Hackney Crisis - A Beginner's Guide
‘Annual income twenty pounds, annual expenditure nineteen nineteen six,
result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and
six, result misery. ’
Mr. Micawber in David Copperfield by Charles Dickens
Hackney is not a bad place to live and Stoke Newington is one of the better parts.
Recent national press reports calling the borough ‘Britain’s North Korea’
and describing the Council as the ‘Bates Motel of local government’ are wide of
the mark. However, there’s no doubt that the Council (and its officers) has not
functioned properly and it doesn’t provide the services that people pay for and have
a right to expect.
This magazine’s purpose has always been to focus on Stoke Newington but we cannot
escape the fact that decisions made in the Town Hall, Mare Street, E8 affect the quality
of life in this area. Short of Tony Blair allowing the devolution of Stoke Newington away
from Hackney and many would probably wish it we are stuck with the politics and
performance of this rambling, diverse and fascinating borough. We thought it might be
useful to provide answers to six basic questions:
1. OK, so what’s the main cause of Hackney’s problems?
Not surprisingly, money, or the lack of it. Hackney receives the fourth highest central
government grant in the country - about £1,200 per head of population. But what it
doesn’t do is collect the money due to it from many of the people who live here.
Three small clues: 1. Rent collection in the year 1999/2000 was only 78 per cent of rent
due (22 per cent uncollected). 2. Around 33 per cent of tenants owe more than 3 months
rent. 3. Only 68 per cent of council tax was paid.
2. How come?
Hackney has a large number of people who live here for only a short time. They and quite a
few longer term residents do not appear on the electoral register. They
‘disappeared’ during Mrs. Thatcher’s hated poll tax regime. This has been
made worse by monumental cock-ups such as the decision to award the administration of
housing benefits and collection of council tax to the private company ITNet. Over 17,000
people haven’t been paid their housing benefit and 32 per cent of council tax is
uncollected. There is a predicted shortfall in next year’s Council budget of £76
million if no further action is taken. Of this, around £40 million has been allocated to
bail out the ITNet operations.
3. Hackney’s not the only poor borough. Why can’t it live within its
budget like Newham?
Good question. Firstly, unlike Labour-run Newham, there is no political party with a
majority on the Council to give direction to Council officers. Secondly, during the failed
‘Transforming Hackney’ experiment created by the former Managing Director, Tony
Elliston, financial control was removed from the central accounting system. This was
devolved to the various individual services and departments. Nobody knew the state of the
overall finances until the end of the financial year. Thirdly, the managers overspent
without telling anybody.
4. A bit of a nightmare then. Who’s throwing the money around?
Step forward Borough Services, Customer & Advice Services and the Social Services
Departments. The latter two can plead with some justification that in dealing with 1) the
payment of benefits (13.1 million over budget) and 2) children’s placements (f 1.028
million) they are suffering from circumstances beyond their control. It does not excuse
the fact that their budget forecasting was woefully inaccurate. Borough Services are the
worst offenders. On a budget of £5.775 million for waste management (bin collection and
street cleansing), they are forecast to overspend by £3027 million. All figures are the
medium, not the worst case scenario, given by the new Managing Director. Overall, he
expects Hackney’s overspend to be between £14.5 million and £22 million.
5. I hear the Managing Director Max Caller is on £150K a year. What’s he
doing to sort out the mess?
Well, he’s produced a number of far- reaching proposals, some of which have gone down
like a lead balloon with users of services like nurseries and, in particular, Council
staff. Education is not much affected, waste management will be privatised from 1 December
2000. There are some trivial cuts such as the removal of staff mobile phones and car
allowances but the main aim seems to be to improve performance and collect monies
due. The cuts agreed by the Council amount to £22.5 million. A new ‘Directorate
of Finance and performance’ has been set up with a Director shipped in from Camden.
6. What about the workers?
Staff are under the cosh. Redundancies and a worsening of their terms and conditions of
employment are on the horizon. The unions claim that about 1,000 will be made redundant.
The Council say more like 250, possibly compulsorily. Most organisations when seeking
voluntary redundancies improve the severance pay to attract more volunteers. The extra
money spent is quickly recouped through the reduction in the wage bill. Hackney is doing
the opposite by reducing this to the legally possible minimum of £230 per week for each
year of service. Not exactly a golden handshake. This is a legal minefield for the Council
and the Borough Solicitor has warned that it must tread extremely carefully. As an
employer, Hackney appears regularly in front of Employment Tribunals. Be prepared for some
industrial (in)action.
But... That’s enough for now. We’ll keep you informed.
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