Jun 5th 2018, 11:28
Blog 5th June 2018
In this week’s blog, I refer to: the Local Government Association; the Local Government Chronicle; Somerset County Council; the New European; HM Treasury; Impact Housing Association; Homes England; the Riverside Group; the Scottish Housing Regulator; the Welsh Government; the Ministry of Housing, Communities & Local Government; Local Authority Housing Finance; Training and Seminars.
The finances of local government in England continue to cause concern, especially around the funding of adult social care and children’s services. This week the ‘Local Government Chronicle’ reports on a recent peer review of Somerset County Council by the Local Government Association. The review found that the Council is forecast to over-spend by £14.5million in its children’s social care services this year, following over-spends of £4.5million in 2015/16 and £3.7million in 2016/17. General Fund reserves are estimated at £11.3million at the end of 2017/18. The report also found that the Council has succeeded in delivering only 65% of agreed savings over the last two years. The peer review team didn’t have to perform any complex mathematical calculations to conclude that:
“If the level of over-spending seen in 2017/18 continues in 2018/19 (the Council) will only have sufficient resources to balance its budget for one more year.”
Dr. Frances Ryan wrote an interesting piece in this weeks’ ‘New European’ entitled ‘Speeding up the clock on a social care time bomb’ in which she said that:
“Experts are warning that the care sector is ‘in crisis’ due to staff shortages, with low pay, zero-hour contracts, overworked conditions and outsourcing leaving councils and care homes struggling to hire and retain qualified carers. And it is predominantly European migrants who are coming to the rescue. The number of non-British European Union nationals working in the UK’s social care system has increased rapidly in recent years, shooting up by more than 40% between 2014 and 2017. In total, European workers make up 7% of a social care workforce of 1.34million… Analysis by the Institute for Public Policy Research shows the UK will need to attract and train an estimated 1.6million health and social care workers up to 2022.”
All local authorities are facing challenges in delivering services at a time when needs are increasing, and funding is being reduced by central government. It is to be hoped that the Treasury will provide an appropriate level of funding to local government following the ‘Fair Funding Review’ that is now in progress and the Comprehensive Spending Review that will be completed next year. In the meantime, the Local Government Association’s peer review scheme is providing Councils with valuable support.
I am pleased to be an Associate Consultant with the Local Government Association and to be providing support to peer review teams principally by providing analysis of the finances of local authorities prior to peer reviews.
I attended the Impact Housing Association Annual General Meeting yesterday as a shareholding member. Readers of this blog may know that I joined the Impact Board in 2009 and was Chair from 2011 to 2015 after which I stood down due to pressure of work. Throughout my time as Chair, Impact enjoyed a G1/V1 rating with the Homes & Communities Agency but in 2017 was downgraded to G3/V3. Following this the Board continued in office and decided that Impact should be taken over by the Riverside Group. Readers of this blog will know that I have not been happy with the process that has been followed.
I was somewhat disappointed that only eleven members attended such an important meeting and that the non-attendees included some board members. They decided to accept the annual report and accounts for 2017, to re-elect the current board and to make the necessary changes to the rules to enable the Riverside Group to take over.
Impact Housing Association will now come under the control of the Riverside Group. I do not think that the Impact Board have negotiated a good deal, but nonetheless I hope that Riverside will respect Impact’s values, maintain existing homes and services and even make some improvements.
The Scottish Housing Regulator has published its summary of the financial performance of Scottish housing associations for 2016/17. They show a reduction in financial headroom with around a third of associations seeing a reduction in interest cover of at least 25%. The average ratio of cash generated from operations to interest paid reduced from 2.89 to 2.70 and it is forecast that it will reduce in future to 2.50. Associations are forecasting a £1.4billion increase in borrowing over the next five years and this is one of the reasons for the reduced financial headroom. Income from care and support activities is also reducing as some providers withdraw from providing these services.
The Welsh Government is proposing to introduce an ‘Early Intervention, Prevention and Support Grant’ to replace ‘Supporting People Grant’ and other anti-poverty schemes. However, the proposal has been criticised by a cross-party group of Welsh Assembly members who consider it is confusing and fear it will lead to reduced funding for housing support for vulnerable and elderly people. The Supporting People Grant in Wales is currently a £125million a year ring-fenced scheme.
The Ministry for Housing, Communities & Local Government has announced that it will publish a consultation paper on introducing more flexibility to the ‘right to buy’ scheme in England. This follows the release of figures showing that, between April 2012 when the ‘reinvigorated’ scheme was introduced with more generous discounts and December 2017, 63,518 council houses have been sold, but only 15,981 new council houses have been started. The government’s stated intention that there would be ‘one for one’ replacement has therefore not been achieved with only about one in four homes being replaced.
Of the £4.9billion raised in capital receipts, only £2.3billion has been made available to councils to fund replacements, with £1.1billion being used to repay debt, £0.9billion going to the Treasury and £0.6billion covering administration and other costs. Councils will be hoping that, in future, a greater proportion will be made available to fund replacements. However, I am sure I am not alone in thinking that it would be even better if the scheme was abolished as it has been in Scotland and Wales.
Our next seminar will be on ‘Developments in Local Authority Housing Finance’ and will be held in Leeds on 10th July and London on 17th July.
This seminar looks in depth at current developments in local authority housing finance in England – especially the implications of the policies of the government, the public finances, rent policy, welfare reform including universal credit, issues around the reinvigorated ‘right to buy’, changes to the funding of supported housing including the proposed sheltered housing rent and locally administered budgets for short-term accommodation, the implementation of the homelessness reduction act, the flexible homelessness reduction grant, the affordable housing programme, local housing companies (what they can offer, how to establish them and how to set one up) and new development.