Blog 31st December 2019

Blog 31st December 2019

In this week’s blog, I refer to: Housing Association Finance; Queen’s Speech; Boris Johnson; UK Parliament; NHS; Adult Social Care; Housing; European Union; Brexit; the Conservatives; Cumbria County Council; the Cumberland News; General Election 2019; Service Charges; Seminars & Training.

I have just launched our 2020 series of seminars ‘All You Want to Know about Housing Association Finance’ that will be held in Leeds and London during March and April 2020.

Bungalows developed by North Star Housing on Teesside.

Housing Associations face significant financial challenges because of which it is now more important than ever that everyone involved in the governance, management and operations of housing associations has a working knowledge of housing association finance.

These seminars provide a solid grounding in the basics of housing association finance including:

• The financial environment in which housing associations work
• Regulatory requirements including Viability and Value for Money
• Statements of Comprehensive Income
• Statements of Financial Position
• Statements of Cash Flow
• How Development and other Capital Expenditure is financed including through grants and loans
• Managing Opportunities, Threats and Risks
• Budgeting and Budgetary Control
• Asset Management and Treasury Management
• Developments in government policy following the election of the new government in December 2019.

Do you think that a working knowledge of housing association finance gained at our interactive seminar would put you in a position of advantage? If so, you should attend one of our seminars.

For further information about the seminar 'All You Want to Know about Housing Association Finance', please click here.

Last week, we published our briefing paper on the Queen’s speech that was made on 19th December 2019 and its implications for public services.

The United Kingdom Parliament where the Queen's speech was made on 19th December 2019.

The Queen said that the priority for Boris Johnson’s government was to deliver ‘Brexit’ on 31st January 2020, but that ministers also had an:

“Ambitious programme of domestic reform that delivers on the people's priorities".

The Queen’s speech outlines the government’s proposed legislative programme that they say will ‘Get Brexit done’ and allow the government and the country to move on to address the domestic agenda including the National Health Service, Adult Social Care and Housing.

Despite the Conservatives’ victory in this month’s general election, everything is still overshadowed by ‘Brexit’. It is not possible for the government to devise long-term policies for any public services while the outcome of the ‘Brexit’ question is unclear. Whatever happens on 31st January 2020, it will be followed by detailed negotiations with the European Union, the United States and other nations around the world. Therefore, the outcome of the ‘Brexit’ question will continue to be unclear for some time.

Where the government is saying something about public services (for example on the National Health Service, Adult Social Care and Housing), what it is saying is rather vague and dependent on future policy statements. Housing policy continues to be focused on home ownership rather than on building new affordable and social housing. The Queen’s Speech also makes very little reference to how new policies could be funded, although the Conservative Party manifesto envisaged increased public expenditure funded through borrowing. The government’s financial position continues to be weak and a budget is expected early in 2020.

In the meantime, there are no resources being made available to any public services in addition to those that were announced in September’s spending review. This provided increased funding for the National Health Service and Adult Social Care, but most commentators consider that these increases are not enough to meet increasing need. Other services including local government and housing have experienced significant reductions in funding since 2010 and there are no proposals to increase funding to pre-2010 levels. However, there may be increases in public expenditure at the next budget, and these may be significant if there is an economic downturn following ‘Brexit’ and the government responds by increasing public expenditure and borrowing even further than was envisaged in their manifesto.

This briefing paper summarises the main implications of the Queen’s Speech for public services and some of the reactions to it, as well as providing some context and commentary.

To view or download your copy of the briefing paper, please click here.

In common with other local authorities, Cumbria County Council is currently out to consultation about its budget for 2020/21. As I live and work in Cumbria, I have submitted a response. My conclusions are that:

• The financial management of Children’s services and Adult Social Care should be reviewed as it is likely that the potential for savings may have been exhausted. Realistic budgets should be set that are aligned with actual income and expenditure. There is a need to ensure that the Adult Social care 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’. Realistic budgets should be set that are aligned with actual income and expenditure. 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 2020/21 and subsequent years. • It may be worthwhile considering whether it would be appropriate to make further reductions in earmarked reserves in 2020/21.
• Aspects of the Capital Programme that should be reviewed include project management, sustainability, government grants and other contributions, prudential borrowing, capital receipts and asset management.
• Aspects of Risk Management that should be considered include Treasury Management.
• The Council should increase Council Tax by 3.99% as proposed in the budget papers.
• 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, alongside considering with the district councils how to mitigate the effects on people with low incomes through Council Tax reduction schemes. 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 also propose more radical reform to Local Government finance.
• 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.

To view or download a copy of my response, please click here.

Following the general election, I wrote a letter to the ‘Cumberland News’ that they published under the heading ‘Britain is not a Democracy’. To view or download a copy, please click here.

Our first seminar of 2020 will be on ‘All You Want to Know about Service Charges in Social Housing’. This seminar is a very useful introduction and overview to this important subject. For further information or to make a booking, please click here.