NAO report into local authority investment in commercial property. Is it out of control?

The National Audit Office has just published its latest report into local authority investment in commercial property and recommends a toughening up.

Click to access Local-authority-investment-in-commercial-property-Summary.pdf


a. The Ministry of Housing, Communities & Local Government (the Department) should improve the relevance and quality of data and analysis it has on authorities’ acquisition of commercial property to understand more fully any associated risks and to provide greater assurance on framework compliance.

b. The Department, with HMT as appropriate, should broaden its analytical work on local authority commercial property acquisition to:

• assess potential market-distortion effects;
• understand any value-for-money risks associated with access to PWLB borrowing; and
• assess the investment risks that the sector as a whole is exposed to through the national ‘portfolio’ of investment properties.

c. The Department needs to articulate clearly both the nature and scale of behaviour causing it concern in relation to both borrowing in advance of need and disproportionate borrowing. It should:

• monitor trends more actively at sector level to understand compliance; and

• assure itself that it has sufficiently flexible forms of intervention supported by robust evidence to enable it to target particular behaviour.

d. The Department, working with CIPFA as appropriate, should review the prudential framework, its oversight and intervention arrangements, and underpinning data to ensure they remain fit for purpose in the context of an increase in local authority commercial activity. In doing this the Department should:

• examine whether varying interpretations of the authorities’ borrowing and investment powers in the sector are having an impact on the resilience of the prudential arrangements; and
• review recent changes in local authorities’ investment and borrowing activities and their underlying motivations to understand fully:
• the drivers behind recent changes in behaviour in different types of authority, and the relative importance of each driver

  •  the extent to which authorities have undertaken activities that test the limits of the framework such as borrowing to invest solely for yield;
    • the extent to which changes to the codes and guidance have genuinely changed behaviour or whether other factors such as the recent rise in the PWLB rate might have been more significant; and
    • whether recent changes to the codes or guidance have had any unintended consequences that may have increased risk.

Sajid Javid: Chancellor quits Boris Johnson’s cabinet and replaced with Rishi Sunak in reshuffle

Chancellor dramatically walks out after a bust-up with Dominic Cummings over a demand for him to sack his advisers

Owl intends to be sparing with National News, you get it anyway, but this has a bearing on a post Owl has in preparation concerning various bides being made for more investment in the South west.


Sajid Javid has dramatically quit the Cabinet, throwing Boris Johnson’s first reshuffle into chaos and controversy.

The chancellor walked out after a bust-up over Dominic Cummings’ demand for him to sack his advisers to end a briefing war, it appeared.

Mr Javid’s departure comes just one month before a crucial budget, intended to chart the course for the new government – and makes him the shortest-serving chancellor for more than 50 years.

Tensions have been rising between Mr Johnson and Mr Javid over spending plans and the power of the two offices. The chancellor also jumped the gun with his backing for the HS2 go-ahead.

The rivalry with Mr Cummings, the prime minister’s controversial chief of staff, dates back to the sacking of the chancellor’s adviser last year – when she was frogmarched out of Downing Street.

A source close to Mr Javid pointed the finger at No 10, saying “no self-respecting minister” could accept the condition being asked of him.

“The prime minister said he had to fire all his special advisers and replace them with Number 10 special advisers to make it one team,” the source said.

“The chancellor said no self-respecting minister would accept those terms.”

Rishi Sunak, the high-flying but little known chief secretary to the Treasury, was quickly appointed the new chancellor, having been called into No 10.

Sajid Javid is an Alumnus of  Exeter Uni

CALLED IN – Marketing exercise on Exmouth seafront plans set to be scrutinised

The decision to launch a formal marketing exercise over the future of Exmouth seafront has been called-in for further scrutiny.

East Devon District Council’s cabinet last Wednesday night voted to launch a formal marketing exercise to identify a developer/operator for a waterfront restaurant, an 80-bedroom hotel, and an area for play and leisure uses.

But that decision will now be reconsidered after Councillor Paul Arnott, leader of the East Devon Alliance, said the purpose of agreeing the selection criteria for the commercial development was not properly balanced.

The cabinet had agreed the leader of the council, the portfolio holders for asset management, finance and economy and relevant officers should be on the selection panel, as well as one Exmouth councillor.

But Cllr Arnott said: “The number of elected members taking part in the selection panel is too few and has insufficient Exmouth democratic representatives.

“There remains well-documented and live concern in Exmouth.

“Under this resolution their involvement comes belatedly in the Queen’s Drive Delivery Group, which has hitherto been meeting in secret.

“The ongoing damage to the council’s reputation – given its decision to fund the construction of Queen’s Drive from public funds without a certain means of recouping that – is further exacerbated by this and the continuing insufficient inclusion of localised democratic representatives risk our reputation even further.

“The constitutional justifications to seek scrutiny of this are that this decision is likely to cause distress, harm or significant concern to a local community, or to prejudice individuals within it and that this matter has not been subject to proper consultation or debate with relevant interested parties.”

Cllr Kim Bloxham, vice-chairman of the scrutiny committee, has accepted the call-in and the decision will now be discussed again when the Scrutiny Committee meet on Thursday, March 5.

If the scrutiny committee decide to take no further action, then the cabinet’s decision will come into force.

If they decide that the selection panel has been wrongly constituted, then their suggestion will go back to the cabinet for reconsideration.

Village clerk’s salary to rise to £52,869 – Broadclyst

At a meeting of the Broadclyst Parish Council’s staffing committee councillors (Pepper Chamberlain, Jackson, Rylance and Staddon) agreed to raise the pay grade of the clerk to SCP49 which is equivalent to £52,869 per year. (Minutes and nation pay scales)

Village clerk’s salary to rise to £52,869

This £1,440 raise brings the total increase in the clerk’s salary to £16,298 since 2015 and does not include pension contributions or training budgets.

By comparison the average wage in East Devon is just over £26,000 per year and most workers in Devon have seen their real term wages reduced.

A Freedom of Information request, asking who undertook the clerks salary grading and what qualification they have has gone unanswered by the Parish Council. Why won’t the council tell us and who recommended such a high grade and what qualification they have?

Using the information published by the parish council on its website [here] and through Freedom of Information requests [here] we have been able to establish the facts about pay.

Other staff will receive just the National Minimum Wage increase of 30p per hour meaning the gap between the highest and lowest paid staff continues to increase, with the maintenance and cleaning staff earning just above the minimum wage.

How can a Parish clerk be paid so much when other members of staff are paid so poorly? Looking at all the budgets for rural parishes across the South West I cannot find a single example of a parish clerk being paid more than £35,000 and the average is much less at around £25,000.

The question that remains unanswered is why is this such an expensive parish? We have the 4th highest rural parish precept in Britain which is funded by ordinary working families.
Let’s have fair play in Broadclyst with a parish precept that is substantially reduced.

Flybe set for crunch Whitehall talks over bailout terms

The airline and government officials will meet this week to discuss the potential terms of a state loan, Sky News understands.

Flybe, the struggling regional airline, will be handed proposals for financial support from the government this week as it seeks to avoid a collapse that could undermine ministers’ pledge to bolster regional connectivity.

Sky News has learnt that Whitehall officials are expected to meet with Flybe and its shareholders as soon as Thursday to discuss the prospective outline of a £100m government loan.

The terms of a proposed deal may pose a dilemma for Flybe’s shareholders, led by Sir Richard Branson’s Virgin Atlantic.

Among the options being drawn up by officials would be for the government’s loan to rank above that of existing investors’ capital – an idea that at least one of Flybe’s shareholders has previously signalled they would reject.

Another scenario would give the taxpayer security over many of the airline’s remaining unencumbered assets.

A third idea, comprising warrants that would convert the government loan into equity in a rejuvenated Flybe, is said to be “significantly less likely”.

City sources say Flybe has sufficient financial resources to support the company’s operations until the end of March, but that the company’s existence would be imperilled at that stage if no deal has been secured.

Contingency plans that would allow the government to continue operating Flybe routes seen as critical to preserving vital regional connections are understood to be being drawn up, rival airline executives say.

While Flybe insists that it is not in talks about “a bailout”, and Sajid Javid, the chancellor, has denied any plan to support the company with state aid, its rivals have responded furiously to the idea of it being propped up by ministers.

British Airways’ parent – International Airlines Group – and Ryanair have threatened to take legal action against the government for breaching state aid law.

This week’s talks between the government and Flybe’s owners are said to represent an important step towards determining the scope of any loan, although the impending Cabinet and ministerial reshuffle will mean a delay to any formal decisions.

Officials from the Department for Transport, Treasury, and Department for Business, Energy and Industrial Strategy are involved in the talks.

UK Government Investments, a unit of the Treasury, is helping to coordinate the negotiations.

On Wednesday, BA said it would step in to operate a Heathrow-Newquay route recently – and controversially – vacated by Flybe.

Last month, Heathrow Airport’s chief executive intervened in the row over Flybe’s future, demanding urgent government action to preserve “lifeline routes” from Britain’s busiest airport.

John Holland-Kaye wrote to Paul Maynard, a transport minister, to call for the ring-fencing of so-called Public Service Obligation (PSO) routes for flights to and from Heathrow.

A number of additional routes, including some operated by Flybe, are expected to be given PSO status following a forthcoming consultation on regional connectivity.

Ministers have also pledged to review Air Passenger Duty (APD) in next month’s Budget, with Flybe already benefiting from a short-term deferral of part of its tax bill.
Flybe, which is one of the UK’s biggest domestic carriers, transports more than eight million passengers annually.

It employs more than 2,000 people.

Michael O’Leary, Ryanair’s chief executive, has accused Mr Javid of being “blindsided by billionaires”, asking him last month: “If these billionaire shareholders are not willing to put their hand in their own deep pockets to bail out the loss-making Flybe, then why is your government and HMRC [the tax authorities] giving them a bailout?”

The restructuring experts Alvarez & Marsal have been drafted in to advise the government on the terms of any loan, which would have to be made on commercial terms to avoid breaching state aid rules.

Flybe’s inability to access a loan from commercial lenders has, however, provoked criticism that a loan from the government could be on such terms.

The airline could not be reached for comment, but said at the weekend: “Flybe and its shareholders continue to have productive and positive discussions with the government regarding support to enable us to deliver our long-term strategic plan.”