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
management and personnel systems and reducing its corporate and
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:
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
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
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
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.
£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.