Sep 12th, 15:04
Blog 12th September 2019
In this week’s blog, I refer to: Spending Review 2019, Sajid Javid, HM Treasury, Health, Education, Police, NHS, Operation Yellowhammer, United Kingdom Government, Brexit, Medicine, Social Care, Risk Management, CIPFA, RSH, Local Government, Housing, Service Charges, Seminars and Training.
The Spending Review of 2019 was announced by Sajid Javid, the Chancellor of the Exchequer, last Wednesday. The statement sets departmental budgets for just one year rather than the usual three years, due to uncertainty over the impact of Brexit.
Sajid Javid outlined £13.8billion of investment in areas including health, education and the police in what he said was the fastest increase in spending for fifteen years. He said that:
"No department will be cut next year. Every single department has had its budget for day to day spending increased at least in line with inflation. That's what I mean by the end of austerity."
The Houses of Parliament, where Sajid Javid announced the Spending Review 2019
I have written a briefing paper that summarises the spending review’s implications for public services and to provides some commentary. It includes sections on: Economic Context, Local Government: General, Social Care, Housing, Education, National Health Service, Police, Prisons, Economic Development, Reactions to the Spending Review and Financial Management.
I conclude that while the Treasury’s spending review provides additional resources for public services, this is generally not enough to replace the resources lost during the years of ‘austerity’ or to meet the needs of a growing and ageing population. Furthermore, some important services, notably housing, appear to have been neglected.
However, my biggest concern is that the government is basing the public finances on outdated economic forecasts, short-term planning and borrowing to fund increased expenditure and reduced taxation. I doubt if this will prove an effective strategy. It runs the risk of making the United Kingdom government insolvent and our public services unsustainable in the long-term.
A County Councillor who read the briefing paper wrote to me to say:
"Thanks Adrian. Thorough coverage here. Well done!"
The government has published its ‘Operation Yellowhammer’ paper on its planning assumptions for a ‘No-Deal Brexit’. It contains several references to public services including the following:
“The reliance of medicines and medical products’ supply chains on the short straits crossing (Calais to Dover area) make them particularly vulnerable to severe extended delays; three quarters of medicines come via the short straits. Supply chains are also highly regulated and require transportation that meets strict Good Distribution Practices. This can include limits on time of transit, or mean product must be transported under temperature-controlled conditions. Whilst some products can be stockpiled others cannot due to short shelf lives – it will also not be possible to stockpile products to cover expected delays of up to six months.
“The commission and individual member states do not agree to extend the current healthcare arrangements for United Kingdom state pensioners and tourists beyond 31st October 2019… Member states should treat people with urgent needs but may require them to pay after the fact. There is a risk of disruption for patients and a minority could face substantial costs.
“The Adult Social Care market is already fragile due to declining financial viability of providers. An increase in inflation following European Union exit would significantly impact adult social care providers due to increasing staff and supply costs, and may lead to provider failure, with smaller providers impacted within two to three months and larger providers four to six months after exit. There are also possible concurrent localised risks… that could exacerbate the existing market fragility and that cumulatively could stretch resources of providers and local authorities.
“Certain types of fresh food supply will decrease. (This) will reduce availability and choice of products and will increase price, which could impact vulnerable groups… Low income groups will be disproportionately affected by any price rises in food and fuel.
“Protests and counter protests will take place across the United Kingdom and may absorb significant amounts of police resource. There may also be a rise in public disorder and community tensions… Law enforcement data and information sharing between the United Kingdom and European Union will be disrupted.”
The government now describes this situation as a ‘worst case’ scenario but it has previously been described as a ‘base case’ scenario. It is only five pages long and it is to be hoped that the United Kingdom government’s contingency planning is more comprehensive, but no further documents have been released. However ‘Operation Yellowhammer’ raises considerable concerns and underlines the need for effective risk management and contingency planning by public authorities.
Last week we launched our seminar ‘All You Want to Know about Risk Management in Local Government and Housing’. There are sessions in Leeds and London that will be held in November and December.
Flooding in Carlisle in 2015. Risks can be natural or man made.
Risk Management is gaining a higher profile in local government and housing because of austerity, self-financed housing revenue accounts, ‘Brexit’ and the Regulator of Social Housing’s new regulatory standards.
In its guide to housing self-financing the Chartered Institute of Public Finance & Accountancy identified the main risk factors that local authorities and arms’ length management organisations should consider now that self-financed housing revenue accounts have exposed local authorities to greater risks.
The Regulator of Social Housing’s regulatory code is strongly focused on risk. This is based on risk being an integral part of the business of housing associations. Housing association risks are becoming more complex as they diversify. Risks need to be assessed in terms of the possible effects on the wider organisation – an approach that is often called ‘scenario planning’, ‘what-ifs’, ‘stress testing’ or ‘multivariate analysis’. The regulator is concerned that housing associations consider the risks to the three elements of their business (affordable housing, contracts and commercial activities) separately.
Yesterday I presented an in-house session of ‘All You Want to Know about Service Charges in Social Housing’ for a housing association in Northeast England. Delegates said they found the information provided was relevant and the presentation was good. They described the session as thorough, useful, clear, comprehensive, thought-provoking and valuable. Specific comments included:
Our seminar on ‘All You Want to Know about Welsh Local Authority Housing Finance’ will be held in Cardiff on 22nd October 2019. This is a very useful introduction and overview of this very important subject. For further information or to make a booking, please click here.
Our seminar on ‘All You Want to Know about English Local Authority Housing Finance’ will be held in London on 5th November 2019. This is a very useful introduction and overview of this very important subject. For further information or to make a booking, please click here.