Creative accounting masks Labour's £7 million overspend?
13/10/2016 22:45:00......Posted by Luke Clancy
The Q1 financial performance report of Croydon Council shows a worrying overspend of several million pounds in the People Department that contributes to a total overspend across the whole Council of £6,696,000.
However, in a neat accounting trick, Labour has reduced this overspend to just £696,000.
How did they do that you might ask?
Well, the details are contained in the Cabinet papers for 19 September. In Item 9, the table on page 72 lists four conveniently round-numbered budget items totalling £6,000,000 exactly. These are classified as "non departmental underspends" and are:
Additional grant income £3 million;
Interest receivable £1 million;
Interest payable £1 million and;
Contingency £1 million.
I made a formal request for information to the Cabinet Member for Finance and Treasury, Councillor Simon Hall, asking what assumptions exactly have led to these estimations reducing the overspend by £6 million.
He has responded:
"The £6m saving is made up of the following;
"£3m additional grant income. These are amounts that were confirmed after budget was set in February 2016.
"£1m Interest receivable. This relates to a dividend received on our investment the Real Lettings Fund. Any dividend and the timing of that dividend was uncertain when we set the budget.
"£1m Interest payable. We have borrowed less than anticipated for our capital programme at this stage of the year.
"£1m Contingency. This is held to offset risks during the year."
The Conservatives will be keeping a close eye on Labour's handling of the budget and whether it can keep spending in its People department under control.