Tuesday, 24 November 2015

Truro Sustainable Transport Strategy: Bus lane fiasco

Many of us have been extremely dubious about the Truro Sustainable Transport Strategy for some time. 
The bus lane fiasco in Tregolls Road shows that we were absolutely right to be concerned. 
The Council has described the introduction, followed by the immediate abolition of the bus lane, as a 'tweak' to their Strategy.  This is not so.  It was fundamental to their thinking that people would be encouraged to get on the buses because they would be moving faster than cars.  This does not work without bus lanes. 
Another bus lane on the western side of Truro has also recently been dropped, although it too was originally considered essential.
The fact is that Truro does not have the road space for bus lanes.
The Council was convinced that the people who come from East Cornwall and use the Western Park and Ride would swap to the Eastern Park and Ride but apparently they have not: they would rather have the convenience of their own car.
If we are to avoid total gridlock the Council needs a root and branch review of their Transport Strategy for Truro.   In the meantime they should stop approving developments based on computer modelling which clearly does not work.

Monday, 7 September 2015

Cornwall Council as King Canute: more on the surf tax

Monday, 3 August 2015

Another meeting on the surf tax

After concerns expressed by a significant number of members, the Housing and Environment Policy Advisory Committee looked again at the Cabinet's proposal to introduce a surf tax.

Despite us rehearsing all the reasons why this is not a good idea (see previous blog dated 20 May) the Committee still decided to recommend that the Cabinet proceed with their plan.

If the Council introduces a tax on surf schools operating on 'Council beaches', I would expect at least some surf schools affected to challenge the tax. The Council said it was not aware of any legal challenge.  If you know differently or you may challenge the tax once it is introduced or you have any other comments, please get in touch.

These are the beaches that are proposed to be taxed.


Thursday, 30 July 2015

A tale of two stadiums

Today there was an eight hour discussion at the Strategic Planning Committee mainly on enabling applications for the Stadium for Cornwall and a new stadium for Truro City Football Club.

Really disappointing that the Committee felt it had to put the cost of two stadiums onto Truro City Centre. The Government offered to help. Why let the Government off the hook and take the adverse retail impact on Truro instead by approving two out of town retail parks to compete with the City Centre?

It looks like a failure of leadership. Was this not just the right moment to stand up for Cornwall?

Perhaps the Council will reduce town centre parking charges if things get really tough. But I would not hold your breath. Its next plan is to charge for on street parking in town centres too.

Tomorrow, a meeting on the Council's proposed surf tax.

Wednesday, 8 July 2015

Council's 'briefing' on LOBO loans (£400m of 'toxic debt')

I have received a copy of a note from the Portfolio Holder together with a briefing on LOBOs.

There are two errors:
1. The best way to minimise your borrowing costs is to borrow only what you need for the period you need it and, if it is important to have certainty, fix the rate.
 It is a mistake for the Council to enter into a cocktail of complex financial  instruments which the Council thinks will minimise its risks but in fact carry different risks which the Council is not well placed to evaluate.
The way of calculating the price to exit an 'inverse floater' is an example. 
Banks would not ordinarily run the risks that the Council is running on these deals. They swap out their risk.
2. The Council has a good credit rating. It is better than the banks it is borrowing from. So the banks should ordinarily have to pay higher rates of interest than the Council.
This should put us on red alert to start with that the deals might be too good to be true. It also means that we should be aware that the terms of these deals would look jaw droppingly attractive  to the banks.
If the banks lent to central Government, they would get peanuts in comparison. Can anyone imagine the Government offering  National Savings Bonds where the rate is fixed except that if rates go up the investor can raise the rate and the Government has to redeem  the bond early if it does not like the new rate ?

Comparing fixed PWLB loans with LOBOs is like comparing apples and oranges. On the PWLB loans the rate is fixed.  So the Council takes a view that it is comfortable to pay the fixed rate on a PWLB loan for the designated period - like a fixed rate mortgage.

The LOBOs are not fixed as the lender can ratchet up the rate on the option dates.

If the Council has to carry liquidity (which pays derisory interest rates - on average, 1.17%) to hedge against suddenly needing to repay the LOBOs then that is another cost that the LOBOs are causing the Council.

I did not raise this issue until 1 December last year because the Council does not disclose in any of its documents details of these deals. Other Councils do.

Tuesday, 7 July 2015

'LOBOs': Call for Independent Inquiry

 Those who have been following the story highlighted by the Channel 4 Dispatches programme will realise that Cornwall Council have been dealing in complex loans through which £millions of Cornwall's money could be lost.

Some questions that need answered :
1. What is the cost to the Council of these deals which can even involve compensating banks for the cost of complex derivatives such as Bermudan swaptions?
 2. Why was the Council taking bets on interest rates?
 3. Why has the Council failed to be transparent about these deals? Other Councils are.
 4. Why does the Council not appear to comply with CIPFA guidance on LOBOs?

I am calling for an independent enquiry on what risks Cornwall Council has been taking on complex LOBO (Lender Option Borrower Option) loans.

Clive Betts MP the chairman of the Local Government Parliamentary Select Committee has been particularly outspoken and said, "I think the FCA [Financial Conduct Authority] now ought to investigate this, and if it hasn't got the powers then the government ought to consider giving it the powers to regulate this in the future."

Mr Betts may well get things under way first. If he does then I expect Cornwall Council to play a prominent and transparent role.

Monday, 6 July 2015

Council borrowing blunders exposed by Channel 4 TV

Many of you will have just seen the Channel 4 Dispatches programme which has highlighted the problems with Cornwall Council entering into complex loan arrangements and not understanding the consequences.

On the 17th February 2015 I asked Cornwall Council about the huge amounts of money that had been borrowed, the extraordinary length of time over which the agreements had been made and why I thought there was significant risk to the Cornish taxpayer.

Listen for yourself to what I said at that meeting and judge if I gave Cornwall Council a fair warning that they were taking enormous risks with taxpayers' money.

It takes about 6 minutes.   Thanks