Forum Topic

Guy,Not having to pay the profit margin of private contractors was part of the rationale for taking over the annual waste and recycling contract from Suez in 2016The report on the councils overview and scrutiny meeting notes an overspend by recycling 360 – a subsidiary of Lampton 360 – of £1.4m and a capital investment of £22m that clearly incurs significant costs of capital. These increased costs have been incurred despite a reduction from weekly to fornightly waste collections while recycling rates have declined.https://www.getwestlondon.co.uk/news/west-london-news/hounslow-council-overspends-14-million-14501472The Carillion management fees presumably cover the cost of providing management and administrative staff and services and not purely a profit add-on. The council may not see significant reductions in the cost of services simply by bringing them in-house.With a reported budget overspend of £7m on the council accounts for last year, it seems reasonable to conclude “not having to pay profit margins” is not of itself going to balance the books or even necessarily lead to lower costs for service provision in many areas. The council website information for Lampton 360 notes “Lampton Development – is a property developer established to redevelop surplus local authority land, with residential and mixed use projects.”The Chair of Lampton 360, commenting on the Nantly House development said: “I am delighted that this project is moving forward, using local authority surplus land…This will be the first of many sites that Lampton 360 will be developing on behalf of Hounslow Council.”Mr Curran in a recent article said “that the policy of buying up homes had not worked, saying: “When we got into the detail we found it was expensive and very time consuming." He said Lampton would now be concentrating instead on buying groups of houses or blocks of flats to try to improve on its target.Selling off local authority surplus land for private development while right to buy continues to deplete council housing stock is not a sustainable strategy for plugging gaps in the council budget. I think much greater focus needs to given to the capture of development gains through S106 and CIL agreements with a view to maintaining council land for the development of social rent and shared ownership housing.

Joseph Gerald Bourke ● 2656d

Guy,“Carillion's profit margin helps but there are still enormous financial challenges.”this is a classic example of spurious policies based on flawed ideologies. As an experienced accountant, you should know only too well that there is a cost of capital required to fund the need for the land, buildings, plant and equipment necessary to deliver public services. When that capital is provided by shareholders (often occupational and private pension funds in which residents save for retirement) the cost of capital comes in the form of profits and dividends that in turn serve to pay the pensions of retirees or is reinvested in new capital formation. If capital is provided by local businesses and residents  it is financed via local and national taxes. Carillion’s problems reportedly have arisen primarily from bidding too keenly for public service contracts and not making sufficient profits to maintain the solvency of the business. Their offices at Westlink House in Brentford have been a workplace for many locals over decades.The jury is still out on Lampton 360. The company has yet to demonstrate that it has the wherewithal to efficiently deliver local services. The record so far (judging by the very significant cost overruns on the recycling enterprise) is far from an unqualified success.I don’t doubt the council faces financial challenges as a consequence of cuts in central government grants and if services can be delivered nore efficiently in-house that is what should be done. However, far greater long-term damage is wrought by the wholesale disposal of public land around the borough by the local council acting (via Lamoton 360) as a private developer. Land that is badly needed for the provision of council housing, schools and youth and community services among myriad other needs for public service provision.

Joseph Gerald Bourke ● 2657d