Blog 20th November 2017

Blog 20th November 2017

In this week’s blog, I refer to: the United Kingdom Budget for 2017; DCLG housing budgets; the Local Government Finance Settlement for 2018/19; the ‘European Pillar of Social Rights’; Scottish Housing Association Finance and Service Charges in Social Housing in Wales.

Philip Hammond, the Chancellor of the Exchequer, will unveil his next budget on Wednesday. However, the circumstances are not good. As Rob Whiteman, the Chief Executive of the Chartered Institute of Public Finance & Accountancy points out in the ‘Local Government Chronicle’:

“Interest rates are rising and we have a £1.8trillion national debt and the worst productivity growth since the second world war… Worse still.. some services (are) stretched to breaking point.”

The government has made no secret of the fact that the budget will contain measures that will be designed to increase house-building towards the 300,000 dwellings a year that the government now agrees are required. Indeed, there are reports that Sajid Javid, the Secretary of State for Communities & Local Government has been lobbying for a £50billion increase in his department’s housing budgets.

In an interview on the Andrew Marr show on the BBC on Sunday, Philip Hammond said that his Budget will set out how the government will build 300,000 new homes a year. However, he said that there was no ‘single magic bullet’ to increase housing supply and the government would not simply ‘pour money in’. His intention is to speed up developments where planning permission has been granted and give more help to small building firms.

In the housing and local government sectors, there is some hope (even an expectation) that the budget will include measures to increase the number of affordable and social homes that will be built by housing associations and local authorities through increases in social housing grant and the lifting of the ‘borrowing cap’ that limits the amount that local authorities can borrow to build new council houses.

Local authorities are hopeful that the government will make progress on their manifesto commitment to enter into bespoke deals with them in which central government will offer more resources and greater flexibilities (mainly around borrowing and the use of capital receipts) to councils in return for agreed targets for new house building. Discussions are already taking place with Newark & Sherwood Homes, Sheffield City Council and Stoke City Council. Janet Sharpe, Director of Housing & Neighbourhoods at Sheffield City Council told ‘Inside Housing’ that:

“I am certainly optimistic. We’ve been working closely with the government about the Sheffield bespoke deal and we’re hopeful of hearing something positive on this… We’re ready to go whenever the government is.”

However, the United Kingdom government’s commitment to subsidising home-ownership remains strong. The Chartered Institute of Housing has recently pointed out that subsidies for home-ownership already account for 80% of government housing budgets; and Philip Hammond said that it was ‘not acceptable’ that young people find it so hard to buy a home, and promised to set out how the government would keep its ‘pledge to the next generation’. On ‘Peston on Sunday’ on ITV he also emphasised that spending money on housing may not be the answer as it may simply increase house prices rather than housing supply – something that many analysts have also concluded!

I will watch the budget with interest, not least to find out what will be proposed for housing. I am not convinced that the budget will deliver what the housing and local government sectors are looking for, but all will be revealed soon! I intend to write a briefing paper on the budget and its implications for local government and housing. Any reader who would like to receive a copy should contact me at adrian.waite@awics.co.uk

The government plans to announce the Local Government Finance Settlement for 2018/19 shortly after the budget. It is expected that one of the changes that will be made will be to use the consumer prices index rather than the retail prices index as the basis for uprating business rates. There are fears in local government that this may be the ‘thin end of the wedge’ and that as local government retains an increasing proportion of business rates, United Kingdom ministers may reduce the rate of increase to below the level of inflation and / or increase the number of exemptions from business rates for small and medium businesses or those in less profitable sectors. This would of course, have an adverse impact on the income of local authorities.

The European Union approved the ‘European Pillar of Social Rights’ at its meeting in Gothenburg last Friday. The ‘European Pillar of Social Rights’ is about delivering new and more effective rights for citizens. It has three main categories: Equal opportunities and access to the labour market; Fair working conditions; and Social protection and inclusion. Beneath these are twenty principles. The ‘European Pillar of Social Rights’ was first proposed in 2015 and a draft was published for consultation in 2016 prior to the final version being agreed.

Jeppe Kofod, a Danish MEP and vice-president of the European Parliament’s Socialist & Democrats group commented that:

“The social summit in Gothenburg this week marks an important change of direction for Europe… Finally, the European Union will begin its work on social rights all across Europe. We will do so not with the means or the approach of the past. We will not seek harmonised social or welfare systems in Europe. Markets, products and services may be harmonised. People can’t and neither should the welfare systems that protect them.

“But we can and must agree on a robust framework of social standards. The practical implementation of such standards will be up to member states according to their distinct national systems. That is why we are fighting for a European social floor. A set of minimum standards that can ensure living wages, decent working conditions and adequate help and assistance when unemployment or sickness strikes.”

When the United Kingdom leaves the European Union this ‘European Social Floor’ will no longer apply.

Information about the ‘European Pillar of Social Rights’ can be found on the European Commission’s website at: https://ec.europa.eu/commission/priorities/deeper-and-fairer-economic-and-monetary-union/european-pillar-social-rights_en

Last week I presented an in-house training session on Scottish housing association finance for housing association board members in Scotland. Members said that the information provided was very relevant, the quality of presentation was good and that the training fully met their needs. They described the session as practical, useful, comprehensive, interesting, thought-provoking and valuable. Further information about in-house training in Scottish social housing finance can be found by clicking here.

Our next seminar is on: ‘All You Want to Know about Service Charges in Social Housing in Wales’. It will refer to all recent developments. For more information or to make a booking, please click here.

It will be closley followed by 'All You Want to Know about Service Charges in Social Housing in England'. It will also refer to all recent developments. For more information or to make a booking, please click here.