When Labour took
over the leadership of Thanet District Council in December 2011, we
were advised of a commercially confidential arrangement that the
previous Conservative regime had entered into in March that year with
Transeuropa Ferries.
The company was struggling
financially and Conservative-controlled TDC, together with the
authorities at Ostend, had agreed to special payment terms in order to
assist its survival.
In Thanet’s case this meant
deferring the fees Transeuropa paid to berth at Ramsgate, initially for
three months but subsequently for longer, and putting in place a payment
plan that would have seen the outstanding debt recovered in full by
2014.
The purpose of this arrangement was
to give every possible chance for the continuation of the ferry service
at the port, and to protect both the jobs that depended on it and an
important source of ongoing income for the council taxpayers of Thanet.
By the time Labour took over from
the Conservatives, the ferry company already owed the council £1.7m, and
the risk attached to this debt had become an additional consideration.
The council was in constant contact
with the company and there were regular discussions internally about the
potential financial implications of it going under.
If we had taken action to recover
the money at that stage, for example by denying Transeuropa facilities
at Ramsgate, this may well have tipped the firm into administration,
leaving the existing debt unpaid and the port without its major
customer.
It was also important that the
council said nothing publicly that had potential to undermine commercial
confidence in the company, as this may have had the same outcome.
Developments
over the next year gave some cause for encouragement. In July 2012 the
firm began making debt repayments. In November last year it reached
agreement with an Italian investment company. And early in 2013 it added
a third ship to the Ramsgate-Ostend service.
During this time
the amount outstanding to the council increased to £3.3m, but the risk
of the firm becoming insolvent appeared to be reducing.
It should be
understood that if the council had adopted a hard line at any point then
in all likelihood the ferry service would simply have ended earlier.
The council would still not have had the £3.3m, as that level of debt
would never have been incurred in the first place.
It is true that
the council would have been able to make some savings at the port if the
ferry company had failed earlier, but these are a fraction of the
overall amount.
We take
responsibility for the actions of the council since December 2011, but
in our view, officers and elected members have done what they could to
protect the best interests of the district in a very difficult
situation.
The council will
take whatever action is available to recover as much money as possible,
but in the meantime we have to show in the 2012/13 accounts that we are
able to cover the shortfall from existing resources and that is the
purpose of the report to cabinet next week.
Cllr Clive Hart - Leader
Cllr Alan Poole - Deputy Leader and Cabinet Member for Operational Services
Cllr Rick Everitt - Cabinet Member for Finance
What an absolute load of rot. That means that at no point did the Labour administration consider whether the level of debt of the Company had reached a stage where it was unsustainable. They should have, and also have accepted that the company would and should fold at that point. Has Hart got no business sense whatsoever? Obviously not. He clearly would rather have kept throwing Council massive resources into a failed company, rather than into the services that the Council should be financing. What is he going to say to the staff at the next round of redundancies for Council employees who actually provide the services? The man is an embarrassment and should go.
ReplyDeleteNo lessons learnt from the Titanic then....sinking ships always sink.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteThe dismissal of savings as being a fraction of the overall amount says it all. We have to foot the bill and I'm sure most taxpayers would welcome any saving or it actually being spent on improving the area. Did anyone work out how much could be saved at the time and who decided that this amount should it seems be dismissed and discussions continue? Have the savings now been actioned?
ReplyDeleteAlso why didn't they put money by during 2011 if they knew then that the company was struggling financially and this amount was at risk of not being collected? Wouldn't most responsible businesses do that or their auditors make sure that they do in order to protect investors?
Did they budget for more money coming in from Transeuropa during 2012 knowing that the company was struggling financially and what have they put in for 2013? Was the amount of money included prudent?
This release sheds a bit more light but there are still lots of questions that need answering.
It looks like a case of damned if you do, damned if you don't. If the Labour led TDC had pulled the plug on TEF early doors the usual suspects would have been screaming about lost jobs and business.
ReplyDeleteThe deal back in March 2011 under the Tory TDC was all about helping the company survive a difficult period, Labour allowed the arrangement to continue after seeing promising signs during 2012. It seems the company were being given the same assistance in Ostende as well.
Once again it shows how difficult it is to deal with companies who promise a lot but don't deliver, there have been successes such as Thanet Earth but the Ferry services must be checked over with a fine toothcomb before being allowed to operate from Ramsgate again.
What puzzles me is how a statement released by the Thanet Labour Group can be described as a joint statement. Joint with who one might ask? Basically this is an umbrella statement by Labour to justify how they have allowed a debt to virtually double in their time in office when the arrangement they inherited was scheduled to clear it by 2014, that's like next year folks. Well, that was well monitored.
DeleteThink about it for a moment, but can an administration that includes no high level commercial management experience, or even any really experienced businessmen of any sort, be expected to handle business arrangements running into millions. If one appoints clowns to run our isle's business affairs we should surely expect nothing short of a bit a slapstick and lots of spillage. At the circus that might be buckets of water or custard, but at district council level it is our money.
Presumably the previous administration also had no business sense either, first for not realising that the ferry business was only heading one way and not pulling the plug then and secondly for allowing the debt to grow to £1.7 millions within six months.
DeleteI always thought that councillors were supposed to be advised by the paid experts at TDC.
Anon 18:00 You are right. Councillors are supposed to be advised by experts. One of the problems with TDC is that the so-called experts are useless and running their own fiefdom.
DeleteMore secrecy and dodgy dealings from TDC - any councillor that is stupid enough to think the officials are experts in anything other than boosting their own salaries and pensions are, well, stupid.
DeleteI am not opposed to providing financial assistance to support jobs and the local economy, but there must come a point in time when a judgement call is made as to the continuing viability of the support. For a small District Council like Thanet which has a weak economy, massive social problems and a very limited and reducing budget, the judgment call should have been made well before the debt escalated to an eye-watering £3.3 million (18% of the total 2013-14 budget). To allow the debt to grow like Topsy, as the Labour leadership, did is incompetence of the first order. This incompetence will cost local tax payers at least £30 on their bill. Furthermore only a select few Councillors knew about this "secret deal". The vast majority of Councillors were unaware of the arrangement. They were not consulted on it. Not given the chance to vote on it. And when Councillors voted to set the 2013-14 budget in February of this year the Council leadership, and the most senior council officers did not say at word about a secret festering debt which would blow the budget out the water.
ReplyDeleteIn book the Cabinet and some very senior Council officers have misled Councillors by withholding vitally important information. I also believe that the Cabinet and certain senior Council officers may have breached the Council's Constitution and have certainly acted in an extremely unethical way. This is why I have lodged a complaint with The District Auditor and will be taking a motion to the Council calling a full independent enquiry. In my opinion there should be some high level political resignations and the officer disciplinary process should also be brought into play.
I am fed up of hearing the leadership of the Council & senior Council officers telling us that Thanet is an open, transparent and accountable Council when quite clearly it is not. Keeping a £3.3 million debt secret from the majority of councillors and not allowing them to have a say is clearly not open, transparent or accountable.
Finally when I asked Mark Seed the Director responsible for Ramsgate Port in April about any debts owed to the Council by TransEuropa he refused to answer me. I will publish his e-mails today.
Councillor Ian Driver Green Party
Thanks Councillor Driver for trying to get the facts on this. At least you were trying to find out what the position was and, if true (and I don't doubt you on this), I find it astonishing that a council official would not answer an elected councillor's question on something like this. How can you protect the people's interests.
DeleteAlso if many councillors were not aware of this when setting the budget that is astonishing too. Surely something must have been planned for the pots of money that are now being raided. For example what was said about the New Homes money that is going to be used for this? How long ago was the benefits money discovered and were councillors told about it? Was money put by in this years and last years budget in case the bills weren't paid and if not why not if the debt was so large?
Was money put in the budget for ferry fees in 2013 and is there an ongoing hole as I can't remember seeing anything about this? If fees weren't put in then presumably some allowance should have been made for not collecting the money already outstanding.
Please keep pressing on this and thanks for providing your information which sheds a bit more light on what has gone on. There is however a lot more information that's needed before the public can make an informed judgement on the matter. I hope the council will now be transparent on this but I won't be holding my breath!
Mark Seed refused to provide an answer!! How unusual.
ReplyDeleteAnd call in the Police Cllr Driver
ReplyDeleteOn what charge, peasant. I know the one Driver would face if he took your advice, wasting police time.
DeleteMisuse of public funds and fraud would be the charges rude person. Possibly even negligence. Sounds like the councillors are getting nervous about Plod jailing some more of them.
DeleteOr are you saying there is no corruption at TDC? And if there is as almost anybody would confirm, why are you so keen not to involve the Police? Investigating corruption etc is what they do. Otherwise we'll have continued failure and waste then shtum payoffs as the civil servants and councillors trying to whitewash everything with our money for as long as possible.