Blog 30th October 2017

Blog 30th October 2017

In this week’s blog, I refer to: Scottish Social Housing Finance, Housing Business Planning, the Homelessness Reduction Act, Institute for Fiscal Studies, Phillip Hammond, Bank of England, Local Government Association, Adult Social Care, Theresa May, the Local Housing Allowance and Supported Housing.

This evening I will be presenting an in-house training session in Scottish Social Housing Finance for a group of Scottish Housing Association Board members. I am looking forward to meeting them. Further information about in-house training in Scottish social housing finance can be found by clicking HERE

We published two briefing papers last week.

The first is on ‘Housing Business Planning Assumptions and Uncertainties’.

The new uncertain environment requires a different approach to business planning. In the past, it was usual to produce a single strategic plan and financial forecast that represented what the Council expected would happen. This is no longer sufficient. There is a need to treat this business plan as just one of several possible scenarios. There is a need to stress test this base business plan to establish how it would respond to changed assumptions; and then to develop contingency plans to address any issues that arise. To date, this approach has been developed further in housing associations than in local authorities with the Homes & Communities Agency promoting ‘stress testing’ through ‘Regulating the Standards’.

This briefing paper examines the assumptions that local authorities can make surrounding the key uncertainties that affect business planning. Some of the discussion is also relevant to housing associations. When preparing their housing business plans, local authorities will have to consider the key issues outlined in this briefing paper.

Your copy of the briefing paper can be freely downloaded by clicking HERE

The second is on ‘The Homelessness Reduction Act: New Burdens Funding’.

The Homelessness Reduction Act has been widely welcomed in the sector and the government has accepted that it places new burdens on local authorities that will require additional funding.

The government has now announced its proposals. An additional £72.7million is to be provided to councils over a three-year period based on the government’s assessment of the additional costs of the scheme nationally and on a formula to allocate it between authorities based on existing levels of expenditure and homelessness statistics. The largest share of the funding will be provided to London and £25.0million will be provided before the Homelessness Reduction Act comes into effect.

However, London Councils has calculated that the additional funding provided will only meet 39% of the expected additional costs. If their calculations are correct, most of the additional costs of the Homelessness Reduction Act will fall on local council tax payers.

Your copy of the briefing paper can be freely downloaded by clicking HERE

Our latest publication: ‘Housing Business Planning in an Uncertain Environment’ has now been published. For further information or to order a copy, please click HERE

The Institute for Fiscal Studies has published an interesting report entitled: Autumn 2017 Budget: options for easing the squeeze’ that considers options for Phillip Hammond’s next budget on 22nd November 2017. In the context of a forecast reduction in productivity growth from 1.6% to 1.0%, a reluctance to increase taxes and under pressure to increase spending, the report suggests that the government will be forced to abandon its objective of balancing the budget!

Carl Emmerson, Deputy Director of the Institute for Fiscal Studies has told the BBC that:

"Public sector workers, the NHS, the prison service, schools and working-age benefit recipients, among others, would like more money… Does he allow higher borrowing to persist, does he add to that with more spending, or does he try to offset that with greater taxes?

"Given all the current pressures and uncertainties, and the policy action that these might require, it is perhaps time to admit that a firm commitment to running a budget surplus from the mid-2020s onwards is no longer sensible."

The Institute for Fiscal Studies calculates that the government deficit could more than double to £36billion in 2020/21 or even £70billion if productivity declines still further. It also predicts that ‘austerity’ will continue for most of the public sector.

Furthermore, the Bank of England is expected to increase interest rates on Thursday.

The Local Government Association has made the case for local government funding and the need to meet the £7.1 billion funding gap as part of their budget submission. Adult social care funding remains a major challenge for local government. The Local Government Association has recently published a report into Adult Social Care Funding: the State of the Nation. This makes the case that for adult social care to thrive, Government needs to act on funding both for the here and now, and for the longer-term.

Meanwhile, the government has decided to abandon its plans to cap housing benefit at the level of the local housing allowance in both supported and general needs housing. It also plans to make an announcement on the future funding of supported housing tomorrow. This was announced by Theresa May during Prime Minister’s Questions in the House of Commons last week at which time she said that:

“This (funding supported housing) is something we have been looking at very closely over the past year… and I can confirm that we will be publishing our response to that on Tuesday 31 October. It will look at a range of issues: we need to ensure the funding model is right so that all providers of supported housing can access funding effectively. We need to look at issues such as significant increases in service charges that have taken place recently, making sure that we are looking at cost control in the sector. But I can also say that we will not apply the Local Housing Allowance cap to supported housing – indeed we will not implementing it in the wider social housing sector, and the full details will be made available when we publish our response to the consultation.”

This announcement will be welcomed by all those involved in supported housing. Hopefully a more certain funding environment will enable local authorities and housing associations to come forward with new plans to develop the additional supported housing that is needed, including extra care housing for the elderly.

Our next seminar is on: ‘Housing Business Planning in an Uncertain Environment’. It will refer to all recent developments. For more information or to make a booking, please click HERE