Independence...Integrity...Value

December 2014

Dec 9th 2014, 10:35

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29th December 2014

I hope that my readers had a Merry Christmas and will have a Happy New Year.

The provisional Local Government Finance Settlement for 2015/16 was announced just before Christmas. It was not the sort of Christmas present that most people want – most local authorities found it either unsurprising or disappointing.

As expected there will be significant reductions in the revenue support grant that central government pays to local authorities – an average of 8.8% but even more in the most deprived areas. However, as authorities also receive income from council tax, business rates and various fees and charges the reduction in their ‘spending power’ will be somewhat less. The government has calculated that this will be 1.8% on average and 6.4% in the most deprived areas but the Chartered Institute of Public Finance & Accountancy has disputed this figure saying that in reality the reduction in spending power will be 6% on average. The effects will be huge – Birmingham City Council alone estimates that it will need to reduce its budgets by £117million in 2015/16.

The government has also announced phase II of the ‘Local Growth Fund’ – a limited scheme to allow selected local authorities to borrow an additional £100million to build new council houses at their own expense. However, there are significant ‘strings’ attached such as the need to develop ‘affordable’ rather than ‘social’ housing, the need to involve Local Enterprise Partnerships and conditions surrounding timescales. The ‘deal’ falls far short of the unconditional £7billion increase in ‘borrowing limits’ that has been proposed by the Local Government Association.

Alongside these announcements much is being said about devolution to local authorities in England. There have been a number of ‘City Deals’ in Greater Manchester, South Yorkshire and West Yorkshire with others expected in areas including the West Midlands. Both the government and the authorities concerned are understandably ‘playing up’ the significance of these deals. However, I am somewhat sceptical as it appears to me that Westminster and Whitehall are actually doing nothing significant to ‘roll back’ the centralised state and in some ways are increasing their stifling ‘iron grip’ because the ‘city deals’ have the following features:

  • They relate only to a limited range of functions. In Greater Manchester, which has negotiated the most extensive deal, they relate only to transport, housing, planning and policing – functions that traditionally belong in local government. They do not extend to the more significant budgets such as welfare and health or to taxation.
  • Ministers will decide to which authorities these powers will be devolved.
  • Ministers have decided the criteria for devolving powers including the imposition of elected mayors and ‘combined authorities’ that appears to make governance even more opaque than it is already.
  • Local authorities are required to make detailed applications that require Ministers to approve their policies.
  • Detailed control over local government such as prescriptive regulations on weekly refuse collections, caps on council tax and restrictions on borrowing to fund social and affordable housing will continue.

I hope that the ‘city deals’ will be a first step towards significant devolution. However, they clearly do not offer England a devolution deal that resembles the devolution deals in Scotland, Wales or Northern Ireland; and do not appear to make the structure of local government simpler, more economical, more transparent or more democratic.

In my view part of the problem is the approach of local government leaders. Most of them appear unable to get out of the ‘begging bowl’ mentality of pleading poverty and begging for more funding. I would rather see an ambition to seize freedom, take control of all local taxation and expenditure and create a situation where neither the local authority nor the local economy requires any subsidy!

Our first seminar and workshop of 2015 will be on ‘Implementing Self-Financing in Wales’. We will hold two sessions: the first in Cardiff on 10th February 2015 and the second in Wrexham on 12th February 2015.

Further information is available on our website at http://awics.co.uk/walesselffin.asp from where you can also book a place online. A brochure can also be downloaded from HERE.

15th December 2014

Last week I was working principally on a Housing Revenue Account Business Planning model for Denbighshire Council and on preparing and marking examination papers in Management Accounting for the Chartered Institute of Public Finance & Accountancy.

This week I will be Chairing the Impact Housing Association Board meeting that will be held at the Eden Rural Foyer in Penrith on Wednesday evening. The main subjects under discussion are our Business Plan and Budget for 2015 (the association has a financial year that runs from January to December).

The Business Plan is the association’s key planning document and is made available to the public. It sets the framework for the Delivery Plan and the Budget. It covers how we will achieve our four purposes:

  • Poverty reduction, including poverty of economy, communities and opportunities.
  • Providing good, long-term secure accommodation.
  • A transformational role for people moving through.
  • Raising aspirations.

The draft business plan identifies four key challenges:

  • Funding.
  • The role of the third sector.
  • Self-regulation.
  • Staffing.

It concludes that these changes will require four major commitments from the association:

  • We need to stick closely to the commitments set out in our latest blueprint which is a reaffirmation of our basic principles.
  • We need to continue to have a clear focus on best use of our energy and resources.
  • We need to continue our commitment to develop truly customer facing services.
  • We need to have a continuing emphasis on value for money, the costs of front line services and back office costs within a budget that shows very constrained surpluses.

When approved the business plan will be posted on the Impact Housing Association website.

John Seddon has written an interesting article in the ‘Local Government Chronicle’ entitled ‘We need to close the DCLG policy-promulgation machine’. In it he makes a persuasive argument that the centralised bureaucratic control that we ‘enjoy’ in the United Kingdom may be promoting uniformity but is also depressing performance rather than enhancing it. Here is an extract:

“The DCLG, along with other Whitehall departments, is central to a compliance regime. Regulators, inspectors and DCLG representatives ensure that what happens in the name of public service is evaluated on the basis of conformance, not innovation. To release the opportunity for effective public sector reform we need to shift the locus of control from the DCLG to local public sector leaders. The cost savings from DCLG salaries will be nothing compared with the savings from ceasing to make local authorities slaves in a yoke of compliance. The greatest benefit will be in liberating local authorities, giving them the freedom to innovate.â€

Sounds excellent but will it happen and would all local public sector leaders be willing and able to respond? Our next seminar and workshop is on 'Implementing Self-Financing in Wales'. For further information please click HERE

8th December 2014

I had three meetings last week:

  • · On Monday I attended the Remuneration Committee meeting at Impact Housing Association where we discussed next year’s pay award and projected increases in superannuation costs.
  • · On Tuesday I attended a meeting with Homes for Northumberland in Blyth. They are the arms’ length management organisation established by Northumberland County Council to manage their council housing stock in Alnwick and Blyth.
  • · On Thursday I made a presentation on Asset Management at the Housemark / ARCH conference for stock retaining authorities in Coventry.

I expect most housing associations are thinking carefully about pay increases and superannuation as they prepare their budgets for next year.

My presentation on asset management was well received and covered the following topics:

  • Funding local authority asset management
  • Valuation and Depreciation
  • Revenue Repairs
  • Development
  • Sale of High Value Stock
  • Asset Management Strategies and Plans
  • Sustainable Investment Programmes
  • Asset Performance
  • Performance Management

I have put a copy of the slides that I used for the Asset Management presentation and an accompanying briefing paper on my website at http://awics.co.uk/assetmmt.asp

Last week also saw the government’s autumn statement. Perhaps the most significant thing about it is not the list of measures that was announced – of which some have been welcomed in the housing and local government sectors while some have not – but the long-term assumptions and forecasts.

Public finances in the United Kingdom clearly continue to be weak and, if anything, the government’s forecasts may prove to be optimistic. However, even if the projected economic growth and increases in tax revenues do occur, the financial projections to 2019/20 include an assumption that there will be unprecedented reductions in public expenditure that will be focused on a narrow range of services including housing and local government. If this happens the budget reductions between 2015 and 2020 will be far greater than those between 2010 and 2015, radical approaches will be required and services will become unrecognisable compared with what they have been.

Local authorities and housing providers will have to be increasingly innovative and determined if they are to continue to meet the pressing needs of individuals and communities for housing, social care and other essential services.

My briefing paper on the autumn statement and its implications for housing and local government is available on my website at http://awics.co.uk/dynamicdata/data/docs/autumn%20statement%20-%20briefing%20paper.pdf

This week I have only one meeting – the AWICS staff Christmas dinner!

1st December 2014

We are now putting together our series of seminars and workshops for 2015.

The first will be on ‘Implementing Self-Financing in Wales’. We will hold two sessions: the first in Cardiff on 10th February 2015 and the second in Wrexham on 12th February 2015.

This seminar and workshop is designed to assist local authorities with the implementation of self-financing. It is suitable for elected members, housing managers, finance managers and anyone with an interest in the implementation of self-financing in Wales.

The Session addresses the following questions:

  • The Welsh Self-Financing settlement - debts, borrowing caps, new build and what the Welsh Government expects from local authorities.
  • The new Welsh policies on rents and service charges.
  • The practical implications of self-financing including those for Treasury Management, Accounting, Business Planning, Asset Management, Risk Management and Governance.
  • The opportunities and challenges that are brought with self-financing.

The session includes opportunities for networking and a participatory case study. It is accompanied by a very useful and fully up to date book that is designed for future reference entitled: “Implementing Self-Financing in Walesâ€.

Further information is available on our website at http://awics.co.uk/walesselffin.asp from where you can also book a place online. A brochure can also be downloaded from HERE.

Denbighshire Council's housing offices in Rhyl. Denbighshire is a stock holding authority in Wales for which we have provided assistance with self-financing.

Wednesday will see the Chancellor’s autumn statement. I am surprised that it is called an ‘autumn’ statement because I always thought that December was in the winter! However, what is of more importance is what (if anything) will be announced.

It appears to me that the Chancellor has a problem. Despite making significant reductions in public expenditure the government will not have achieved its initial objective of eliminating the public sector deficit by 2015. In fact the public sector deficit is still higher than that of France and Italy and the government is continuing to borrow significant amounts. This appears to be because tax revenues have not increased as much as expected despite the apparent growth in the economy. The government therefore cannot afford to give much away either in lower taxation or additional expenditure and I expect the emphasis will be on the National Health Service and infrastructure spending – probably linked to rhetoric about devolution. I am told that a tunnel to take the A303 under Stonehenge is likely to be announced but that additional resources for housing or local government are less likely.

I thought that the events on ‘Black Friday’ provided a sad commentary on contemporary Britain. People borrowing more than they can afford to buy things that they don’t need and then ending up fighting in the shops! What does this say about the values of our society? Will the autumn statement attempt to change those values? I expect not!

On Thursday I will be speaking on Asset Management at the Housemark conference in Coventry. I hope that the delegates will find what I say useful. I am looking forward to it. Details were included in my blog last week (see November 2014).

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