Thursday, May 30, 2013

Sunk Without Trace

Cllr Ian Driver appears well on his way to setting a new local record for being thrown out of Thanet Council meetings.

Hard on the heels of Cllr John Worrow who very publicly, flounced out of this week's Scrutiny Committee meeting, Cllr Driver, once again, made it impossible to conduct the business of the meeting while he belowed for Labour Leader, Clive Hart to resign over the TransEuropa Ferries debt.

Eventually, he had to be escorted from the room by two security guards, so the meeting could conclude, leaving only his colleague, Cllr Tom King, to mutter loudly about resignations.

I'm sure others will comment on this meeting and the Gazette's Thomas Brown was busy filming, so you will soon be able to see, at least part of what took place for yourself.

What did become very clear is that Cllrs Driver and King and a vociferous group in the audience, struggled to grasp the financial facts, as explained by the Council's Chief Executive, Dr Sue McGonigle. Both Labour and Conservative groups agreed, that in the circumstances, they would have both acted in the same way, their options were limited and the Chief Executive, argued, as I have here, that the port of Ramsgate benefited from the presence of TransEuropa. This was over and above the outstanding debt, while efforts were made to find a solution that might enable the Council to recover if not all of the money, at least some of it.

The Conservative's Cllr Bayford, reminded the Chamber, that it was not so long ago that TransEuropa was running a very successful service, with several ferries, plying back and forth each day from Ostende but it was overtaken by the huge rise in fuel prices which made the older ferries it used inefficient. During the time it was attempting to restructure its debt, it was also in discussion over buying new and more fuel efficient ships, designed specifically for the route but this was not to be.

At this point, we should perhaps draw a line under the matter and agree that in principle, it was right to attempt to save the service and agree to defer the debt. If there was any chance at all of the company recovering. the only alternative was to pull the plug much earlier with the consequence very much the same, a large outstanding berthing debt to the Council.

Some observers need to keep sight of the fact that this was a debt and that the only way of recovering the money was for the company to trade its way out of an increasingly difficult situation. As Labour's Cllr Rick Everett asked of Cllr Ian Driver: "What would you have done that might have been any different in the circumstances at the time?"

Back to the meeting, where the Royal Sands, Pleasurama business, was raced through so quickly by Labour's Cabinet that if you had blinked, you might have missed it. Observers may have been forgiven if they did and perhaps wondered what happened as a consequence.

I played very little part in last evening's performance, other than ask a question of Clive Hart in regard to our new local economic plan. I have a habit of over-intellectualising and last night, it was clear I lost Clive completely, when he answered that he didn't know what planet I was on and that I told lies on my weblog. Quite what the latter had to do with the question on our economy I really don't know. I should point out that if I do write anything in error here, then I encourage comment and correction.

The Future Looks Much Like the Past
If your'e curious, then I pointed out, that in my view, our local economic strategy was firmly trapped in the past, repeating the same tired-old phrases each time its shaken awake and re-written for an annual Council meeting to approve. "From 1897 to 2007" I said, the western economies grew by an average of 2% and that's enough to double the standard of living every generation, based on the innovation of a hundred years which gave us the electric light, the internal combustion engine, power tools, vertical cities and equal employment for women." "Since 2007", I added, "growth is about 0.8% and has collapsed as employment was decoupled from productivity and yesterdays dismal Eurozone figures are a rude wake-up call."

"Thanet," I said, "Faces a number of challenges we can all agree upon. It's position, a skills shortage, inward migration pressures and rising unemployment. we simply can't write an economic plan for the next five years which fails to recognise the evidence that circumstances may become very much worse among all these key challenges, rather than better, before the economy starts to recover.

This all proved too much for Clive, who instead quipped about me 'dragging'flags around the sky' while he and his Cabinet were 'successfully dealing with down to earth problems'. Very good. This weblog will be ten years old in November and I hope in another five years, I will be able to look back and see how Clive Hart's vision and leadership revitalised the new thriving Thanet local economy, through the simple expedient of fiddling with the worn-out phrases of a much older one. Good luck is all I can say.


Anonymous said...

The problem as I see is that with politicians you get what you vote for, and sometimes the calibre of candidate is not what is required to do the job. For example, a majority party in government must appoint ministers from its elected members, and if the best candidate for the job is not elected then second best will have to do. OK so they can appoint advisers, but the minister is still in charge. The same must apply in local politics with the loudest voice getting the biggest job. I sometimes wonder if many politicians stand for election because the wouldn't get a job in the outside world.

Steve h from ramsgate said...

Hello Simon

I'm afraid you lost me with your question, or was it a speech?

As for failing to grasp the financial facts, I can grasp this one - a £3.3mm realised debt is a loss to the balance sheet. A loss. Not profit, income, cash flow - a loss. If you don't believe me, ask an accountant, preferably one not associated with this mess and everything to lose and nothing to gain by admitting a loss.

I've had to pull the plug on loss making businesses before. If there is no income and costs associated with the business, you pull the plug early to avoid any unnecessary spend . In a private company, you have owners or an owner who would be pretty upset if you squandered their money for no reason. In the fantasy world of public spending, no such concerns exist.

Back in the real world, in the event of an operational loss, the responsible department should identify the events that led up to that loss, what could have been done differently so lessons can be learned and the problem not occur again. Where is TDC's lessons learned on this? How can we be sure this will not happen in the future? All noise from the main parties and the Exec say this was the right decision and therefore suggest the same decision would be made again in the future. What would you do faced with the same situation in the future?

There should have been a decision process when TEF advised they were no longer paying the bills. What were the options, and what were the financial implications of those options? This is a basic control around decision making. Without the due diligence on cost implications of important financial decisions, it's akin to flipping a coin and choosing heads every time. You say we would have been no worse off letting the debt get to £3.3mm rather than cutting loose early - prove it. Show us the calculations to back up your theory.

FOI requests will bring the public the information they need to make a decision in 2 years time on who they trust with the keys to the till. On the evidence of last night, what you have written and everything that has happened with TEF, it's not red or blue.

Simon Moores said...


Call it a rhetorical statement if you like!

As we stand, we need to be satisfied by the statement from the Chief Exec that the process was proper, the financial implications managed and likely the same decision might be made in the future but hopefully with the benefit of hindsight.

As a businessman, I recognise it's a loss but local government does not account in quite the same way as a business as was explained last evening. I think the difficulty comes when the Council, as in this example, is tasked with running a commercial enterprise, such as the port of Ramsgate.

Undeniably, it's a loss of potential income but the bulk of the Council's income comes from elsewhere and its the budgeting for services that really matters as I'm sure you will agree.

Anonymous said...

Simon, you might have a lesson to learn too. When dealing with people of lesser intellectual skills than yourself it is often better to ask them questions they can understand but nevertheless to the point. The problem arises in that I assume you can only ask one question. Does the council have a leader's question time as in Prime Ministers question time? Is Hart the Prescott of TDC? Or am I being too generous?

Anonymous said...

Were those who did due diligence on TEF debt the same individuals [name the names!] who did the due diligence on Royal Sands?
Who trousered what?!

Simon Moores said...

1:34 Your comments are contemptible to put it mildly!

Simon Moores said...

1:23. Lesson learned indeed. To use a well-worn expression "Keep it simple stupid" whcih I will most certainly aim to do in future!

Unfortunately a Leader's question time doesn't really exist and if it did, I doubt we would be enlightened to the same degree as say, Boris, during his regular and entertaining Q&A sessions as Mayor of London

Steve h from ramsgate said...

Hi Simon

I was lucky enough not to attend, but I look forward to reading the exec's speech as I'm sure she will publish it on the website in the spirit of openness.

I still don't quite grasp why the council cannot explain clearly. I'm far from being an idiot yet I'm struggling to understand TDC's logic in its finances or decision making process.

If you've budgeted for money coming in, when it fails to turn up, your budget needs adjusting. We can see that money earmarked for other things is now being used to cover the shortfall. What would have happened to the budget if this money was never expected in the first place? It needs to be clearly communicated, not brushed aside.

What is happening to the 2013/2014 budget? How has it been impacted by the loss of revenue to the port?

So many unanswered questions. The arrogance of TDC elected members and officers is quite astonishing.

Anonymous said...

Simon, It appears the budget showed an income where there wasn't any, which is false accounting and that the debt was kept out of the accounts so as not to arouse any suspicion about TEF's trading whilst being insolvent. Am I right?

John Hamilton - talking sense and cutting through bullshit said...

Steve h;

As i posted elsewhere, I think this explains the TEF situation quite nicely;

It appears there are 2 scenarios when a company is failing, at the is the position that TDC found itself in. So, simply put, the 2 scenarios are below;

1. TEF indicates it is in trouble some 2 years ago, TDC it appears tries to help it by waving fees for a time that extends to 2 years plus, ending in TEF going bust, and the council losing the £3.3million it had waived, collection of ill informed amatuer protesters shout about TDC incompetance, Driver jumps on bandwagon.


2. TEF indicates it is in trouble some 2 years ago, TDC immediately pulls the plug, resulting in the loss of the service 2 years ago, fee no longer due to TDC as TEF no longer exist, adding upto a loss to TDC of £3.3million in fees from TEF as they have gone bust 2 years earlier, collection of ill informed amatuer protesters shout about TDC incompetance, Driver jumps on bandwagon

That the ultimate loss of income isn't budgeted for is not that surprising given that it seems that it appeared that TEF were going to be successful in restructuring, as evidenced by the new ferry it used for a short time, and the payments is apparantly paid to TDC at the end of last year.

In any case, the outcome as is, is no worse than if TEF had been forced into bankrupcy by TDC. The rest is sadly window dressing, being leapt upon by the usual political opportunists.

I can't disagree with Simon's summary of the situation, and I think the shallow comments of anon 1.34 show the low level of understanding that has to be dealt with when trying to explain business imperitives to some of the more noisey inhabitants of Thanet.

Simon Moores said...

I think we really need to put an end to the conspiracy theories and remind several observers that we live in a representative democracy where decisions are taken by elected councillors. I'm happy that the process was a sensible one to pursue in the circumstances and with the information available at the time.

As Cllr Johnston reminded Cllr Driver, he was also on the Finance & Audit committee but rarely attended. If he had, then he would have been able to ask questions which now appear to concern him.

Steve h from ramsgate said...

John h, you make the same mistakes as Simon when assessing the financial situation. Maybe you are the same person?

If you cut the cord as soon as the money stopped coming in- march 2011- then you instantly stop all ferry related expenses incurred by TDC for the next two years. Have these been calculated and presented to the electorate? No.

You adjust the budget accordingly 2 years earlier, spreading the impact of £3.3mm lost revenue over 2 years instead of one. 2013/2014's budget would also be correct. We have yet to hear what is coming out of the current years budget. Again, why has this not been presented?

TEF have less debts, therefore one less thing for a new owner to pay for when they take them over. Is a failing business more or less attractive with £3.3mm of debt? I'll let you work that one out for yourself.

TDC start marketing for new operators, or start looking for alternative uses 2 years earlier, assuming they have started is process already.

Just a few ideas off the top of my head which I would expect councillors and officers to have considered from November 2010 and march 2011. If they did not, they, as civil servants and elected members have failed the tax payer.

Try as you like to dismiss the opposition to events over the last few weeks to a few loons who don't know our arse from our abacus, unfortunately this issue has some way to run and I hope will define the careers of those involved.

John Hamilton - talking sense and cutting through bullshit said...

Couldn't agree more Simon. Driver is simply a political opportunist, nothing more nore less.

Anonymous said...

Just out of interest, what is the current record for removal from council meetings and how close is Cllr Driver to beating it?

Simon Moores said...

Two.. and very close as Driver looks to very soon be able to beat his own record!

Anonymous said...

It is hard for me to see why Cllr. Driver was ejected. Apart from one dodgy word he seemed ok to me. What did I miss, or did the film clip finish before it all kicked off?

Simon Moores said...

As you might reasonably expect from Thomas Brown at the Gazette, the filming was extremely selective and no coverage whatsoever was given to the Chief Executive's response which was arguably more important than Cllr Driver's publicity drive.

In fact it all kicked-off, as you put it after this, with all kinds of interesting, rich and imaginative adjective's involving the word "Anus" several times.

I'm sure that would have been much more entertaining for the public to view!

Anonymous said...

In the last 3 weeks in Westgate on two seperate occasions. I have overheard old women gossiping "loudly", that there is a large chinese invasion imminent.

The first time I heard them, I thought they were just talking about the Manston China Gateway project from 2008. This morning they seem to be convinced its something new with major infrastructor planned.

Is there any trueth to this gossip going around Westgate, or is it some new UKIP spin?

Simon Moores said...

It's news to me although a good chinese restaurant would be a nice addition to the town

Anonymous said...

With a bit of luck the Driver will disappear up his own fundamental orifice.

John Hamilton - talking sense and cutting through bullshit said...

Sorry Steve h, but the mistake really is yours. Interesting I have been accused of being yet another different councillor, that's 2 in as many days, and even more amusingly, from opposite ends of the political spectrum, a record even for me!

When you say cut the cord, and ending "all ferry related expense" I assume you have failed to include the live export business that uses the port? It would seem that the extra manpower required to run the 2nd ferry would be clearly negligible, and would instantly mean that all hope of repayment of the money owed by TEF would evapourate. A VERY shortsighted approach given that there was a strong possibility that TEF would secure a new investor.

TEF is now in recievership, and will now disappear, that is sadly inevitable. It will not find a new buyer now, as it could not find a new investor then. New operators? You are aware of the competition presented by Dover, the huge rise in fuel prices, the failure of the catamaran service, the ferry service etc etc? Ramsgate is capable of taking far more ship movements than it has for many years. Do you really think that another operator is likely to materialise then or now in the current climate! Sea France couldn't manage, neither will any other operator not address a nich market. Finding another operator really is fairy tale stuff. I wonder if you can get your head around that on your own...

I'm sure that all options were explored by councillors/officers, and clearly the option taken of trying to protect TDC's income as far as possible was the correct one. If they had forced TEF out of buisness, to simply make the same loss as they would have anyway, that would have mean incompetance of the highest order, something TDC are MORE than capable of, but clearly not in this case where they have acted perfectly properly and correctly.

Sadly most of people commenting about this issue have no clue what they are talking about, clearly have an axe to grind, mis represent the facts to a huge degree, simply have no understanding whatsoever as to how business works and/or rely on 100% hindsight to critisise others who actually have to deal with real world issues in real time.

You do fall into a couple of those catagories Steve, I will leave you to decide which they maybe.

John Hamilton - talking sense and cutting through bullshit said...

PS I must admit I was very disappointed that video of Drivers removal wasn;t posted, now that would have goven me a great laugh going into the weekend. Seems he and some of his fellow independants are proving why they don;t really have any business as elected representatives.

Anonymous said...

If a new Chinese restaurant were to appear in Westgate doubtless Driver and Worrow would be outside protesting at the lack of diversity in the menu in that Indian curries are not available, and seating arrangements do not include an area for LGBTs.

John Hamilton - talking sense and cutting through bullshit said...

^^^^ HAHAHAHAHAHA Oh well said anon, I laughed and laughed until after a few minutes i realised that the only inaccuracy in your post is that you left out the fact that the owners of any Chinese Restaurant would cleraly also be homophobic for not sending homophobe finder general Worrow at least a letter of support!

Steve h said...

John h,

If the facts about TDC's' decision making process become public, I will be correct. There wasn't any.

As for living in the real world, I make decisions on a daily basis about profits, losses regulation and difficult decisions that have to be justified to shareholders. TDC when they act in such away are answerable to nobody. Collusion across party's, elected member and officers is a very dangerous thing.

You don't offer any suggestion outside what the council have done which puts you in the red or blue camp. Seeing as you are somewhere right of AH himself, you are more blue than red.

Closing the ferry in march 2011 as a going concern would have avoided any animal export issues.

I am very aware of Dover up the road. Seemingly more aware than Tdc who built the place. If you look at Thanet in isolation - which Tdc does when looking at infrastructure such as port ramsgate or manston, competition from near neighbours does not have any relevance. But Dover and the channel tunnel were always going to kill it eventually. Was this a consideration by Tdc- you mention it, a a councillor so the council considered it. Makes your choice of keeping it going all the more strange.

All the options, if thy were discussed, will have to come out eventually. It wil be interesting to see if they really did have any clue what they were doing. All indicators say they had no clue whatsoever.

Anyone who would publicly support the councils loss making actions and own their own business will open themselves up to ridicule and rightly so. Anyone who supports the actions are either offering support to save their own neck or really are stupid.

Anonymous said...

Anyone know the current state of play re Chinagate? Is it still on? Has it all been laid to rest?

Simon Moores said...

I think the application may have expired by now (2 years) but don't take my word as Gospel. It may be a rolling re-application. No great confidence that it will ever happen though as the applicant has no show evidence of putting the conditional elements in place

Anonymous said...

John, I believe the Chinese are working on a letter of support but getting it translated into at least 27 languages so they can demonstrate their diversity, is proving difficult.

Bill said...

Surely some of the questions that must be answered are where did this debt appear in the end of year accounts, and has the councils 151 officer discharged her job with due diligence. Did the fact that the 151 officer was also the chief executive allow some poor decisions to be taken.
At the end of the day very few people seem to have known about the deal, which you could understand for a couple of months but not 2 years. I thought district councils were supposed to be open and transparent , not closed deals agreed in small back rooms.

Anonymous said...

It does seem more like due negligence rather than due diligence. Expect a massive rise in parking charges to pay for the hole in the budget.
Will the decision making process be scrutinised or brushed under the carpet ?

John Hamilton - talking sense and cutting through bullshit said...

Sadly Steve h, I very much doubt that your name, and the words "proved correct" will EVER share a sentence except when I point out what ill bedfellows they are.

I'm sure that you make very difficult decissions daily as to what you should bag up from the floor sweepings generated by your days labours. But your posts here clearly demonstrate you neither understand nor are fit to run and commercial business, as clearly compertent commercial decissions are WAY over your head!

Clearly by collusion, you mean a number of people, all reaching the correct concensus on an issue, and then acting on it. The fact that you don't understand that decission is utterly irrelevant.

The fact that the councils actions were no worse than any other choice in this instance means nothing more than someone who understands and has run his own businesses for over 30 years understands that in this once instance the council acted completely correctly.

It amuses me greatly that you suggest closing the port, and losing the live export business would result in losing LESS money! Now let me walk you through this VERY slowly ;)

TEF fail = £0 income from TEF, minimal expence running port

TEF supported = £0 income from TEF, minimal expense running port.

Close port = £0 income from TEF + £0 income from animal exporters = BIGGER loss to TDC.

I hope my caps will assist you in spotting the elephant in the room, TEF not paying fees OR forced out TDC lose the same money, your simplistic "shut the port" suggestion = a BIGGER loss.

This really is business 101 Steve h.

Clearly, Ramsgate and TEF were competitive with Dover and the tunnel until a couple of years ago when fuel prices rose dramitically, hence why TEF have operated successfuly for a number of year, you did notice the big ships going in and out of the harbour over the last few years didn't you surely?

I love that you think I'm a councillor, I would be amused as to which party you think i belong to, so far I have 3 tory and one particularly intellectually vacant dimwit calling me a Labour councillor...

Clearly teh indicators were all in TEF's favour to those of us who are competent in business. Payments made late last year, and a new ferry would seem to suggest the financial issues they faced were on the way to being resolved, but then the only thing you seem to be cpmpetent in is using hindsight to reach inaccurate conclusions.

Anyone who can't grasp the clear facts I have tried to educate you in above clearly has no place in business above sweeping my office floor, lets hope that you will be able to get your head around the basic facts above, and that you stop humiliating yourself by making such inaccurate and ignorant posts as the ones you have made thus far :)

Thomas Brown said...

Nothing selective about it. There are several clips from the Cabinet meeting including Sue McGonigal's statement here:

Apologies for the lack of a Conservative clip. Audio was faulty for most of the night for the public gallery/press desk and I was restricted to filming from my seat at the back behind the Tory cllrs.

We hope to be able to provide full online video coverage of key meetings soon but we're limited with AV equipment (both mine and TDC's) and location.