Blog 14th January 2019

Blog 14th January 2019

In this week’s blog, I refer to: Seminars and Training; Welsh Housing Association finance; the Welsh Government; Service Charges; Almshouses; Local Government Finance; Cumbria County Council; Children's services; Eden District Council; the Guardian; HM Treasury and Harold Wilson.

I have just launched our seminar ‘All You Want to Know about Welsh Housing Association Finance’ that will be held in Cardiff on 30th April 2019.

Social housing is becoming increasingly important in Wales at a time of rising demand for affordable housing and constrained resources. Housing Associations in Wales have committed with the Welsh Government to building at least 12,500 new homes by 2021 and face significant challenges and opportunities.

This seminar is designed for people who are not experts in housing association finance, but who need to understand the basics and achieve an overview of what is going on. It answers the following questions:

• How do the Statements of Comprehensive Income (and Expenditure) work?
• What policy developments are affecting Welsh Housing Association finances?
• How can Housing Associations invest in social housing?
• What are the Financial Opportunities for Housing Associations in Wales?

For further information or to make a booking, please click here.

Last week I was in the West Midlands to present an in-house session of ‘All You Want to Know about Service Charges in Social Housing’ to staff of an Almshouse charity. There are significant and interesting constitutional differences between almshouses and housing associations that affect many issues including service charges.

Delegates said that they found the information provided very relevant, that the quality of presentation was excellent and that the training met their needs fully. They described the session as interesting, clear, comprehensive, thought provoking, useful and valuable. Specific comments included:

• Presentation was a blend of theory and tailored information that I found very useful.
• Questions and Answers were exceptionally useful.
• Really enjoyed the training session. Now service charges make a lot more sense.

After the session, the organiser contacted me to say:

"Thanks for your advice and thank you for an interesting, informative day yesterday."

For more information about in-house training in service charges, please click here.

This is the time of year when local authorities consult their residents on their budget plans for the following year. I live and work in the Eden district of Cumbria and so have responded to Cumbria County Council and Eden District Council.

Cumbria House - Headquarters of Cumbria County Council

In common with most upper tier authorities, Cumbria County Council has had to make significant savings since 2010 and is having trouble in managing its Adult Social Care and Children’s services within budget. Having examined their financial statements for 2017/18, budget monitoring reports for 2018/19 and budget reports for 2019/20, my conclusions are that:

• The financial management of Adult Social Care should be reviewed as it is likely that the potential for savings may have been exhausted. There is a need to ensure that the Adult Social care services that the Council provides are funded adequately.
• The financial management of Children’s services should be reviewed as it is likely that the potential for savings may have been exhausted. There is a need to ensure that the Children’s services that the Council provides are funded adequately.
• It is possible that the Council’s central budgets contain what accountants call ‘padding’, ‘budget slack’ or ‘over budgeting’. I think there may be a missed opportunity to allocate resources to front-line services I would therefore suggest that central budgets are reviewed to ensure that they are set at an appropriate level in 2019/20 and subsequent years.
• It is stated that a programme of service reviews will be planned on a rolling basis throughout the Council and this would appear to me to be a good approach. This approach was adopted successfully by Impact Housing Association when I was Chair. I would suggest that the approach to this should be to focus all resources on delivery of services to service-users, to adopt a ‘bottom-up’ rather than a ‘top-down’ approach and to reduce layers of management.
• It may be worthwhile considering whether it would be appropriate to make further reductions in earmarked reserves in 2019/20.
• Aspects of the Capital Programme that should be reviewed include project management, government grants and other contributions, prudential borrowing, capital receipts and asset management.
• The Council should take advantage of the opportunity to increase Council Tax by 3% rather than 1.99% without holding a referendum.
• The Council should also consider holding a referendum on the option of increasing Council Tax to the level that would be required to fund Adult Social Care, Children’s services and other services adequately. I would vote in favour of such a proposal.
• It is important that the Council engages fully with the Fair Funding Review when appropriate to ensure that its outcome is at best beneficial for the Council and at worst no more adverse than the current position.
• The Council should prioritise the devolution issue and should aspire to the level of devolution that has been achieved by the Scottish Government, as this is the most comprehensive model of devolution that has yet to be achieved in the United Kingdom.

Information about Cumbria County Council’s budget can be viewed by clicking here.

A copy of my response to their consultation can be viewed or downloaded by clicking here.

In my response to Eden District Council, I suggest that they should consider:

• A more significant capital programme to address especially the economic development and housing objectives that it has identified, funded through surplus reserves, prudential borrowing and more effective asset management.
• Providing greater clarity and transparency about the objectives and activities of ‘Heart of Cumbria’ (the Council's arms' length development company).
• Improvements to the project management of the capital programme.
• Approving revenue budgets that do not contain ‘budget slack’, that aim to reduce reserves to an appropriate level and that focus resources on direct services.
• Adopting a more robust approach to risk management and stress testing.
• Increasing Council Tax by 3% in 2019/20.

Information about Eden District Council’s budget can be viewed by clicking here.

A copy of my response to their consultation can be viewed or downloaded by clicking here.

An interesting piece by Larry Elliott appeared in today’s ‘Guardian’ entitled ‘Is it time to trim the UK Treasury?’. He points out that HM Treasury combines two functions that are separated in most jurisdictions: managing the government’s own finances; and managing the country’s economy. This gives the Treasury extraordinary power that enables it to dominate government. For many years, analysts of government in the UK have often argued that the Treasury uses this power to stifle innovation and economic growth. In 1964, Harold Wilson created a new Department for Economic Affairs that was responsible for economic management, but the initiative was not sustained. Larry Elliott argues that:

“Harold Wilson was right. We need a separate department for the economy to boost growth.”

Harold Wilson - Labour Prime Minister 1964-70 and 1974-76

The article can be viewed on the ‘Guardian’ website at: https://www.theguardian.com/business/2019/jan/13/is-it-time-to-trim-the-uk-treasury?utm_term=RWRpdG9yaWFsX0d1YXJkaWFuVG9kYXlVS19XZWVrZGF5cy0xOTAxMTQ%3D&utm_source=esp&utm_medium=Email&utm_campaign=GuardianTodayUK&CMP=GTUK_email