Library deal collapse leaves “£1m black hole” in budget

The last-minute cancellation by John Laing Integrated Services of the deal to privatise Croydon’s libraries has created a £1 million “black hole” in the Conservative-run council’s budget for the coming year, according to a senior opposition councillor.

john-laing-resized-1Timothy Godfrey, the Labour councillor ordered from the Town Hall chamber last night just for wanting to ask questions about the collapse of the council’s £30 million library privatisation contract with Laing’s, today spoke of his shock and astonishment at the way the Conservative leadership of the council handled the announcement, shunting it almost as an after-thought at the end of a three-hour budget discussion.

“It’s very bad news for the people of Croydon,” Godfrey said of the collapse of the deal with John Laing Integrated Services (slogan: “Making infrastructure happen”. Oh yeah!)

JLIS was the hand-picked preferred bidder to run Croydon’s public libraries, but they have decided to quit the process, following what was presented as an 18-month commercial bidding process, apparently because they had suddenly discovered that there would be some pension liabilities incurred when they took on council librarians and staff.

“I was shocked that such a major announcement about how you spend council money was handled in this way. It was astonishing,” Godfrey said in an interview with Andrew Pelling for his Croydon Radio programme. When Godfrey persisted in asking questions about the consequences of the collapse of the library deal, Tory mayor Eddy Arram ordered his removal from the chamber; Godfrey was followed by all his Labour councillor colleagues.

Godfrey is the local Labour party’s spokesman on arts and culture, and he has argued for the past two years that the council could better run its public libraries by reducing back-office costs and not saddling the library budget with expensive centralised IT contracts which offer little value in the running of the service.

According to Godfrey, the council was “relying on John Laing to make significant savings to this year’s budget, which they will now not be able to make that, and it leaves a huge hole. They haven’t explained how they will be able to cover that.

“The black hole must be in the region of £1 million, because they were relying on cutting the back-office costs and getting out of expensive contracts for IT and facilities management, which was where the savings came from,” he said.

“Obviously, the 1.8 per cent increase in Council Tax will help, but surely they had other plans for that.”

Laing’s retreat from the Croydon library deal is the latest withdrawal by the builders and developers from a series of projects with local authorities. “They’ve pulled out of all deals like the council’s luxury HQ deal, so they won’t be doing that sort of thing again,” Godfrey said.

“Once again its about the Tories trying to privatise services and cut the front-line staff, as in the care homes last year, but this time it’s too much for John Laing on this contract,” he said.

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4 Responses to Library deal collapse leaves “£1m black hole” in budget

  1. Does the Audit Commission still exist?

    And if so, is this a suitable case for referral?

  2. derekthrower says:

    I think it is a case for the District Auditor. The huge sums this council is starting to lose is becoming a serious problem.

    Mr Pickles wound up the Audit Commission which was more of a body proving guidance for best practice in public finance. Lessons which were never learnt by the Jonahs in the Town Hall.

  3. I stand corrected – thank you Derek. The District Auditor it is then. Come on Croydon Labour Party; stop talking, start referring.

  4. Pingback: Libraries News Round-up: 27th February 2013 | The Library Campaign

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