Cllrs need to step up their game understanding council finances.

In the 10 years Folkestone & Hythe District Council have been publishing their spend data, £179m or 48%  of the spend has been on premises related expenditure, as the chart below shows. The chart shows that in 2019/20, there was a major blip. This was due to the purchase of Folkestone racecourse, which alone accounts for £26m in that year. Also what the chart shows is that non premises related expenditure has risen considerable under the leadership of current Head of Paid Service & Chief Executive of Folkestone & Hythe District Council, Dr Susan Priest.

Of course, this data can be better seen and understood as a graph, which clearly shows the anomaly in 2019/20. A deeper analysis of the data makes it clear that our council has made £87.75m of investments into property since 2016/17. These properties have been used to help alleviate the council’s need to provide expensive B & B costs which were growing each year from 2012 onwards. Since late 2018, these costs begun to fall.

Also on Oct 1 2020, the council took control of their housing stock after numerous failings were exposed by The Shepway Vox Team, 18 month long investigation. This has meant that costs are now direct to the council.

Spending money on such as property or vehicles, for example, is considered to be capital expenditure. In order to count as capital expenditure, new assets or additions to assets must have a life of more than one year. So the £25m on Folkestone Racecourse, the £17m on Connect 38, the £3m on Westenhanger Castle and the purchase of £1m plus of vehicles is capital expenditure

It is only since 2016, has the Council’s spend data shown whether the expenditure is capital, or revenue expenditure.

Capital – if the council spends money on improving the council’s assets, then this is capital expenditure. This would include purchasing new assets, such as land and buildings, but also refurbishing and improving existing ones. Capital expenditure is funded through capital income sources such as capital receipts and borrowing.

Revenue – this is the council’s day-to-day expenditure and includes salaries and wages, running costs such as fuel, utility bills and service contract payments. As a rule of thumb, if the expenditure is consumed in less than a year, then it is revenue. The council funds revenue expenditure through revenue income sources such as the council tax and charging users for the services they use.

So one can see that less and less of council tax has been spent on revenue expenditure since 2020/21, and the council have increased there borrowing to pay for more capital assets, such as those set out above.

It is clear from the the chart above that capital expenditure from 2020/21 has grown significantly.

Now spending on your housing stock or building more new homes, via the council’s company Oportunitas Ltd is also capital expenditure. In 2019/20 the council state that it’s expenditure on the Housing Revenue Account was £4.769m. However, the payment data only shows on £3,515,076 [net] was spent on the council’s housing stock. Even if one takes the gross as can been seen in the chart below, there is still a £550,909 discrepancy in expenditure.

All monies in 2020/21 stops for East Kent Housing, as Folkestone & Hythe District Council took control of their housing stock in Oct 2020. A graph better shows this information, and the one belows shows that all housing stock expenditure is now direct from the council. The sums spent on the council housing stock is set to increase over the next few years as the council resolve the issues discovered in the housing stock survey and make all their homes decent homes to live in.

There are anomalies in the data to which we have referred to, and those can’t be readily explained. Without Cllrs asking the right questions, and without Cllrs understanding how money sloshes through the council systems, they and us will remain in the dark.

It is time for our Cllrs to step up their game (some do not need to), and improve their understanding of the intricacies of our council’s finances, for until they do, they’ll be none the wiser what are council are doing with ratepayers money.

The Shepway Vox Team

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