Jan 25th, 17:04
Blog 25th January 2021
In this blog I consider: The Coronavirus pandemic and its implications for local government; Risk Management in housing and local government; the implications for Housing services of Britain having left the European Union; and our webinars.
Last week, Britain recorded the highest daily number of COVID-19 related deaths. However, some hope was offered by the rollout of the vaccination programme and the opening of ten more mass vaccination centres in England. It was confirmed that most of those aged eighty and over have received their first vaccine dose, while the over seventies and vulnerable people are now being invited to receive their vaccinations.
There is concern about variations in the number of daily vaccinations being administered in different places. This underlines the case being made by the Local Government Association that local authorities should play a stronger role, working with local health partners. Following lobbying by the Local Government Association, the government has agreed that Directors of Public Health will now receive data on the number of vaccines administered locally, including daily and cumulative total vaccinations by first and second doses and by the higher risk cohorts in their area. This is to be welcomed.
Rishi Sunak, the Chancellor of the Exchequer, is due to announce his Spring Budget on 3rd March. The Local Government Association has called on the Government to ensure that the financial challenge facing councils because of COVID-19 will be met in full, including funding for cost pressures and full compensation for lost income and local tax losses in both 2020/21 and 2021/22.
How many local authorities and housing associations had risk management plans in place in February 2020 for a pandemic that turned out to be ‘fit for purpose’?
The coronavirus pandemic has underlined the need for effective risk management; and I have just published a briefing paper on ‘Risk Management in Housing and Local Government’.
Risk Management has been defined as follows:
“Risk is the threat that an event or action will adversely affect an organisation’s ability to achieve its objectives and to successfully execute its strategies. Risk management is the pro-cess by which risks are identified, evaluated and controlled”.
While coronavirus has raised the profile of Risk Management., it was already 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.
Flooding in Appleby in Cumbria. While the news is dominated by Coronavirus, flooding is still a risk to be considered.
Local authorities are guided by the HM Treasury 'Orange Book' and 'Risk Management in Government' advice from the Cabinet Office. However, many struggle to implement a risk management process that includes a review of the inherent risks that threaten achievement of corporate objectives and therefore they can lack a transparent risk mitigation framework at both a strategic but particularly operational level.
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’.
Risk Management is equally important in England, Scotland, Wales & Northern Ireland where there are similar approaches.
Risk is often seen as negative, but the Chartered Institute of Public Finance & Accountancy has identified that risks can be opportunities as well as threats:
“Risk is not all bad; it can present opportunities for the service to innovate and change. The full understanding of risk can enable new ideas to be progressed in a managed environment. The failure to take risks at the opportune moment can also in itself be a risk to the success of the service.”
Another area of risk is ‘Brexit’. Britain left the European Union on 1st January after 48 years of membership. Only a week earlier, on Christmas Eve, the United Kingdom and the European Union agreed a new trade deal that will have implications for all sectors of the British economy including housing.
The main concerns for housing associations and councils are the impact of Brexit on the economy and trade, and how that could affect development and the housing market. If the economy contracts further during 2021 because of Brexit, the housing market is likely to follow. This is worrying for housing associations, especially in the big cities, that rely on the cross-subsidy model to fund development.
This will be further exacerbated by the end of the stamp duty holiday in March. This has buoyed the market. Unemployment is also expected to increase, leading to higher arrears for tenants and growing social housing lists. These are already unusually high because of COVID-19.
Securing materials and labour will be a challenge. A quarter of all construction materials come from overseas and 60% of these come from the European Union. This is even higher when it comes to materials such as sawn woods and boards where 90% come from the European Union. Additional checks on materials coming from Europe are leading to delays, and with 8% of construction workers coming from the European Union, and 25% in London, the fact that these workers will need visas could increase worker shortages and increase labour costs.
Another key factor is how the Internal Market Bill turns out. This legislation, that looks to create an internal market between all nations of the United Kingdom should soon be passed. However, there are already concerns that it will force devolved nations to accept goods and services even if standards are set differently locally. This could be particularly relevant for building regulations, with each country having slightly different requirements.
We will be holding webinars from January to May 2021 including: