An interesting little story buried away in the pages of the icSouthlondon site would seem to suggest that the borough of Lambeth is about to go seriously broke.
The story dates back to the 80s when a Government loan was taken by the Greater London Council. When the authority was wound up in 86, that debt was passed to something called the Inner London Education Authority which only lasted until the end of the decade.
In 1992 the repayments were split across a few boroughs and Lambeth was saddled with its share of the debt. However, possibly due to this chain of bureaucratic nonsense, the loan was seemingly forgotten about until recently when "accountants found Lambeth's books didn't add up."
Slight understatement that: with interest the debt now weighs in at a whopping £21m and the Government want it back, sharpish. The date for repayment has been set at 31 March.
The good news is that Lambeth can pay off most of the debt. The bad news is that they'll have to use up the £19m they have in their reserves to do it and they won't be able to build that kitty back up again until around 2009. All councils have a legal duty to maintain their reserves at a certain level (generally between £15 and 30 million),
To put all these numbers in perspective we should mention that Lambeth currently owes £725 million and has an annual budget of £411 million. The borough also boasts one of the highest council tax rates in the country.
The blame game has already started with the LibDem council leaders accusing Labour ("We do not want any more financial messes like this one the Labour Party has left us with") and Labour accusing the LibDems:
Over the last year, Cllr Lumsden has lost £3million in fraud, £11million because of an accounting error, turned down £20million in government funding for a new school and wasted £26million buying himself a luxury office block overlooking the Thames.
It is no good the Liberals always trying to put the blame for their failure in the distant past when they are making such a mess of the present.
Maybe we should just have a whipround?
