The Modern World - Reality at the town halls

Hard on the heels of the report into the growth in town hall spends on personnel over the past decade, comes evidence that, when it comes to paying suppliers, Mallorca's town halls are far less willing to splash the cash; cash they owe against invoices raised for work done. While staffing levels have risen - in some instances by some astonishing amounts - and have clearly eaten into town halls' revenues, companies over which some of this staff have supervision are being left unpaid. And in certain instances, especially construction companies, they have gone out of business or maybe are about to. Work that has been funded by central government is being paid for, but other work - ostensibly paid for by the town halls - is not.

The suppliers are caught in the vicious credit circle. Several town halls have had to seek bank money, but the banks of course are unwilling to part with it, or not all that is being sought. Pity the poor suppliers to the likes of Pollensa and Muro town halls, where considerable debts are sloshing around and where budgets are seemingly neither supported by tax and other revenues nor by lines of credit. Pollensa's budgets for this year were described by the opposition as "science fiction"; Muro's financial situation has been portrayed as being "frightening". Pollensa was denied all the bank lending it wanted, and Muro faces a similar reluctance. Good luck, frankly, to anyone putting in an invoice to a town hall. The chances of it being paid are ... who knows?

This is not a new situation. Many town halls have reputations as being lousy payers, and have had for years. Even an administration that is relatively flush, such as Alcúdia, can take ages to cough up, with all the frustration to say nothing of harmful effects for cash flows that this can cause. Chances are, as well, that unless invoices are pro forma, the supplier has had to declare those invoices and been obliged to pay tax and IVA, despite not having received a remittance. The situation has been exacerbated by the current lack of credit. Companies, though, have taken the risk, in all probability having to seek their own credit, which may not actually be available. Without doing so, and given the importance of public building projects, local economies would all have but ground to a halt. They may yet still do so, if suppliers keep going out of business.

The president of the federation of local authorities, in an interview with "The Diario", has admitted that the town halls are causing serious problems for businesses. Joan Ferrà, himself the mayor of Puigpunyent, points out that town hall revenues are down by as much as 40%. While tax revenues are part of the story, Ferrà refers also to non-payments to the town halls and of course to the banks. He talks, vaguely, about the need for greater efficiency and effectiveness and about "good practice" when it comes to setting budgets and seeking cost cuts. To this end, he mentions fiestas and sports facilities as two areas that will have reduced spending, while staff will have to make do without using mobiles.

So, I guess our hearts should bleed for Vodafone and Movistar, as they will have reduced town hall contracts. Efficiency and effectiveness - where have we heard these words before? They were at the heart of the drive towards value for money in British public administration of the early Thatcher years. The town halls needed to increase staffing levels as they were operating from too low a basis of service, but one wonders as to how much attention has been paid to working practices. Staffs have grown like topsy, making town halls major employers, thanks to the spending frenzy of the Spanish boom years. More personnel was needed, but so also was more professionalism in terms of operational management, to which one can add factors such as inefficient working hours and departmental duplication in the governmental mini-me's that are the town halls.

So, fiestas are to be more "austere". Some already are. Pollensa cut its budget in 2009, for example. Trapped in a cycle of the traditional colliding with the modern, and in the social fabric of which the fiestas are integral, the town halls barely dare to question their fiesta spends. But the town halls have been, and remain, wasteful in this regard. Back in 2008, I asked, in the context of Can Picafort's summer fiesta, just how sustainable the fiesta was. And this was before the real impact of the crisis kicked in. The amount of money going up in flames seemed grotesque, and was made even more so when Santa Margalida town hall announced that some 300,000 more euros were to be allocated to fiestas. It was madness. Here was a town hall willing to fork out on bread and circuses while the benighted village of Son Serra lacks a decent police presence and has a vandalised sports centre. There again, sports facilities are to be deprived of money, aren't they.

The town halls are the Spanish economy in microcosm. Easy money was thrown at beefing up administrations and at creating projects. Much of this was necessary, but was approved by politicians - locally and nationally - overtaken by the thrills of growth but lacking a vision of sustainability. The national government now has its programme of economic sustainability, one that is long overdue and born out of the economic crisis. If it is to work, then different levels of government, including the town halls, are going to have get used to reduced spends, as are residents of the towns. More fundamentally, they - the town halls - are going to have to appraise their practices and priorities, as I said on 11 January. They cannot continue to operate way beyond their means, because the consequence is that suppliers don't get paid. But whether some of these suppliers should have been engaged in the first place is another question, as some of the projects have been of such deeply questionable value - like Can Ramis in Alcúdia. Ah yes, value. Value for money - efficiency and effectiveness. Welcome to the modern world.


QUIZ
Today: which group came second with the modern world?

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