will post on the visit but yesterday David wrote a powerful (and angry) article in the NewStatesman which I have copied below:-

"Unless Europe’s leaders summon the political will to act on behalf of the voiceless and vulnerable this untold suffering will only get worse, and I fear that Greece, perpetually teetering on the brink of oblivion, may well collapse as well.

Last week, while European leaders met in Brussels to discuss their response to the worst refugee crisis Europe has seen since World War Two, I visited a dilapidated shipping warehouse in Piraeus, the port area of Athens that has become home to thousands of stranded refugees.

What I saw was absolutely harrowing. Hundreds of refugees are living in inhumane conditions in a dark, damp and filthy old shipping warehouse, lacking supplies or even basic levels of sanitation.

I spoke to a group of Afghan teenagers who told me that a young child had tragically passed away in the camp over the weekend preceding my visit, and there will be more deaths to follow if Europe does not act urgently to address the situation.

It has become clear that this situation can only be tackled if European nations reopen their borders and work to reach a collective, and lasting, political agreement.

35,000 refugees are currently stranded in the Greece, and according to the UN up to 2,000 more are arriving daily. Macedonia closing its border has blocked the Balkan route out of the country, leaving 13,000 migrants stranded in camps on the border, and the situation will become increasingly dire day by day with Croatia and Slovenia following suit.

Greece finds itself in the depths of a double crisis. In addition to being on the front line of Europe’s refugee emergency, it is hard to imagine an economy in a worse state. Official figures show that unemployment is around 25 per cent, but the Mayor of Piraeus told me that in areas of Athens the true figure is at least 50 per cent.

Public spending has also been cut to the bone and last year’s third memorandum imposed further spending cuts worth seven per cent of Greece’s GDP, which itself has been in freefall since 2010. Over half of young Greeks are unemployed, leaving entire families reliant on pensions and charity. The head of the Greek local government union told me that public sector pensions have been cut in half, before taking into account further cuts of almost €2 billion announced in the most recent budget.

It is a source of shame to European nations that Greece’s government is being hung out to dry in this way, handed the impossible task of rescuing an economy that is on the verge of collapse together with managing a humanitarian crisis that is without parallel in Europe this century. Meeting with Syriza ministers made clear that the Greek authorities are completely overwhelmed, like King Canute trying to hold back an unstoppable tide.

The scale of this disaster overwhelmed me in its all of its inhumanity, cruelty and brutality. Turning our back on the great crisis of our time won’t make the problem go away.

A “one in one out” deal with Turkey simply does not come close to providing the answer. A quick fix deal is likely to break down in the future and, as the UN Refugee Agency has warned, the deal is unlikely to stem the flow of refugees trying to reach Europe. A collective political agreement is not only the right thing to do in a moral sense, it is the only real available option that matches the scale and severity of this catastrophe.

Unless Europe’s leaders summon the political will to act on behalf of the voiceless and vulnerable this untold suffering will only get worse, and I fear that Greece, perpetually teetering on the brink of oblivion, may well collapse as well".

Why can't actuaries make their minds up?

This is an article that I wrote recently for Professional Pensions magazine

"John Gray asks why agreement can’t be made on appropriate discount rates for the LGPS.

Currently I sit on three different open defined benefit pension bodies in different employer and employee roles. While I think that all my past and present scheme actuaries are personally wise and wonderful. I just wish they could agree with each other a little more often.

For example, at the moment those of us who are involved in the Local Government Pension Scheme (LGPS) in England and Wales are gearing up for the triennial valuation of funds this April (April 2017 in Scotland).

Different actuarial companies hold different "house views" on discount rates. The question is why?
Net Discount

The LGPS is collectively one of the biggest funded pension schemes in the world with some five million members and assets of around £192bn. Bizarrely there are currently 101 different administrative authorities who manage the scheme. It is a major investor in the UK and overseas.

Some 25% of active members do not work directly for local councils. Income from its investments subsidises the cost of providing pensions by some £3bn per year. While nearly all funds have historic deficits due to past underfunding, future employer contributions are capped.

Putting aside for the moment the important arguments that the way we calculate pension liabilities (and therefore deficits) is simply bonkers in these days of negative inflation, QE and ridiculously low gilt prices, we need our actuaries to make up their minds about what is the correct Net Discount Rate (NDR) ‎to apply to this national scheme.

The discount rate really matters. It decides future funding requirements and – most important of all to financially hard pressed councils and other LGPS employers - decides what their contributions will need to be.

NDR is the projected growth of the fund above inflation. So if the inflation is assumed to be 2% and growth is 5% the NDR would be 3%. The sting in the tale is that the lower the NDR the more employers will usually be expected to pay.

Range of discount rates
Quite rightly it is our scheme actuaries who make the final decision what the NDR is after consultation with the administrative authorities. However, currently there are a range of net discount rates across the different funds in the LGPS that go from under 2% to 3.5%. Different actuarial companies hold different 'house views' on discount rates. The question is why.

I could just about understand different schemes having different discount rates but for funds that offer the same scheme benefits with the same extremely strong employer covenant this doesn't seem credible.

Two of the four actuarial firms that value the LGPS tend to have lower NDR than the others. If they all used the same  NDR as the Government Actuaries Department, which is 3%, then it has been estimated that the combined LGPS deficits would be cut by nearly a half, a staggering £19bn. This suggests to me that since the NDR drives contributions many employers are already paying far more than they need to.

The NDR is not the only controversial assumption (otherwise known as an educated guess) made by actuaries. There are different assumptions made and argued over around future inflation, pay increases and life expectancy. There is even a debate about whether or not life expectancy is currently declining.

If liabilities and contributions to the LGPS are over stated by some too prudent actuaries then this will lead to further politically motivated attacks and scaremongering upon the LGPS. We cannot allow the LGPS to be destroyed in the same way as happened to defined benefit provision in the private sector.

John Gray is a pension board member at the London Borough of Tower Hamlets. (Personal capacity and hat tip to Glyn Jenkins from UNISON following his recent presentation to the London Pension Forum).

LOBOs are a National Scandal

Last week there was extensive coverage in the Standard and Independent on the UK LOBOs scandal. I have posted before on LOBOs (see labels)

Yesterday the Independent published a new report that John Mann MP and Chair of select committee, Clive Betts MP, had called for a Financial Conduct Authority and Parliamentary investigation into the scandal.

This is not just about Newham's exposure to LOBOs but a real national crisis. Councils all over the country, regardless of political control, have been completely ripped off by the banks. At the time of unprecedented austerity cuts to services, 250 Councils have £11 billion in toxic loans. It is not only Councils but Housing Associations have huge exposure as well. 

It is clear that these loans have been mis-sold but there are allegations of wide spread "kick backs" by banks to Council advisors. At the same time the banks were selling these loans some of their own traders were criminally conspiring to manipulate the Libor rate (which most of the LOBOs are linked).

The FT waded in on Friday also with a measured article by Jim Pickard, its Chief Political Correspondent (see below).

This is also an urgent problem due to legal time limits since as pointed out by in the Independent  “If councils are not looking at this they should be,” said Janine Alexander, a partner at the law firm Collyer Bristow. “If they don’t act quickly, they may run out of time.” . 

Doing nothing is not an option. I hope that the Government, the regulators, all Councils impacted and the LGA will get their act together and do something urgently. 

"Local councils suffer after taking out exotic loans

In 2009, Newham Council took what it thought was a canny financial bet: that interest rates would rise. The east London borough, the second most deprived local authority in England at the time, was an unlikely participant in the complicated world of structured finance.

The council took out six loans worth £150m on which the rate of interest would fall if long-term interest rates rose: and vice versa. But interest rates did not go up: they fell to a historic low. And now the council is facing mounting questions about its gamble.

Newham is not alone. Across Britain, councils have taken on hundreds of opaque loans. England’s local authorities have about £70bn of debt, according to the Chartered Institute of Public Finance and Accountancy.

Of that, so-called Lobo loans (Lender Option Borrower Option) make up in excess of £11bn. They were all taken out before 2012. Freedom of Information requests by Debt Resistance, a campaign group, have discovered 805 such loans to 250 councils.

The loans usually have a lifespan of about 50 years. Many are regular fixed rate loans but some are exotic products with embedded derivatives.

Even on the “vanilla” Lobos, a lender has the option at certain dates — typically every five years — to impose a higher fixed rate. At that point the borrower must either accept this or repay the loan.

Newham is in the spotlight because it is the biggest borrower of Lobo loans in Britain. During the 2000s it took out 27 such products at a face value of £563m instead of turning to the usual source of municipal lending: the state.

In its last set of accounts for 2014-15, Newham admitted the “fair value” of those loans had jumped by £256m in a year: up from £703m to £959m. “The increase in fair value is largely due to long-term interest rates falling over 2014-15,” it said.

Newham’s debts are a sensitive issue because it is seeking savings of £50m in 2016-17 after government cutbacks. It took out the loans between 2002 and 2009 to refinance £179m of old state loans and then raise £385m for capital investment including the Olympic stadium.

Cornwall also took out Lobo loans, as did Edinburgh, Brent, Newham, Lancashire and North Lanarkshire

It says the borrowing — from lenders including RBS and Barclays — led to a “dramatic reduction” in interest payments compared to its old fixed-rate loans from the Public Works Loan Board (PWLB), a wing of government.

But critics question whether Newham is still getting a good deal. Some loans appeared cheap at first but are now generating interest rates of up to 7.6 per cent.

Joel Benjamin from Debt Resistance said Newham should have borrowed from the PWLB instead. “There was no need to enter into speculative derivative contracts . . . for what ultimately constitutes a gamble with local taxpayers’ money,” he said.

Newham’s 27 loans represent a mixed bag including some ordinary fixed-rate loans. There are nine “range Lobos” under which the council must pay a higher rate if Libor falls above or below a certain range — which has happened.

Most contentious are its six “inverse floating Lobos” from RBS under which the interest rate payable rises as the 10-year interest rate falls. If the rate had risen, this would have provided a hedge: instead it fell. The six loans have a face value of £150m but their “fair value” has leapt from £176m in March 2014 to £271m in March 2015.

The council says that it took out the loans in 2009 when yields were expected to rise, not fall. “This situation was not predicted by the best pundits,” it says. It admitted the inverse floater Lobos were “expensive” but said their rate should fall amid expectations of an interest rate rise.

Other councils which took out “inverse floaters” from RBS include Cornwall, Edinburgh, Brent, Lancashire and North Lanarkshire.

Overall, Newham claims to have saved money through its Lobos, calling them “prudent, affordable and sustainable”. It says its rump of £65m of PWLB loans have a slightly higher average interest than its Lobo loans.

But campaigners say this is an “apples vs pears” comparison because the legacy PWLB loans were taken out when interest rates were much higher.

There was no need to enter into speculative derivative contracts . . . for what ultimately constitutes a gamble with local taxpayers’ money

- Joel Benjamin, Debt Resistance

A committee of MPs last year held an inquiry into Lobo loans amid criticism of their opaque nature and high exit penalties. There are also concerns about the potential conflict of interest when firms which advised councils received commission from City brokers.

Robert Carver, a former derivatives trader at Barclays Capital, told the committee Lobo loans were “horrible stuff”. “I do not think anyone who fully understood it would do it,” he said.

Barclays said it rejected any suggestion that it had not acted in councils’ best interests. It said no council had ever complained about the “straightforward, fair” loans. A source at the bank said it had made losses on its council Lobo loan book. “This is a conspiracy without a victim,” he said.

RBS said council finance functions were run by “qualified officers”.

Meanwhile, three Labour Newham councillors have criticised the authority for initially refusing to hand over copies of the original loan contracts. “If we are spending more on interest rates than we should be . . . this is an extremely important matter of concern to our constituents,” they said.

Treasury management firms, which advised the sector, typically advised councils to hold less than 30 per cent of their debt in variable rate Lobos. Newham’s Lobos — by contrast — make up 90 per cent of its debt.

That figure spiked in 2012 when £544m of Newham’s PWLB debt was wiped out as a result of the government’s abolition of the housing revenue account system.

The Local Government Association admitted Lobos were “riskier instruments” in the long term. But it said low interest rates meant no lender had yet exercised their “lender option” to increase rates.

“Some local authorities may have been able to get better deals by delaying their borrowing if they had anticipated the credit crunch . . . they can hardly be criticised for not doing so,” it said.

Private Eye, EU referendums and the Role of Coincidence

Chance and coincidence can be a bit weird and unsettling but you have to accept that it just happens from time to time.

This morning in Newham,  by chance I spotted a bundle of papers including musical scores dumped next to a communal recycling bin. I had a look and noticed that there was a single well preserved copy of the satirical magazine "Private Eye" from  1975 in the pile. Which I recycled and took away to read.


Oddly, there was also some minutes from a 1986 Hammersmith and Fulham Conservative Party meeting.

While very few people nowadays will have a clue what the joke was about on the front page regarding "Social Contract" (Goggle it and weep), the 7 March 1975 edition of this 41 year magazine was extracting the Michael about the forthcoming Referendum on the UK membership on the European Union that was also due to take place later that year in June.

....Well, I thought it was all a bit weird.