Wednesday, May 22, 2013

A Ferry Fiasco?

The subject of the £3.3 million debt owed to Thanet District Council featured on last night's BBC Southeast news and of course several local weblogs with of course, the now compulsory ;'Green' Cllr Ian Driver, popping-up on his soap-box to give his opinion, rather than asking anyone with credibility or a command of the facts.

By any measure, it's a huge amount of money and there will be an extraordinary meeting of the Council's Cabinet, next week to discuss the debt.

As ever, wild speculation abounds across the blogs, much like the rumours of my impending arrest with other councillors and officers being pedalled after the Sandy Ezekiel trial. I am worried that some people are starting to believe the mischievous story, that the Council 'Gifted' TransEuropa £3 million pounds of taxpayers money, as opposed to the ferry operator running-up an enormous debt for its use of the Port of Ramsgate.

Let me try and place this story in its proper context, rather than debate the matter on the weblogs. There, it's becoming increasingly difficult to make a contribution, thanks to the usual suspects, with conspiracy theories or simply malicious 'trolls' who have their own agenda. This kind of behaviour simply means that local politicians are reluctant to engage in debate over the internet and for good reason too.

As I recollect, TransEuropa started to struggle at least three years ago, around March 2011. The Council, which also has a commercial responsibility for the Port of Ramsgate, wanted to quite sensibly do everything it could to help the operator through a difficult period, as did the Port of Ostend, which I believe, waived its berthing fees and other creditors, such as the fuel company which was vital to the operation. The cross Channel ferry trade is a fiercely competitive and commercially sensitive business and so the matter was treated with the discretion it required.

Once again, working from memory and I'm sure the exact figure and detail will be revealed next week, when the Conservatives lost control of the Council, the debt was large. Big enough to cause an atmosphere of concern but not large enough to provoke real budgetary alarm, as it is today. From what I remember, an adjusted repayment schedule was put in place while TransEuropa identified the new source of finance it appeared confident in pursuing at the time.

Since then of course, the paper debt to TDC has ballooned to over £3 million and that is more than enough to cause alarm, despondency and some despair. This was a source of much-needed income that was accounted for and that we now appear very unlikely to receive unless, it's a few pence in the pound from the administrators.

Over a decade ago, I was owed a significant amount of money by a company I had invested in. I recall, that at the time, I did something similar, I arranged a repayment schedule, supported by a solicitor's contract. At first, it worked until that first big recession arrived and the business started to collapse. At which point, I had no choice but with regret, to to join its other creditors in applying for a winding-up order and then wait more than ten years to receive a modest dividend cheque and a large loss.

The question we should ask today, is really no different than the dilemma I faced then. At what point in the last 18 months, did the present Labour administration and Council officers, realise that the debt was growing beyond the point of no return? Was that passing £1 million, £2 million or even £3 million? Cllr John Worrow (Ind) is Chair of the Finance and Audit committee. I wonder if he knows as one might think it should have appeared in the last year's accounts?

Why wasn't this information bought to Members attention earlier In fact, it looks as if the very opposite has taken place, as I found out at the same time as my readers did.

There is of course another very important question which comes from the story and that is whether a local Council should be involved in commercial activities of this size. The evidence suggests probably not but I suspect this will prove the focus of a fierce debate next week.

17 comments:

Steve H from Ramsgate said...

Hi Simon

If March 2011 to March 2013 is the period TDC are now writing off - all indicators suggest this is the case - that's 25 months of not being paid by TEF.

You can work out a monthly accrual of the debt by dividing the overall figure by 25.

When the conservative administration was removed, the debt had grown to £ 1,188,000. If this is not enough to 'cause alarm' perhaps you could enlighten us on what is?

You say that we have not been handing cash out to TEF, but we have. You say this is a paper loss to Us, but its not. There are real costs associated with running the port. There has been little or no cash flow against the ferry port since 2011. All of the costs has been absorbed by the taxpayer with no income against it. That's a real cost in anyone's terms. I'd suggest you adjust your post.

We've got debtors and operating costs. Great big red marks all across our balance sheet. Where has this been showing for the past 2 years?

Someone has dropped a ruddy great big ball repeatedly. Remember this is our money. Public money, not yours to play with, gamble with, spend without consequence.

Readit said...

Simon, your post would be much more credible if you did not try to shift the blame to Labour and stated what the amount of the debt was in March 2011 and what the amount was when you lost control of the council to Labour.

Anonymous said...

Simon,

Provided the debt when Labour took power was reasonable in the circumstances I cannot see that you can be criticised. What needs identifying is who was aware that the debt was 'balloning' for the past eighteen months and what did they do about it. Was this another Mark Seed/McGonigal cover up which had to be accepted when the company went into receivership, or was this a cover up by the present administration because the officers had dumped the responsibility on them and it was beyond their capabilities to make a reasoned business like decision.

Anonymous said...

Clearly nobody had their eyes on the ball. Perhaps they were watching the same sex marriage bill/ball instead. How much was the original loan for, and what was the interest rate on the loan?

Simon Moores said...

I don't have the actual figure at the time of the change of administration but the £1 million suggested by Steve may be close and that was cause for concern as I wrote. The emphasis then was getting the debt under control by negotiating a repayment schedule.

The alternative might have been an immediate winding-up order, in which case the council would have received nothing and the service would have ceased. As I wrote earlier, the other creditors agreed to assist TransEuropa to continue to trade its way out of the situation while it searched for an investor or finance from elsewhere.

It's very easy to second-guess a very difficult and commercially sensitive situation when you are not in full possession of the facts and the context of any discussions.

At some point, not so long ago, the size of the debt would have appeared untenable to the Council and would have caused alarm because of its subsequent impact on the Council's finances. When was that I'm asking?

Anonymous said...

Simon, If the debt was £1.1M in 2011 and you clearly knew about it at the time, why did you not ask regular questions after Labour took over? or perhaps you did. Regardless of whether the Labour are incompetent or whether they knew or not, were you waiting for this to go bang at the taxpayers expense and Labour's embarrassment?

Simon Moores said...

It's a valid question but unless it comes up with everything else in the Council's business agenda, such as it's assumed it's under control unless officers report otherwise. The Labour press release suggests that they had it covered.

RossM said...

So, Councillors should assume everything's fine unless someone mentions something ?

Anonymous said...

Simon, In which case we will all be expecting to see an effective opposition tear the current administration into pieces and force some resignations. I trust your leader is lobbying for support from the independents and UKIP.

Simon Moores said...

Ross. I think you misunderstand the nature of the role.

I'm a part-timer, as are many if not most Conservative Councillors. I have a 'real' job, several in fact, which occupy much of my time.

My first priority is to my ward of Westgate. After that comes a shadow cabinet role with an environment portfolio, which involves monitoring and challenging the present administration on issues that appear on a well-populated agenda or indeed, when matters come to my attention.

In administration, I had a direct responsibility for a portfolio decision-making process and gave up my business time to devote more attention to Council matters.

Thanet has more challenges and problems than many of us can imagine. Councillors rely on officers to bring important matters to their attention much like any large organisation but please remember the nature of the job we have to do both in administration and in opposition

Anonymous said...

This is what happens when local authorities involve themselves in commercial operations.

They should stick to what the electorate voted them in for,running local services schools,education,roads etc,

It sall to easy to spend other peoples money without any risk to your own pocket

Anonymous said...

Simon you state that "unless it comes up with everything else in the Council's business agenda, such as it's assumed it's under control unless officers report otherwise". That presumably means that you have trusted the officers implicitly and without question. Perhaps this will be a lesson to you and others that your officers cannot and should not be be trusted. This isn't the only instance of matters going seriously wrong and officers keeping it to themselves or even lying to cover things up. I hope that Cllr Wise is preparing his attack for next Wednesday and will demand resignations. You should get support from the Independents and UKIP.

Simon Moores said...

I'm reminded of "Yes Minister" and politicians being treated like mushrooms and left in the dark by their civil servants. But that I'm afraid is how democracy works and we've still to come up with something better as Winston Churchill astutely observed.

Anonymous said...

Will you all stop attacking Simon Moores ! It was not he who caused this problem and at least he has had the guts to try to explain his theory of how TDC is in this mess. He could have refused to publish any of your comments yet allows you to vent your anger at him on this blog. If incompetence is at the bottom of the mess regarding the 3m owed, then it will come out and I am sure the people responsible will do the right thing and resign. In the meanwhile, stop attacking the messenger.

Anonymous said...

10:18. Re responsible people resigning? I have just seen a formation of pigs passing overhead, not. Very few resign these days, which is a great shame. The are usually pushed first. Otherwise I agree with your comments and the apparently honest way that Simon has put the case. With a population of about 125,000 the sum owed represents about £26.40 for every man woman and child in Thanet.

John Holyer said...

I spent my working life in central government and I know for sure that Civil Servants should not run a business. Their minds are not wired that way, and there is no harm in that. A tiny local council like TDC cannot possibly run a large commercial venture such as our harbour. Then I suspect they know that. They kept quiet about the debt presumably in the forlorn hope that something would turn up to rescue them. It didn't.

Personally and for what it's worth I am satisfied that there is no corruption here. It is just good old TDC incompetence.

I do not have sufficient facts to suggest that anyone should be fired. But I cannot overlook the possibility that TDC's senior officers have demonstrated that they are not worth the high salaries we pay them - once again.

Bernie said...

I just love the way people being paid to be incompetent is seen as an acceptable state of affairs; everyone knows it's happening, some of us have direct experience of it happening, it's openly talked about, TDC would be a laughing stock except it's not at all funny, and yet nothing changes and there seems no will from anybody, whatever political colour, to actually change anything, be that systems, staff or anything else that could possibly be causing such incompetence to continue unabated!
It's a real shame, and a lot of hard work and good behaviour is no doubt being overlooked and left without acknowledgement because of it all.
It would seem there is nothing to do except despair :(