Independence...Integrity...Value

June 2014

Jun 9th 2014, 13:46

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30th June 2014

I am in 'Inside Housing' this week. As part of the headline story 'Treasury probes £1billion unused headroom' I am quoted as saying that I know of several authorities that are simply averse to taking on extra loans despite residents' desperate demand for new housing and that they are acting like retiring officers instead of the large institutional landlords that they are and that:

"They view (new debt) as a bad thing, want to pay it off and don't want any more. That approach is viewed in some councils as being more prudent. But I am not sure it is particularly logical. "It comes from thinking about what they would do personally. People think about paying off debt before they retire. but councils don't retire. Future generations might want housing to live in to tackle the social problems we see and have more debt in the housing revenue account."

Government has imposed limits on how much councils can borrow either to build new council homes or to improve existing ones but some councils are so worried about debt that they are not even using the borrowing capacity that they have. I think that the concern about council borrowing is overdone.

No one worries about housing associations borrowing for development (in fact government encourages them to borrow as much as possible). No one worries about owner-occupiers taking out mortgages to buy houses (or even private landlords borrowing to buy houses). It seems to me that as long as a local authority can afford to meet the capital financing costs and its assets exceed its debts there should be no problem with borrowing to finance capital investment.

One of my clients, Basildon Borough Council is a good example. It:

  • Has not achieved the decent homes standard
  • Faces a severe shortage of social and affordable housing
  • Has a revenue surplus of over £2.5million a year in its housing revenue account
  • Has an existing stock of council houses valued at £513million
  • But has a borrowing cap imposed of £222million that prevents it from borrowing either for decent homes or new build.

It appears to me that this has nothing to do with accounting or economics and everything to do with political dogma.

The article can be found on the ‘Inside Housing’ website at: http://www.insidehousing.co.uk/finance/treasury-probes-1bn-unused-headroom/7004378.article

The next AWICS seminar and workshop is that on developments in local authority housing finance. It will be held in London on 8th July 2014. It offers an opportunity for housing managers, housing accountants, local councillors and others with an interest in local authority housing finance to become fully up to date with this important subject.

As usual, the seminar and workshop is popular, but there are still a few places available. Details can be found on our website at: http://awics.co.uk/devts.asp

All our seminars and workshops including ‘Developments in local Authority Housing Finance’ are also available as in-house sessions. In fact I have an in-house session in London next week. For further information please contact me at Adrian.waite@awics.co.uk

The book that accompanies the seminar has also been published this week. For further information or to place an order please visit http://awics.co.uk/developments_England.asp

Last week I attended the Impact Housing Association Staff Day where our focus was on providing housing and support services to people with dementia. Impact already provides homes for the elderly with extra care and is in the process of developing some further schemes. There are a significant number of people with dementia and about half of us have had a close relative or friend who has suffered from the disease. With an ageing population dementia will become more common and will provide significant challenges for services such as housing, social care and health. I couldn’t help thinking that if more resources were devoted to researching the causes of dementia and possible ways of preventing or delaying it, this would not only prevent considerable suffering but would also reduce the pressure on our public services.

Information about Impact Housing’s ‘Living Well’ schemes for older residents can be found on their website at: http://www.impacthousing.org.uk/living-well-impact-homes-over-55s

The Thamesmead estate in South London is a place where service charges and estate charges are controversial. The local MP, Teresa Pearce, has commissioned me on two occasions to provide advice and analysis for her and her constituents who are unhappy about the level of charges and their legality.

There has been an interesting development at Woolwich County Court regarding the estate charges. One defendant thought he had a better chance of winning his dispute with the housing association based on the question ‘What is due and reasonable’, rather than a defence based on the rights and wrongs of the deeds.

The judge ordered the housing association to comply with the following:

  • Provide each defendant with a signed Deed of Covenant.
  • A breakdown of the charges claimed.
  • Provide a detailed witness statement setting out:
  • What is included in each item of expenditure.
  • How each service benefits their land.
  • How is it divided?
  • All receipts for the years which make up the charges GHA are claiming for.

Further details are available on the residents’ website at: http://www.thamesmeadresidents.co.uk/latest-news/justice-for-residents

We are holding a seminar and workshop ‘All You Want to Know about Service Charges’ in London in November. Further information is available on our website at: http://awics.co.uk/schs.asp

23rd June 2014

The next AWICS seminar and workshop is that on developments in local authority housing finance. It will be held in London on 8th July 2014. It offers an opportunity for housing managers, housing accountants, local councillors and others with an interest in local authority housing finance to become fully up to date with this important subject.

I have been busy recently finalising the preparations for this seminar and workshop including completing the presentation, course materials and the accompanying book. There really is a lot going on in local authority housing finance at the moment. The government has just published its proposals for council house rents after 2015; councils are building new homes but are constrained by the borrowing cap; the government is still insisting that ultimately depreciation and impairment should become real charges to the housing revenue account; and the implications of self-financing, welfare reform and the right to buy initiative are still unravelling.

As usual, the seminar and workshop is popular, but there are still a few places available. Details can be found on our website at: http://awics.co.uk/devts.asp .

All our seminars and workshops including ‘Developments in local Authority Housing Finance’ are also available as in-house sessions. In fact I have an in-house session in London next week. For further information please contact me at Adrian.waite@awics.co.uk

Staying with the theme of developments in local authority housing finance, I have just published a briefing paper on ‘Local Authorities, Development and the Borrowing Cap’. Your free copy can be downloaded from: http://awics.co.uk/dynamicdata/data/docs/local%20authorities,%20development%20and%20the%20borrowing%20cap%20-%20briefing%20paper.pdf

I was interested to see that the government is finally considering providing some updated guidance on how to interpret the housing revenue account ring-fence. When I was a member of the working party that Communities & Local Government and HM Treasury convened in 2008 to consider the introduction of self-financing this was one of the issues that we considered. There was concern that some authorities were abusing the system to channel resources out of the housing revenue account to fund services in the general fund. The previous government accepted our recommendation to provide firmer guidance but the present government opted instead to allow ‘local discretion’. Since then, concern that tenants’ rents are increasingly being used to fund services that should be funded by council tax has increased to the point that the government is having a re-think.

However, I also think that there are questions for the accountancy profession to answer. Finance Directors have prepared these accounts and advised these councils. Auditors have certified these accounts as being correct. Have they always been sufficiently diligent in ensuring that expenditure has been properly allocated between the general fund and the housing revenue account?

Last week I attended some very productive meetings at Denbighshire County Council where I am providing assistance with advice and financial modelling on self-financing, business planning, new build and service charges.

I also chaired the Impact Housing Association Annual General Meeting at Kendal last Thursday and this week will be attending the staff day on Tuesday and the Senior Managers’ away day on Friday. The theme of the staff day will be managing dementia while the theme of the away day will be performance management. I will talk about what happens at these meetings in my blog next week.

16th June 2014

Last Tuesday hundreds of people around the world sat the Chartered Institute of Public Finance & Accountancy’s Professional Certificate Stage examination in Management Accounting. These qualifications are a very important part of improving financial governance worldwide and especially in developing countries. As examiner I draft the questions and mark most of the scripts so I now have a large number of scripts that I am working my way through. The marking process is quite rigorous and starts with the test marking of a few scripts by me, the moderator and another marker to ensure that we are all taking a consistent approach and to identify any issues that might arise. This morning I am having a tele-conference to discuss the test marking.

This afternoon I will be travelling to Rhyl prior to meetings tomorrow with officers of Denbighshire County Council who I am assisting with some advice and financial modelling on the introduction of self-financing to the housing revenue account and the de-pooling of service charges.

On Saturday I went to the Cumberland Show for a day out. The reason why I mention this is because Impact Housing Association, of which I am Chair, took a stand, manned by the residents and staff from the Young People’s service. The young people have been involved in designing and creating a Health Action Project called ‘Junk Bunnies’ creating craft from recycled materials and focussed on promoting well-being through positive activity. This project has been funded by the Big Lottery in conjunction with the Foyer Federation, and forms part of the Healthy Conversations agenda that works to improve physical health, mental well-being and healthy eating both within the service and to the wider community. Both the Cumberland Show in general and the ‘Junk Bunnies’ stand in particular were excellent. More information about the project is available on the Impact website at: http://www.impacthousing.org.uk/news/impacts-junk-bunnies-will-be-present-cumberland-show-2014

Impact Housing Association’s Annual General Meeting will be held at the South Lakes Foyer in Kendal on Thursday. As Chair, I will be presenting the annual report to members for 2013 in the context of the key challenges that we are facing and the Homes & Communities Agency’s proposals for regulation. The key questions that I will be asking and answering are:

  • Are we fulfilling our Mission in an increasingly commercial environment?
  • Do we have an ambitious agenda or are we complacent?
  • Are we a well governed and well managed organisation?
  • Do we achieve Value for Money?

I will outline the performance of the association during the last year and for the first time will report on how well the board has performed against its own specific performance measures.

Our performance during 2013 was impressive and when our annual report is publically available I will provide a link in my blog. In the meantime a copy of my presentation can be downloaded from HERE.

The government has published its final proposals for rents for social housing from 2015. I wrote a bit about this in my blog last week (see below). I have now written a briefing paper that is available at: http://awics.co.uk/dynamicdata/data/docs/guidance%20on%20rents%20for%20social%20housing%20-%20briefing%20paper.pdf

The next AWICS seminar and workshop is that on developments in local authority housing finance. It will be held in London on 8th July 2014. It offers an opportunity for housing managers, housing accountants, local councillors and others with an interest in local authority housing finance to become fully up to date with this important subject. Details can be found on our website at: http://awics.co.uk/devts.asp .

All our seminars and workshops are also available as in-house sessions. For further information please contact me at Adrian.waite@awics.co.uk

9th June 2014

This year’s Queen’s speech was delivered last Wednesday. I would tend to agree with most commentators that it was rather ‘light’ as you would expect at this stage in a Parliament. However, it did include an Infrastructure Bill that will be of interest to people in local government and housing. One of the objectives of this bill is to encourage the building of more housing through relaxing section 106 agreements (that often ensure affordable housing is built as part of a scheme) and relaxing environmental standards. The government considers that it is removing unnecessary bureaucracy but critics consider that the government is turning away from its commitments to build affordable housing and to be the ‘greenest’ government ever!

I have written a briefing paper on the implications of the Queen’s Speech for housing and local government. It can be freely downloaded from: http://awics.co.uk/dynamicdata/data/docs/queens%20speech%20june%202014%20-%20briefing%20paper.pdf

While on the subject of housing I came across this interesting graph this week. It shows the number of new houses built in Britain and demonstrates that since local authorities stopped building new homes in the 1980s neither housing associations nor the private sector have built sufficient houses to fill the gap.

Tomorrow is the day on which hundreds of people around the world will sit the Chartered Institute of Public Finance & Accountancy’s Professional Certificate Stage examination in Management Accounting. As examiner I draft the questions and mark most of the scripts. These qualifications are a very important part of improving financial governance worldwide and especially in developing countries. I would like to wish all the candidates well and will look forward to marking the scripts. A copy of the syllabus can be downloaded from the website of the Chartered Institute of Public Finance & Accountancy at: http://www.cipfa.org/-/media/files/training%20and%20qualifications/qualifications/syllabus%20docs/pq%202014/syllabuses/2014%20%20syll%20%20management%20accounting%2010.pdf

The government has published its final proposals for rents for social housing from 2015, following a consultation last October. Unsurprisingly it is sticking with its basic proposal that, in future, rents will increase each year by the Consumer Prices Index plus 1% and that ‘rent convergence’ will come to an end. This is bad news for local authorities and housing associations that have yet to increase their rents to the ‘target’ level as it will leave a ‘black hole’ in their budgets.

The government is also pressing ahead with its proposal that social tenants with incomes in excess of £60,000 a year should pay market rents to stay in their homes.

I intend to write a briefing paper on the government’s proposals that should be available later in the week.

The next AWICS seminar and workshop is that on developments in local authority housing finance. It will be held in London on 8th July 2014. It offers an opportunity for housing managers, housing accountants, local councillors and others with an interest in local authority housing finance to become fully up to date with this important subject. Details can be found on our website at: http://awics.co.uk/devts.asp .

All our seminars and workshops are also available as in-house sessions. For further information please contact me at Adrian.waite@awics.co.uk

2nd June 2014

My briefing paper ‘New Housing Policy to meet the Housing Crisis’ has been attracting some comment on Twitter. Councillor Judith Derbyshire of Eden District Council tweeted:

“Good analysis & sensible suggestions by @AdrianWaite on housing crisis & solutions - but will this government take action?”

And Councillor Ian Stewart of Cumbria County Council and South Lakeland District Council tweeted:

“In the fifth year of a Parliament the obvious answer is ‘no’. However, all parties are preparing manifestos.”

When I read the election manifestos next year I will be interested to see if any of the parties borrow any of my ideas!

If anyone would like to add to this conversation or follow me on Twitter my address is @AdrianWaite

My briefing paper ‘New Housing Policy to meet the Housing Crisis’ can be freely downloaded from: http://awics.co.uk/dynamicdata/data/docs/new%20housing%20policy%20to%20meet%20the%20housing%20crisis%20-%20briefing%20paper.pdf

This year’s Queen’s speech will be delivered on Wednesday. I intend to write a briefing paper on the implications for housing and local government and to post it on my website on Thursday. However, some elements of the speech appear to have been ‘leaked’ already!

It is expected that an Infrastructure Bill will be announced that will mark a further retreat from the government’s initial intention to be the ‘greenest ever’ and to ensure that all new homes would be ‘zero carbon’ by 2016. It is expected to exempt all small developments from new green standards and allow builders to pay their way out of full obligations.

It is also expected that the government will introduce a ‘Recall Bill’ to empower citizens to remove an MP part way through their term of office if their performance is considered inadequate. This was suggested during the 2010 election campaign. It is not clear whether this would extend to other elected representatives such as MEPs, councillors or crime commissioners. It will also be interesting to see how this would work without damaging consequences. For example:

  • Elected representatives sometimes have to take controversial decisions that are unpopular in the short-term but are recognised as having been beneficial in the long-term. Would the recall bill enable them to be ‘sacked’ immediately and would this lead to politicians being even more averse to risking short-term unpopularity by taking necessary decisions?
  • If a political party became unpopular it would be in the interests of its rivals to think of reasons to ‘recall’ its representatives in marginal seats thus provoking by-elections. Would this be conducive to good government and honest politics?

The next AWICS seminar and workshop is that on developments in local authority housing finance. It will be held in London on 8th July 2014. It offers an opportunity for housing managers, housing accountants, local councillors and others with an interest in local authority housing finance to become fully up to date with this important subject. Details can be found on our website at: http://awics.co.uk/devts.asp .

All our seminars and workshops are also available as in-house sessions. For further information please contact me at Adrian.waite@awics.co.uk

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