Memorandum from Kent County Council (LAI 39)

 

Firstly, may I thank members of this Select Committee for allowing me the opportunity to correct the statements made about Kent County Council during the course of evidence collection. 

 

While clearly Mr Knight noted he has been collecting views from a number of councils as part of his research, Kent County Council was not one of these councils. Therefore it is unclear as to why this particular council was cited during this evidence or the basis of the views clearly held. Members or others may have assumed that given the research mentioned and Kent County Council being the only council mentioned, that discussion had taken place. While this council can broadly support many of Mr Knight's views, we would have preferred for any evidence offered to be factually based. In particular we regret that the two references to Kent County Council at best misrepresent the position here.

 

The actual references are noted below for convenience:

 

Mr Knight: "It is clear that in some authorities they do have specialist treasury management officers. Certainly when I was chair of finance of a metropolitan authority we did have specialist staff. If you read the PriceWaterhouseCoopers' report on Kent, for instance, at the moment, it actually says that that authority which has one of largest investment portfolios, does not have any of its own specialist treasury management staff - have to say I was pretty astonished by that." 

 

Like other councils, KCC has an Investment and Treasury team of circa 5 people. These people are very experienced but clearly we do not employ them to do the same specialist role that external advisers were contracted to do. In addition a professionally qualified manager supervises this team and met regularly with the external advisers to discuss or supervise this contract. Elsewhere in his evidence Mr Knight talks about councils working together to ensure specialist skills are available collectively - this in effect was exactly the role such advisers took. The issue is whether councils had arrangements in place to provide specialist market advise, not how it was procured. We believe the statement misrepresents or reflects a misunderstanding of the situation.

 

Mr Knight in correspondence has responded to the above statement with further assumptions about how the management of this contract operated. Again, he makes inferences that are simply not accurate. I must admit to finding this odd in the extreme, as I would be perfectly happy to directly discuss with Mr Knight the arrangements in place and the issues we (in retrospect) are having to tackle.

 

Mr Knight: "................. However, I think it is fair to say that there was a huge over-reliance on the information provided by credit rating agencies in a market that was rapidly changing. If you compare authorities - this maybe unfair but I'll do it - if you looked at say Kent, it was relying on info only from one CRA, whereas if you look at Essex, which doesn't have funds at risk, it was very clear about having information from three credit rating agencies and only relying on the lowest or worst scenario from each of those agencies when taking information into account in terms of the way it moved forward."   

 

This is simply factually untrue. KCC uses all 3 credit ratings agencies. We cannot understand how Mr Knight came to this conclusion. I am grateful that subsequently Mr Knight has acknowledged this was not true.

I would reiterate that while Kent County Council is puzzled by this whole exchange, we would want to support many of Mr Knight's views. We find it sad and regretable that we feel the need to correct the statements made.

 

January 2009