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The government will provide£25m of financial support to Hackney LBC ...
The government will provide£25m of financial support to Hackney LBC

to enable the council to set a balanced budget for 2002/03 and to improve the delivery of key services to the local community.

Ministers have attached stringent conditions to this offer that

require the council to submit plans for improving its financial

management and personnel systems and reducing its corporate and

accommodation costs.

Local government minister Nick Raynsford said:

'This is an exceptional offer of support to prevent unacceptable cuts

in services while Hackney Council continues to take urgent action to

get its finances back in order on a long term basis and to deliver

the front line services that the people of Hackney deserve.

'The council should be clear that merely safeguarding services is not

enough. I also expect them to significantly improve the delivery of

key services to the public - social services, education and waste

management services in particular.

'Stringent conditions are being applied to this offer of support and

if Hackney fails to deliver we will consider further action. The

department and the Audit Commission will closely monitor the

council's performance in the coming weeks and months.

'Our overriding objective is that Hackney cannot be allowed to fail

its people again and that the borough must restore itself to being a

properly functioning authority as soon as possible.'


Five government departments have already imposed Directions on the

council requiring service improvements in education, social services,

waste management and housing benefits and tough action to get the

council's budget back in balance. The government will monitor the

council's progress in the coming months to ensure that it is

complying with the Directions and conditions. If the government takes

the view that Hackney is not making good enough progress towards

meeting the Directions, serious consideration will be given to

further intervention options.

The conditions attached to the£25m include submitting

detailed project plans underpinning savings of£13m already

agreed in the council's budget strategy and producing medium term

financial plans to set a balanced budget without further government

assistance for the financial years 2003/04 and 2004/05. The

conditions require these plans to be approved by the district auditor

and the government's independent adviser in Hackney.

The full list of conditions are attached.

Conditions attached to offer of financial support

Condition 1 - financial issues

Establishment of a new basic financial platform to conform to a

project plan to the satisfaction of the district auditor and the

council's and central government's independent adviser. Subsidiary to

this, the council will also develop new feeder systems to that basic

financial platform, in particular for:

- payroll

- creditors

also to the satisfaction of the DA and independent adviser, on the

basis described above.

The project plans to be completed by 1 April 2002, and all new

systems to be effective from 1 April 2003.

Condition 2 - Personnel

Introduction of personnel systems to establish a management

information database to enable action to be taken on, for example,

productivity, sickness and other absences, and competency.

Systems to be implemented by 1 April 2003.

Condition 3 - Accommodation

Implementation of the action plan based on the findings of the Best

Value review of accommodation and property management to reduce the

overhead costs and rationalise the council's occupation of

accommodation and to increase efficiency in the management of

property within the council's estate.

Condition 4 - Procurement

Prepare an action plan addressing any weaknesses identified in the

review of procurement capacity in the authority and take appropriate

steps to implement the action plan by 1 April 2003.

Condition 5 - Education Services

As Directed, establish the new body for running education services in

the borough from August 2002. In setting the funding for the new

body, the council needs to have regard to the secretary of state for

Education's letter of 29 January to all council leaders on education


Condition 6 - Income Collection and Benefits Paid

a) Continuing improvements to council tax collection rates:

- 77% 2002/03;

and at least:

- 80% 2003/04

- 82% 2004/05

b) Continuing improvements in the administration of housing benefit

and council tax benefit, building on the changes that have been

introduced, and further improving on the performance levels that have

been achieved, since April 2001, taking fully into account the

Benefit Fraud Inspectorate's recommendations made in its report of

January 2001.

c) Improvements in rent collection.

d) Improvements in sundry debtor collection.

Condition 7 - Budget Strategy

2002/03 Budget savings

Submission of detailed project plans, to the satisfaction of the

District Auditor and the independent adviser, underpinning savings of

#13 million already agreed in the 2002/03 budget strategy.

To be in place by 31 March 2002.

2003/04 medium-term financial forecast and exit strategy

Production of medium-term financial plans to set a balanced budget on

General Fund revenue account (exclusive of the Housing Revenue

Account) without further government assistance for the financial

years 2003/04 and 2004/05. Such plans to be to the satisfaction of

the district auditor and the independent adviser.

To be in place by 31 July 2002.

Condition 8 - Financial Monitoring

Continuation of monthly financial monitoring reports from Hackney

Council, to be submitted within six weeks of the end of the relevant

period. Reports to continue to monitor in detail the financial

position of the Council, including both General Fund revenue account

and Housing Revenue Account.

Reports also to indicate overspends or slippage in planned savings

across all service departments of the council, which service

directors need to report to the Section 151 Officer as soon as they

are identified, and the action taken to correct the position. Any use

of centrally or locally held contingencies must be reported in

monthly monitoring returns.

Arrangements for monitoring will be in accordance with advice

provided by the Audit Commission.

Condition 9 - Use of Resources

(a) Capital

Capital resources available for 2002/03 are to be used only:

- to repay debt incurred under SCAs issued to cover revenue

shortfalls in 2001/02

- to finance 2002/03 revenue expenditure capitalised in accordance

with the revenue budget

- to finance committed capital expenditure

- to finance capital projects essential to meet health and safety


Any capital resources not required for these purposes are to be

either set aside to repay debt or used to finance 'invest to save'

projects (the genuineness of the latter to be endorsed by the

independent adviser).

These principles are to apply both to the setting of the capital

programme for 2002/03 and to any additional capital resources that

become available during the year.

(b) Revenue

£15m, of the£25m support, is to provide Hackney with a reasonable

level of central contingency allowance/working balances. This amount

may only be used on the authorisation of the Director of Finance and

Performance. It is not to be used to finance growth in revenue

levels, or to offset failure to achieve savings, but only to meet

genuine unforeseen and unbudgeted contingencies. The director of

finance and performance may take the advice of the independent

adviser on the genuineness of any proposed use in making her decision

on authorisation. The larger part,£10m, of the£15m, is to be held

strictly as working balances and should so far as possible remain

available to be carried forward into future years. This support will

not be repeated and any significant utilisation of this reserve will

need to be replenished by Hackney in the following financial year.

c) Other provisions and earmarked reserves

These should only be used for the purposes intended.

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