Gallery

Let Them Eat Chicken!

Many people will have heard the absurd comments from Cherwell’s lead councillor for Financial Management and Governance, Tony Ilott, on BBC Oxford breakfast radio on Tuesday. I thought it was worth covering a few of the comments made by the Conservative representative in more detail.

The programme featured a running topic on the amount of back rent owed to several councils in Oxfordshire and you can hear it here. This is not a problem unique to this county as so many councils now rely on commercial investment to make ends meet since central government no longer provide enough funding for even the basic services that we all rely on.

This problem is exacerbated by the fact that legislation requires local authorities to balance their budgets every year and prevents them from borrowing to cover any shortfalls. This leaves them in the position of trying to operate like private investors without having the same financial flexibility.

With many local authorities now heavily invested in commercial property they have all faced a huge shortfall in income from rents that have not been paid throughout the pandemic. To add insult to this injury, even though the Chancellor said he would provide “whatever it takes” to help local government, central government has excluded losses from commercial investments from it’s support payments to councils.

The need to balance the books each year results in councils being left with only 2 options when they have a shortfall in rents. Either they increase council tax (which can only be done up to certain limits without a costly referendum) or they cut services.

that’s going to be a pretty expensive chicken dinner for the residents of Cherwell!

This is what Cherwell District Council did in 2021 when they reported losses in the region of £1.6m against the Castle Quay shopping centre in Banbury. With similar losses predicted for the next financial year, this is likely to put the same pressures on the budget for the following year which will inevitably mean yet more cuts, along with additional charges like we’ve seen this year for things like garden waste collections.

Commercial landlords would usually carry these sorts of shortfalls over a period of years, often borrowing to cover the gaps, and recover as much of the rent as they could over that time with deferral agreements with tenants. Ultimately some of the losses may have to be written off. But as explained above, councils can’t do this. So as long as these shortfalls are on the books, more cuts or tax increases are the only way to deal with the problem each year.

It was clear though from the interview Cllr Ilott really didn’t understand any of the mechanics of this, which is quite staggering considering his role on the council. When he was asked if he thought there should be a change in legislation that would allow councils to deal with these problems, he said he didn’t think so. Instead he chose to make childish personal comments about me and avoided answering the interviewer’s questions about how the council will recover these losses.

it’s clear that they have no real vision for how to revitalise the development other than the idea that making it bigger will somehow make it better.

He did make mention of ‘working with tenants’ which of course is a good plan. As a retail consultant myself I’d always advocate such a move, but due to the limitations imposed on councils, this can only be done on a year by year basis. Any outstanding debts at the end of each year will need to be accounted for and action taken on increased taxation or services cuts.

Cllr Illot suggested that we look at things “in the round” and I agree we should do that. Unfortunately, time restraints on the programme prevented me from laying out the full details, but I’m happy to do so here :

  • Losses in the last financial year attributable to Castle Quay – £1.6m
  • Losses predicted in the next financial year due to Castle Quay – approx £1.6m
  • Rent owed to Cherwell District Council at this point – nearly £2m
  • Loss in value of Castle Quay shopping centre since the council took full ownership – over £30m (it’s now worth less than half what they paid for it 4 years ago)
  • Additional investment being ploughed into expanding the centre – £73m (underwritten by council tax payers)
  • Interest on the loans to finance all this (so far) – £2m+ per year
  • Cuts required to the entire council budget this year – £4.4m

Yes some of this can be blamed on the pandemic, but retail was already on the decline when the council took the frankly bizarre decision to buy the scheme, especially as it’s clear that they have no real vision for how to revitalise the development other than the idea that making it bigger will somehow make it better. That and Cllr Ilott’s head in the sand optimism seems to be the main strategy from our Conservative councillors.

I don’t see that as good value for the council tax payers of Cherwell. Judging by Cllr Illott’s flippancy and lack of concern he seems to regard massive financial losses along with the associated financial impact on resident’s pockets as fine as long as he can get some chicken.

I’d say that taking all that into account that’s going to be a pretty expensive chicken dinner for the residents of Cherwell!

And let’s not forget that all this money is going into one town in Cherwell – Banbury. Meanwhile Bicester town centre’s retail area is being hollowed out due to the council’s planning decisions elsewhere, and the whole of the district – every single tax payer – is footing the bill for all this incompetence. As is often the case with Cherwell Council , the south of the district is left to fend for itself and pick up the tab. If I were a cynical soul I might suggest that this is because the majority of support for the councillors who agreed to this whole adventure comes from the north of the district.

But I think we should all be able to rely on decent fiscal management from our local councillors, no matter where we live. Sadly it seems clear to me that we can’t expect this as long as the Conservatives are in charge.

It’s about time the Tories got a proper grip on council finances and stopped playing chicken with all our money!

Gallery

Cherwell’s Reckless Investment in a Struggling Shopping Centre Leads to Cuts in Services and Increased Charges for all Cherwell Residents

Cherwell District Council announced it’s budget last week detailing £4.4m in cuts and extra charges that it will be imposing on the residents of Cherwell as well as an increase in council tax.

During the budget debate I raised my concerns that around a third of these cuts and charges were as a result of losses incurred over the past two years in Banbury

In a nutshell the centre is predicted to make a loss of around £1.6m in the 21/22 financial year after having made a similar loss in 20/21.  On a broader scale, taking into account some small gains in the first 2 years the council owned the development, it will have racked up losses in the region of £2.5m by the end of the next financial year if the current predictions are correct.  To close the gap left by that hole in the budget there have been additional service cuts with around a third of those in the forthcoming budget directly attributable to pressures from Castle Quay. 

You may have seen some of this in the press this week in Oxford Mail and the Banbury Guardian

I was also interviewed by BBC Radio Oxford, although my section was recorded and heavily edited, after which Cllr Tony Ilot ,the Lead Member for Financial Management & Governance on Cherwell District Council, was invited on the show live to respond.  If we’d been on at the same time I might have pointed out that as the councillor responsible for this development it would have been more encouraging had he bothered to do his homework before coming on.  At one point he seemed uncertain about how much the losses amounted to (he guessed at £1.3m and the interviewer had to correct him that it was £1.6m) and he also claimed that the £1.6m was a cumulative loss since the council took ownership.  It’s not, it’s just the predicted loss for the forthcoming year on top of a similar one for the last year. You’d think the Lead Member for Financial Management & Governance might have been a little more cognisant of the situation given the scale of problem, but this lack of concern over important details is a familiar theme with Cherwell’s Conservatives.

Cllr Ilot also seemed quite laid back about the fact that the centre is now worth less than half what was paid for item having lost a whopping £30m in value.  They are also currently spending even more than the original purchase price for the shopping centre on the canal side extension which, as a retail analyst myself, I think they are going to struggle to make a return on.

You can listen to the interview in full here 

The council’s line on this has been that the losses at CQ have not directly resulted in an increase in the council tax. As that increase was already in the pipeline anyway that’s probably fair to say, but it also fair to say that if this white elephant wasn’t providing such a huge financial drag on the council’s resources, we may not have needed to increase the tax and we certainly wouldn’t have need many of the cuts in services.

It will be interesting to see how much support we get for the high street in Kidlington and the Exeter Close project in the light of all this.  Certainly something we can point them to if they start penny-pinching on our project to support the eye-watering amounts of public money that’s being poured into one scheme in the far north of the district that we’re all footing the bill for.

Gallery

My response to Cherwell District Council’s 2021/22 Budget

At the full meeting of 22nd February Cherwell District Council passed their budget for the forthcoming financial year. I spoke in the debate criticising a further lack of response to the climate emergency and highlighting the pressures that the council’s reliance on commercial investments have placed on its finances, in particular its ownership of the Castle Quay shopping centre in Banbury.

I’ve long been a critic of the decision to risk council tax payers money by investing in a shopping centre that was already starting to show signs of distress. It was a quite ludicrous decision at the worst possible time, just as the retail economy was collapsing. As a retail analyst myself I’m acutely aware of the pitfalls of investment into retail space with provincial shopping centres being some of the most challenging developments to achieve a viable return on now.

I and fellow members of the council have been excluded from the so-called cross party advisory group on the management of Castle Quay which is entirely composed of Conservative and Labour councillors. Labour supported the purchase of Castle Quay in 2018 for £63m with a further commitment of a similar sum to build a canal-side extension, including a cinema and a hotel.

Looking at the figures in this budget we can see that around a third of the financial pressures are a result of losses attributed to Castle Quay. Even if the council’s own optimistic predictions are correct, by the end of next year Castle Quay will have returned a loss of around £1.9m since the council took full ownership.

The value of the centre is now around half what was paid for it, amounting to a whopping £30m loss of equity in an investment backed by council-tax payers money!

Of course all this is now being blamed on the pandemic, but that’s only part of the story. This was always a reckless investment, and that recklessness has now translated into service cuts for everyone in Cherwell.

Whilst I agree that councils should be the drivers of town centre regeneration, that needs to be evenly distributed. Ownership of Castle Quay is likely to produce only dubious benefit to the people of Banbury with a potentially massive financial burden that will be felt by every Cherwell resident for years to come”

As a retail analyst and adviser, I made my misgivings about the public purchase of a struggling shopping centre clear to the council, even before I was a councillor, but was ignored.

I knew there were already signs of problems on the horizon with several of the major tenants of the scheme, not least Debenhams which recently collapsed into administration.  That failure is yet another problem that is about to hit the beleaguered development when lockdown is lifted.

The much vaunted opening of Lock 29 indoor market in the space previously occupied by one of the other failed anchor tenants – BHS – is yet to prove itself viable.  While I support the inclusion and encouragement of many of the smaller enterprises that were invited to trade there, it’s notable that the major occupier, Happerley, pulled out last year after only 3 months. 

I have asked several questions of the council about Happerley’s involvement with the scheme and the due diligence that went into licencing that company to trade there in the first place.  Those questions remain unanswered.

I originally supported the extension of the scheme with more canal-side restaurant and leisure uses, but as time has gone on it’s becoming apparent that even that is a dubious move. One of the major parts of the development is a cinema, and we are already seeing a market shift there with several of the large cinema operators closing venues and some going into administration

Little focus on climate change

We’ve just had a taste of the pressures a global catastrophe can place on our finances.  In the coming years, ecological threats will make the pandemic look like a mini-break.  Yet 2 years into our declaration of a climate emergency, we have another budget with very little progress towards tackling that threat.

The last budget had a tiny percentage of spending dedicated to the ecological emergency and even that wasn’t fully honoured.  This one has just 5 short paragraphs – less than a page of vague aspirations with no real commitment to anything.  Added to that we’ve increased charges for making homes more energy efficient, the very thing we should be encouraging!

Last year’s budget was billed as Cherwell’s “greenest budget ever” yet many of the pledges made then remain unfulfilled, not least the promise to convert lighting at Bodicote House to LED which would have saved the council money as well as helping to save the environment.

On top of that we also have increased building regulations charges for thermal upgrades to buildings and for the installation of solar panels. These are the very things we should be encouraging residents and businesses to do. Many councils don’t charge at all for Solar Panel installations

It’s becoming clear that Cherwell’s ruling Conservative members simply don’t understand the meaning of the word ’emergency’.  We need to be taking bold steps towards tackling climate change, but the Conservatives would rather simply box tick and greenwash with projects that are either not of their making or are never completed. 

The huge financial commitment that is now being poured into the new waterside development in Banbury could have gone towards renewable energy schemes that would have both helped with climate change and returned a regular profit for the council instead of the losses we see from Castle Quay now. 

Unfortunately due to the short-sightedness and fiscal incompetence of the council’s political  leadership we are now committed to a path that I think will just bring further financial misery to the residents we should be working to protect.”