Tag: bad economics

Submission to Swindon Borough Council Community Governance Review

map showing parish between Swindon town centre and M4 motorway
Swindon Borough Council’s proposal for a new South Swindon parish
This submission refers repeatedly to:

Although only the proposed South Swindon parish and its boundaries are discussed, many of the points made are applicable to other of the proposed new parishes and their boundaries.

Do you agree with the boundaries proposed in the consultation map?
No. If South Swindon is to be parished, Old Town, Lawn and Okus should not be part of a parish containing the new developments of Wichelstowe, Marlborough Park and Badbury Park.

Please provide further detail about your opinion/position
As noted in the Council’s own documents on the review, Section 93 subsection 4 of The Act requires that in conducting this Community Governance Review, Swindon Borough Council must ensure governance in the area under review is

  • reflective of the identities and interests of the community in that area and
  • effective and convenient

Paragraph 33 of The Boundary Commission Guidance indicates how the first of these points should be satisfied. It states

“When undertaking the review they must have regard to the need to secure that community governance reflects the identities and interests of the community in the area under review, and the need to secure that community governance in that area is effective and convenient.”

Paragraphs 50 and 80 add to this by stating

Paragraph 50 “Parish councils continue to have two main roles: community representation and local administration. For both purposes it is desirable that a parish should reflect a distinctive and recognisable community of place, with its own sense of identity. The views of local communities and inhabitants are of central importance.”
Paragraph 80 “The general rule should be that the parish is based on an area which reflects community identity and interest and which is of a size which is viable as an administrative unit of local government. This is generally because of the representative nature of parish councils and the need for them to reflect closely the identity of their communities.”

The proposed South Swindon parish does not conform with this guidance. Whilst separation of this area from Wroughton is ‘reflective of the identities and interests of the community in that area’ and is consistent with Paragraph 58 of The Boundary Commission Guidance, joining the new developments of Wichelstowe, Marlborough Park and Badbury Park with the more established communities of Old Town, Okus, and Lawn is not.Whilst there is a Wichelstowe sense of community and apparently a Badbury Park sense of community, and may well be an Old Town sense of community, there is not a sense of community binding together all the areas within the proposed South Swindon parish, other than a an overall sense of community to the town of Swindon.

The Cabinet Report of August 2016 states in paragraph 3.27 in relation to the proposed South Swindon parish:

“The residents of the new homes at East Wichel have strong community identity links with other parts of the main urban area rather than with the largely rural Wroughton parish to the south.”

Whilst it may be the case that many in East Wichel have ‘strong community identity links with other parts of the main urban area’, it is not true to say that those links are with the immediately adjacent areas of Old Town and Okus, and no credible evidence of such links is provided. Although the same paragraph of the document states

“There was also a submission to the 2011 LGCBE requesting the creation of a Wichelstowe and Okus ward, which is evidence of a shared identity there.”

However, in 2011 less than half of the houses in East Wichel had been built, and a single submission to the boundary commission cannot be deemed to be representative of the community, particularly as it is not identified as being a submission from the community. Having reviewed the documents submitted to that boundary review it appears the suggestion was one from a political party (namely the Labour Party’s proposal to stage 1 of the review) in 2010, and not from the communities in Okus or East Wichel. It is thus not credible to use this as evidence of being “reflective of the identities and interests of the community in that area”.

The same paragraph also states

“The West and Middle Wichel areas, once developed, will also have community, housing tenure and transport links that will make them more similar to the contiguous urban core to which they are attached.”

There is no evidence for this. Whilst Wichelstowe is likely to have similar community to the other newly developed areas in the proposed South Swindon parish, such as Badbury Park, it is far from clear why the mainly high density housing in Old Town and Okus would be expected to have similar ‘community, housing tenure’ to the lower density areas now being developed closer to the M4.

Section 94 of The Act permits parish councils for parishes with more than 150 local government electors and requires them for parishes with 1,000 or more electors. Paragraph 80 of The Boundary Commission Guidance also gives specific guidance on parish size, in relation to community governance being effective and convenient.

“The general rule should be that the parish is based on an area which reflects community identity and interest and which is of a size which is viable as an administrative unit of local government…. It is desirable that any recommendations should be for parishes or groups of parishes with a population of a sufficient size to adequately represent their communities and to justify the establishment of a parish council in each. Nevertheless as previously noted, it is recognised that there are enormous variations in the size of parishes, although most parishes are below 12,000 in population.”

Paragraph 81 of The Boundary Commission Guidance indicates that a parish representing a single estate or development is acceptable:

“A parish council should be in a position to provide some basic services and many larger parishes will be able to offer much more to their local communities. However, it would not be practical or desirable to set a rigid limit for the size of a parish whether it is in a rural or urban area, although higher population figures are generally more likely to occur in urban areas. Equally, a parish could be based on a small but discrete housing estate rather than on the town within which the estate lies.”

Paragraph 82 of The Boundary Commission Guidance indicates when larger parishes may be acceptable:

“There may be cases where larger parishes would best suit the needs of the area. These might include places where the division of a cohesive area, such as a Charter Trustee town (see paragraphs 133 to 134), would not reflect the sense of community that needs to lie behind all parishes; or places where there were no recognisable smaller communities.”

None of the criteria in Paragraph 82 of The Boundary Commission Guidance apply to the communities within the proposed South Swindon parish, yet Paragraph 3.29 of The Cabinet Report of August 2016 dismisses a proposal for a smaller parish:

“The residents of the new development at Badbury Park have expressed a desire to set up their own parish; however, as this area is still under construction, it is deemed too small at this time to provide convenient and effective local governance.”

This appears to be inconsistent with The Boundary Commission Guidance deeming that there may be significant variation in parish size and it still be consistent with effective and convenient governance.

Paragraph 83 of The Boundary Commission Guidance give specific details on the boundaries between parishes

“As far as boundaries between parishes are concerned, these should reflect the “no-man’s land” between communities represented by areas of low population or barriers such as rivers, roads or railways. They need to be, and be likely to remain, easily identifiable.”

The boundary for the proposed South Swindon parish through Old Town, whilst it follows the line of roads, clearly does not ‘reflect the “no-man’s land” between communities represented by areas of low population’, as there is no reason to believe that residents or businesses on the opposite sides of Bath Road, Albert Street and Church Road would regard themselves as being in different communities. The boundary between the canal at Rushey Platt and the Great Western mainline also seems arbitrary. Whilst it is in what, at the moment, a no-man’s land, it is in part following a minor stream and in some parts aligned to nothing whatsoever. It thus does not meet The Boundary Commission Guidance “to be, and be likely to remain, easily identifiable.”

It is not apparent how, in a way that is consistent with The Boundary Commission Guidance, Old Town can be separated for parishing purposes from Swindon New Town. A boundary that would be in ‘the “no-man’s land” between communities’ and would “be, and be likely to remain, easily identifiable.” would be one along the course of the former railway line from Rushey Platt to Old Town, from the point where it crosses the Great Western mainline, to the boundary of housing on Wyvern Close, running to the south of Fitzroy Road, Ambrose Road and Linley Close, Tismeads Crescent and Riverdale Close, then to the north of Nationwide and Intel offices offices, then north of the Marlborough Park development but behind the housing on Marlborough Road, to rejoin the Council’s proposed boundary at the Coate Water roundabout. Placing the boundary in this way would also limit the disruption to the longer established parts of south Swindon when, as noted in Paragraphs 3.56 and 3.57 of the The Cabinet Report of August 2016,

“Members are aware of the expected housing completions in Badbury Park as well as the expected new homes that are to be built in West and Middle Wichel…. Therefore, Cabinet is asked to note that a further Community Governance Review may become necessary in the next few years, depending on the rate at which these new communities become established.”

Any other comments relating to the Community Governance Review
Section 93 subsection 5 of The Act states:

In deciding what recommendations to make, the principal council must take into account any other arrangements (apart from those relating to parishes and their institutions)—

  1. that have already been made, or
  2. that could be made,

for the purposes of community representation or community engagement in respect of the area under review.

Paragraph 136 of The Boundary Commission Guidance expands on that, stating:

In deciding what recommendations to make, the principal council must take into account any other arrangements (apart from those relating to parishes and their institutions)—

  1. that have already been made, or
  2. that could be made,

for the purposes of community representation or community engagement in respect of the area under review.

The Council does not seem to have considered amending its use of its existing Locality teams and of existing community associations as part of this Community Governance Review. Papers to the Swindon Borough Council Cabinet meeting of 16 June 2016 on “Future Direction – Transfer of Services to Parish Councils” note that

“The Cabinet could continue with the existing service delivery model”

but do not discuss options for amending the current model. I also note that the focus in the papers to Cabinet in this respect is on service delivery, not community governance. It therefore seems that the requirements of Section 93 subsection 5 of The Act have not been fulfilled and that the recommendations of Paragraph 136 of The Boundary Commission Guidance have not been followed.

Paragraph 59 of The Boundary Commission Guidance states

“Parishes should reflect distinctive and recognisable communities of interest, with their own sense of identity. Like neighbourhoods, the feeling of local community and the wishes of local inhabitants are the primary considerations.”

The overwhelming view of inhabitants in the the areas that are currently unparished, as expressed in responses to the earlier stages of this Community Governance Review, is that they are opposed to their areas being parished. It thus appears that in continuing to propose the parishing of areas that are not currently parished, Swindon Borough Council is failing to regard “the wishes of local inhabitants” as “the primary considerations”, in contravention of The Boundary Commission Guidance.

Creditors grab the Brunel Centre

The Brunel — in trouble

In a rather complex chain of financial transactions, it appears that the Brunel Centre has been forced into the hands of ‘fixed charge receivers’ by the fall in property values in recent years. The centre — which is owned by a Jersey-registered company — had breached some of the terms of a loan — traded on the Irish stock exchange — of over £110 M in the first half of last year. The creditor’s agentappointed after the default — had also had the centre revalued, reducing its worth by almost a third, down to £87 M, less than the value of the loan. The closure of the Liquid & Envy nightclub was estimated to have lost the centre income of £90,000, but this was less than 4% of their total income.

With the loan due for repayment on 25 April this year, and with over £100 M of the loan still outstanding, the creditors were clearly getting worried about the chances of getting their money back, and have taken possession whilst considering options, including the possibility of selling the centre. The appointment of receivers was announced on 22 December.

Garry Perkins’ reverse commitments

The universe occupied by Mr Perkins is clearly a very topsy-turvy place. In all other places, if one wants to show commitment financially, one gives money rather than taking it. In the Perkinverse, it’s the other way round, Thus with several public sector bodies — including Swindon Borough Councilstumping up £3.5 M to remodel Whalebridge roundabout, as a prerequisite to Muse even starting their Union Square development, Mr Perkins is claiming that this shows commitment by Muse.

The fact that there’s £4 M invested shows Swindon is serious, it shows Muse is serious.

And even the first phase of the Union Square development will mainly be paid for ultimately by the public sector. It consists of a car park — that Swindon Borough Council will buy — sheltered housing, and a health centre — to replace the NHS Carfax Health Centre which will be demolished to make way for the main part of Union Square.

The only commitment in evidence here is that of Swindon taxpayers’ money, being spent up-front, well before the commercial developers have even submitted detailed plans.

Wi-fi’s dead — long live wifi!

The report to next week’s special cabinet meeting of Swindon Borough Council makes it clear that their venture with our money to bring wifi to the whole of Swindon is dead.

So far as the Council’s interests in Digital City is concerned, further legal and financial advice will be required in this matter following which it is suggested that the Chief Executive, in consultation with the Cabinet Member for Finance, be authorised to take such action as he considers necessary to protect and, if appropriate conclude, the Council’s interests in Digital City and ensure that the network assets deployed in Highworth are transferred in the first instance to the Council’s ownership.

Conclude the Council’s interests, i.e. dead, finished, failed. And do we get any apology for that failure? No. Far from it. In fact, reading the report you could be forgiven for thinking the project had been a success.

Despite Digital City having failed to make interest repayments since late 2010, the granting of the loan has still proved to be financially advantageous for the Council. Sums received in interest and arrangement fees total £10.5k, while investment of the sums advanced to the company would have generated £6.9k to date at the Council’s average investment rate of return.

Let’ forget, shall we, that the original proposal said that Digital City would have repaid its £450k loan from us, the tax payers of Swindon, in full within two years. Instead, lets just be grateful. for £10.5k.

In place of an apology, we get a new proposed scheme, between Swindon Borough Council, an unnamed investor “under the ultimate ownership of a Global Telecommunications Company with annual revenues in excess of $3b US.” and that company well known for successful IT projects, Capita. Capita already provides numerous services to Swindon Borough Council. The report gives no indication as to whether Swindon Borough Council would have to stump up more of our money for this deal to go ahead. It also tries to suggest that the return on this new investment will constitute a return on the investment in Digital City (UK) Ltd.

The financial return to the Council is, therefore, enhanced by its investment in Digital City and the resulting Highworth pilot and the Council will now get a return on its investment. This will equate to the loan advance of £400k plus interest by year five or earlier depending on revenue share and this financial benefit will continue to accrue in future years…. Through these arrangements with Capita, SBC has the potential to receive significant return based on sales targets being achieved over 5 years, part of which will be credited against the loan of £400k to Digital City, and accumulated interest. Current indications are that this amount is likely to be repaid over approximately 5 years.

5 years? That’s in addition to the 2 years over which the loan to Digital City (UK) Ltd was meant to be repaid. And unless this new investor is going to take over the assets and liabilities of Digital City (UK) Ltd, then to suggest that this is a repayment of the loan to that company is the most creative of creative accounting. As the report makes clear, no such takeover is envisioned.

The Council’s intention will be to secure an orderly extraction of our interests from Digital City, with its assets being transferred to SBC to ensure that the Highworth infrastructure is kept intact. To ensure this happens, it is suggested that the Chief Executive be authorised, in consultation with the Cabinet Member for Finance, to take such action as he considers necessary to protect and, if appropriate, conclude the Council’s interests in Digital City and ensure that the network assets deployed in Highworth are transferred in the first instance to the Council’s ownership.

So effectively, Swindon Borough Council will exercise its rights under the loan agreement with Digital City (UK) Ltd and take over the company’s network assets. It will then enter a new venture with Capita and an unnamed company. On that basis, the new venture will owe nothing from the first, despite what the report may try to suggest.

The report to Swindon Borough Council’s cabinet is written my Mr Hitesh Patel. Mr Patel is an ex-director of Digital City (UK) Ltd. Mr Patel was also an author of the original recommendation to councillors to invest in Digital City (UK) Ltd. Perhaps, then, it’s unsurprising that he writes about that investment in such glowing terms. But given how poor his advice was the first time around, and that he didn’t know he was already a director of the company he was recommending an investment in, would anyone with any sense really trust his advice again? But then, would anyone with sense have made the first investment? Answers to that on a no-questions-asked cheque for £450k please.

Market failure

The remnants of Wood Street Market

Started a year ago with some fanfare, Wood Street Farmers’ Market has slowly withered away. For the first few months it served as a Christmas Market, with craft stalls to accompany the food stalls. It brought so much trade that many of the shops in Wood Street opened on the Sundays it was there. But after Christmas 2010, with most of the craft stalls gone, interest dropped. In late spring the food stalls started to abandon it too and the shops went back to being closed on Sundays. Now all that are left are a bread stall; two meat stalls — one selling burgers as a take-away as well as raw meat, the other just selling hot pork rolls — a photographer, and a burger stall selling candy floss.

In many ways Wood Street is the ideal place for a market, but with competition from the Sunday Farmers’ Market at the Designer Outlet — which many of the stallholders in Wood Street also attended — and little reason to visit Old Town on a Sunday apart from the market, it was always likely to struggle.

Bluh’s wifi hindsight was others’ foresight

It seems that the current leadership of Swindon Borough Council are going through a rather ‘retro’ phase at the moment, claiming for themselves as original thoughts ideas put forward by others years ago. First there was Mr Perkins who claimed that creating a park on derelict town centre sites await redevelopment was his idea, whereas local residents suggested it in April 2008. Now it seems that Mr Bluh wants to get in on the act too.

Now, whilst it’s always refreshing — and all too rare — when a politician admits they got things wrong, Mr Bluh has a particularly unrefreshing way of admitting his errors. In fact he does so in a way that suggests he doesn’t accept he’s failed in any way at all. As long ago as December 2009 local residents — some that were members of his own political party — were pointing out how risky his decision to invest almost £½M of our money in a wi-fi start-up company was. A company lead by someone with no track record in the industry; a company where directors seemed not to know they were directors, and a company where the directors that did realise they were directors didn’t understand what their responsibilities are. So for Mr Bluh to now say,

We did all the due diligence but perhaps in hindsight we should have looked at the risk factors a bit harder.

is little better than an admission of total economic blindness. For Mr Bluh to only recognise with hindsight what others with just a little foresight have been telling him for almost two years is, though welcome, inadequate. And at the risk of stating the obvious, if they didn’t look at the risk factors hard enough, then they clearly didn’t do all the due diligence, only some of it.

We were prepared to take the risk and we felt it was a managed risk at the time and, with hindsight, perhaps it wasn’t the best risk.

Even if it were managed at the time — which is disputable — the council then chose to relax that management, disregarding concerns that were raised. Again, there’s no hindsight required here, all the evidence was available at the time, and pointed out repeatedly to Mr Bluh, but he wilfully chose to ignore it. Until he shows some signs of admitting that this isn’t just a matter of hindsight, but something he should have and easily could have avoided, there’s no reason to believe Mr Bluh won’t be squandering our money yet again.

Digital City (UK) Ltd, R.I.P.

Hard on the news that John Richard ‘Rikki’ Hunt has filed for bankruptcy, comes the news that Digital City (UK) Ltd is now in the process of being struck off the register of companies. So that’s £½M of Swindon taxpayers’ money gone, despite the assurances of the Messrs Bluh and Perkins that the equipment installed by the company and the use that could be made of that was worth more than the loan to them from Swindon Borough Council, that it was a no-lose proposition. How a patchy wireless internet service for Highworth, and nowhere other than Highworth, could be worth £½M is hard to see, but that is all we got for the money our councillors squandered on our behalf on this project.

Lest we forget, here are a few things said about this failed adventure with our money by Mr Bluh in December 2009.

This is a commercial decision, in the new world in which we all live more and more commercial decisions will be made. An opportunity was put to us, and we were asked if we wanted to invest…. This is a commercial venture that will bring commercial return. The only affects on capital budgets will be if this loan does not get repaid in full…. To get a reasonable level of council tax and to go forward we have been required to find savings and efficiencies. We are doing everything that is humanly possible to keep this ship afloat.

The ship was holed below the waterline before Mr Bluh squandered our money on it, and is now sinking rapidly to the bottom of the ocean. There were many that brought this to the attention of our arrogant council leadership at the time. They wilfully chose not to listen. Now it will be us, the council taxpayers, rather than those councillors personally, that will be paying for their financial stupidity.

The fall and fall of Rikki Hunt

Once upon a time, not so long ago, the likes of Mr Bluh and Mr Perkins were fond of telling the people of Swindon what a great person they thought Mr John Richard ‘Rikki’ Hunt was. How they thought he was a great person to be leading a company to which they had loaned almost £½M of Swindon taxpayers’ money because, in their view, he was a very experienced business man from which Swindon would benefit.

Of course not all experience is equal. Eddie ‘The Eagle’ Edwards had much experience of ski-jumping… and of coming last. Mr Hunt has now managed the same feat as a business man, going bankrupt to the tune of over £1M, including over £400,000 to the tax-man. As he filed for bankruptcy on 8 March this year, it also puts some perspective on his apparent generosity in ‘gifting’ to Swindon Borough Council his stake in the failed wi-fi company for which he had convinced the aforementioned gullible councillors to part with our money. It would have been no financial loss to him, only to his creditors.

Mr Hunt’s involvement with wifi company Digital City (UK) Ltd was via a consultancy company he set up for that purpose, Avidity Consulting Ltd. That company is now in the process of being struck off the register of companies. How much Avidity received from Digital City — and so indirectly from Swindon taxpayers — for its consultancy services has never been revealed. Also of note, before anyone is overcome with sympathy for Mr Hunt’s predicament, is that his wife, Laura Hunt, is not bankrupt, remaining a company director. For the Hunts, Rikki’s bankruptcy may be little more than a minor business inconvenience, rather than a case of serious financial hardship.

Bailing out before a bail out

It is normal practice in any private sector company for the executive to have shares either in that company or, is a subsidiary of some larger organisation, in the parent company. For companies traded on a stock market it is often mandatory for the directors to own shares in their company. That way it ensures that their own well-being is most likely to be guaranteed by them ensuring the well-being of their fellow shareholders. A director without shares in their company — according to the accepted logic — is more likely to perform acts of reckless self-interest that damages the company that employs them.

So when Mr John Richard ‘Rikki’ Hunt claims he is going to ‘gift’ his 30% stake in his failing wifi company Digital City (UK) Ltd to Swindon Borough Council, should that be seen as an act of generosity? No. Given that the company has been unable to keep up its loan repayments to the council, and that it has failed almost every target it has set itself, its debatable whether those shares are worth anything anyway. And now Mr Hunt wishes to remain chief executive of the company he’s lead to failure, yet without the financial incentive almost every other company deems essential to ensure a chief executive does their best for the shareholders. That would seem to be a recipe for financial disaster, though Mr Hunt seems to already have achieved that in a fairly comprehensive manner.

Mr Hunt claims that his company was damaged by public criticism.

There has been a lot of effect on the business with the public noise and debates that have gone on… the kind that is politically damaging to us and the aggression towards the project.

Is political discussion really a surprise when he went looking for funding from politicians? And lets be clear, there has been no ‘aggression’ towards ‘the project’, only to the secretive way in which the decision was made to pour the money of Swindon taxpayers into a company that on the evidence available to those taxpayers at the time had no track record in its industry, no credible plans, and no understanding of the market it was entering. The criticisms remain valid, and the taxpayers of Swindon are currently £½M poorer as a result.

The responsibilities of a director

When Mr Perkins was appointed as a director of Digital City (UK) Ltd last year, I was told by Mr Bluh that he was selected to represent Swindon Borough Council on the company’s board because of his skill and experience in business. The company of which Mr Perkins is a director has failed to make payments on its loan from the council… and that failure pre-dated by a month Mr Perkins claiming that payments were still being made. According to Mr Perkins, that’s all fine and dandy.

I was asked in December whether it was up to date with its payments, and I said yes — because that’s what I had been told. When I made that statement it was correct, based on the information I had at the time.

Perhaps it’s time that Mr Perkins reminded himself of his obligations under the Companies Act 2006.

(1) A director of a company must exercise reasonable care, skill and diligence.
(2) This means the care, skill and diligence that would be exercised by a reasonably diligent person with—
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company, and
(b) the general knowledge, skill and experience that the director has.

At the moment, Mr Perkins’s diligence in checking his facts before making public statements about Digital City (UK) Ltd appears to be falling far short of reasonable expectations.