December 12: Iceland brings chill to KCC
IT’S not
exactly what KCC would have wanted to hear just before
Christmas.
The administrators of the Icelandic
bank Glitnir are querying the priority status of
UK councils, which could have potentially far-reaching implications
when it comes to distributing any of the bank’s remaining assets
among creditors.
It is particularly unwelcome because
until now, KCC had been anticipating recouping 100 per cent of its
cash from Glitnir, compared with a lower rate of return from
Landsbanki.
If councils fail to reverse this
decision - and they are planning a legal challenge - they might get
less than a third back.
Setback for
KCC over Icelandic cash - read our story here>>>
As far as I can make out, the
administrators seem to think there is a difference between what
amounts to a loan and what amounts to a deposit – the latter being
what KCC thinks it had and why it believes it should be considered
as a preferential creditor.
The odd thing is that Glitnir has the
same administrators as Landsbanki, where councils
have retained preferential status.
Either way, KCC – along with others –
will be anxious to establish what is going on but they may have to
settle for a lengthy wait as I don’t expect there to be a quick
outcome.
Councils legal challenge>>
Even if the administrators are
persuaded they have got it wrong, it seems almost certain that
other creditors will turn to the courts to challenge councils’
priority status. The result? Legal wrangling that will undoubtedly
lead to more delays.
There is additional concern that
the bank announced recently announced that there was a further
creditor had come forward and was was claiming 750million
Euros – a substantial increase in its already significant
liabilities.
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I hear that there was a private meeting of County Hall’s
Conservative group last week to consider the fate of Kent
TV.
Councillors heard a presentation from
chief executive Peter Gilroy and representatives from Ten Alps, who
delivered an impassioned plea (what else) for the scheme to
continue. There was much emphasis on the "innovative" nature of the
scheme and words to the effect that it was putting KCC on the
cutting edge of new technology, which as we all know is considered
the "holy grail" of the public sector and gets lots of brownie
points with inspectors.
I gather that these impassioned pleas
had some success in winning over one or two sceptics on the
backbenches but not before there were a number of questions
about the quality of Kent TV and the as yet unresolved question of
funding.
The message was that Kent TV could be
delivered for less than the £600,000 a year that
it currently costs, with the implication being that it could be
done with fewer people (it only employs 14 as things stand). It was
also suggested that more effort would be made to secure advertising
revenue - which was the original intention but never really took
off.
There were several negative comments
from councillors present about the quality and content of Kent TV,
which raises certain issues about how it might be improved a) with
less money and b) with fewer people. And indeed, if an equally good
job can be done with less resources, why has nearly £1.8million had
to be spent so far?
I gather that the Conservative group
will have a free vote on what Kent TV’s fate should be early in the
New Year. Had the vote been taken last week, I’m told it probably
would have got the nod with enough doubters won round.
The key problem for the ruling
administration remains the question of justifying to taxpayers –
and possibly those facing the prospect of losing their jobs with
KCC - an investment in a discretionary, non-essential service when
we are about to see a particularly challenging financial period for
public services.
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Tuesday, December 15 2009