Friday, May 24, 2013

A Bird in the Hand

Waiting to see if a window in the weather might let me fly two jobs today but it's not looking hopeful as the 'Great British Summer" gets underway in traditional rain, sleet, hail and thunderstorms. Wonderful to have our Blue Flags back but it would take a brave soul to walk on the beach as I write this.

Keeping an eye on the vigorous blog debate surrounding the collapsed TransEuropa and the Port of Ramsgate and I wonder if several of the more exercised contributors may have missed something? If Thanet Council had foreclosed on the ferry operator three years ago, when the debt was hovering at £1 million would we be financially worse off than we are today?

After all, this is a large debt for the use of the harbour by a ferry company and not money the Council had in the first place. In the interim period the Council had an obligation to keep the Port of Ramsgate operating and there was a benefit to the local economy in having a cross-channel service operating, in much the same way as small regional airports in Europe are paid, a small pittance by the likes of Ryan Air but benefit from the tourist traffic in a broader sense.

Without a doubt, this is a serious debt that has run wildly out of control over the last year, with little or no chance of recovery. However, one question that needs addressing is whether Ramsgate is better or worse-off, as a consequence of the Council, like any sensible creditor, attempting to find a way of helping the ferry operator through its financial crisis, rather than pulling the plug on the debt two years ago?

Perhaps we should think hypothetically of the harbour, in terms of a large and expensive local car park, frequently empty and used by the lorries of a big supermarket delivering in and out of the island and subject to a regular billing process for the privilege. The supermarket chain admits to having cash-flow problems and the Council suggests a reduced payment schedule until the business can climb back on its feet. This works for a short while but then the business folds, leaving large debts everywhere. Was the Council, as a creditor, right to follow this initial course of action but wrong to let the debt run out of control?

Were the residents of Thanet better or worse-off as a consequence of the Council's decisions or was there really no change, as the £3 million only existed on paper, which would have been nice to have if there was any sensible way of achieving a solution that kept the cross-channel route operating in the long term?

It's a simplistic argument of course and there is of course a great deal more to explore next week in Cabinet in terms of the conduct of proper and correct local government process but I think we need to retain sight of the financial context as opposed to counting £ 3 million which never existed for us.

17 comments:

Anonymous said...

It seems sad to me that we should be offering free berthing etc. in order to attract ferry operators and the like to Ramsgate. One assumes that they are not falling over themselves to come to Ramsgate in the first place. Can somebody explain why?

Steve h from ramsgate said...

Simon,

If port operations created the great wealth that you suggest, why is Dover such a dump?

I assume that as the hole isn't real in our finances, we can fill it up with unreal cash as well? Surely we can fix the hole buy buying up a few sets of Monopoly?

This also suggests that the funds being used to plug the not real hole are also fantasy. Why were things such as the reserve fund for Maritime on the financial report as a positive balance when they don't exist?

The cost of keeping the port open with no income is a very real cost, unless of course the people working there are also fantas, or are happy to be paid with thin air.

I think we are beginning to understand why the council is so bad at simple commercial concepts when a failure to be paid is dismissed as not a real loss.

Anonymous said...

I see that "non-essential" spending has been frozen to claw back waived port fees. If we never had the money in the first place then how can it be "clawed" back? Does it mean no more free parking for councill employees at the multi story car park? No more biscuits at council meetings? Or does it mean that services that most people would consider to be essential will be curtailed?

Anonymous said...

Simon, There are a number of factors here which are most unhealthy. What you say is correct up to a point, but not £3.3M. You owned up to accepting responsibility for agreeing £1M. That allegedly was an underestimate and had in fact careered out of control and reached £1.7 when Labour took control. The whole situation was then suppressed yet again and other that Hart and Poole no-one was told. The debt was allowed to spiral out of control and it would seem the accounts showed a credit of £3.3m that TDC were not receiving. It was only after it was announced that the Ferry Company had folded, did TDC own up to the disaster. I get the impression that having found that your initial and almost credible £1M was a massive understatement in itself that you are now backing away from criticising Labour or the officers because your Cabinet were almost as culpable.

Simon Moores said...

I am having trouble following the logic of some of the arguments. The port exists and boats of all sizes come in and out and pay berting fees. Having a big operator on a cross channel route is a benefit to the local economy.

But this operator owes money. We never had it. We may have looked forward to it but closing them down two years ago or even a years ago would not leave us any better off. The port runs whatever, and has its own expenses regardless of TransEuropa or not

Anonymous said...

The Point is that if the port would benefit from a big operator, why are the big operators not queueing up to get in?

Anonymous said...

Simon, Purely from the financial side could you explain why everyone was allowed to carry on spending money you hadn't got from 2011 and on the false premise that the Council were receiving the port fees. Why did the Council continue to account for and spend that money when it wasn't coming in and when it was most unlikely to ever come in. Why were the accounts not challenged long before now? Was the debt hidden or can Councillor's not read accounts?

Anonymous said...

Part of the problem seems to be that we were spending money that we hadn't physically received and in particular seemed very unlikely to receive for some time, if at all.

We should have cut our cloth early on in this process and made provision for not receiving a large portion of this debt. What would have happened if the benefit money didn't come up or worse we had to pay back benefit money or the crematorium works were on budget? Due to the sparsity of information in the public domain it seems that we may have got lucky to some extent.

Another part of the problem is that a lot of councillors don't appear (through no fault of their own) to have been in the loop on this and as a result had no opportunity to express an opinion on what should happen and maybe drive proactive timely action rather than being forced to take reactive action at the end.

Simon Moores said...

By "spending money the Council hasn't got! I assume you mean spending on assumption of a the book debt being paid?

Local government finances, as I understand them don't quite happen that way in that a Council is not supposed to spend money it hasn't got, rather it budgets against the big ticket items such as the formula grant, KCC, council tax receipts etc.

To be perfectly honest I have no idea why the accounts weren't challenged and that's really a matter for the fiance and audit committee. You will of course be aware that Clive Hart in his wisdom appointed Cllr John Worrow to the well-remunerated Chair of Finance, a man, who, to my knowledge, has absolutely no grasp of figures but a great personal interest in diversity.

I'm sure Clive knew what he was doing ad I'll be sure to ask him next week.

Anonymous said...

It seems that politicians and public employees are more susceptible to the Peter Principle than the man in the street.

Anonymous said...

We don't get free tea and biscuits -finished a long time ago!!!!!

Bernie said...

will the public ever get a chance to ask these questions though?! x

Anonymous said...

So 12:01, you don't deny free parking, which must be a big benefit. Does HMRC take anything for this, or is it tax free?

Simon Moores said...

Quite what free parking in Margate has to do with the Port of Ramsgate, eludes me!

Anonymous said...

Re free parking in Margate. Given that Ramsgate is part of Thanet, then the whole of Thanet is owed this money. TDC is having to claw the money back by cutting spending on non essential services. Free parking for council employees is non essential spending, hence free parking in Margate is to do with the Port of Ramsgate, unless Ramsgate parish council wants to claw back the money on their own. Or have I got it wrong about free parking for council employees in Mill Lane car park?

Simon Moores said...

Somewhat obsessed with parking 7:49 are you not? Others people may have more regular subjects to keep them awake at night.

Anonymous said...

Thought the theme was about parking/berthing a boat for free, so free parking is relevant to this discussion. As yet nobody has denied that council employees park for free at Mill Lane. But promise not to mention it again if I am wrong about that fact. :)