Will this make the Local Enterprise Partnership, Heart of the South West (HotSW), and all the other unelected, business led bodies trying to bid for central government strategic regional funding redundant? – Owl

Ollie Heptinstall www.devonlive.com 

A devolution deal for the whole of Devon is progressing and could be offered to the county by the autumn. Outline approval was given in March to transfer new money and powers to local leaders – part of ‘levelling-up’ proposals by the government.

The ‘level two’ deal does not require an elected mayor, nor change the established council structure. Instead, a combined board would be created with the leaders of Devon County, Torbay and Plymouth councils, as well as district representatives.

The South West Local Enterprise Partnership’s scrutiny committee was told on Thursday [8 June] that work is now underway on the formalities, with six areas of greater powers being focussed on. These include more say on housing, devolution of adult education funding and more control of public transport commissioning.

Phill Adams from Devon County Council, who updated the committee, said the government is also open to exploring other areas for devolution, including innovation, tourism and culture. The planned combined authority will be “standalone from existing councils” according to Mr Adams.

“It would be led by the three upper-tier councils in conjunction with the districts in Devon … a business voice and some partners – most likely education.”

The combined board would be chaired by one of the three upper tier leaders – Cllrs John Hart (Conservative), David Thomas (Conservative) or Tudor Evans (Labour).

“It doesn’t replace anything,” Mr Adams stressed. “It’s not taking over. It’s not a super council or anything like that. This is purely around local government having a body to work through some of these functions that come down from government together. It’s very different from a mayoral approach. This is very much around developing what we’ve got.”

Once the deal has been offered by the government, it will then be subject to approval by local councils and a formal consultation process.

Woking has a council tax income on a similar scale to EDDC’s.

On an annual council tax take of £11m, it  is now paying £62m a year to service £1.8bn in loans on assets worth £600m less than what was paid for them.

A local resident “”armchair auditor” has been writing warning letters for years that have been ignored.

A picture is now emerging of: “Municipal recklessness, non-compliance with financial rules, over-optimism, egomania, incompetence, lack of transparency and regulatory neglect.”

A Tory council out of control – who could believe such a thing? – Owl

‘Eye-watering’: how Woking council’s glittering dream turned to dust

Patrick Butler www.theguardian.com 

In the autumn of 2020, the Tory leader of Woking council announced he was stepping down. In his valedictory speech, David Bittleston insisted Woking was not merely the best council in the country but was going places. “Ahead of us, this borough has an exciting future,” he declared.

Bittleston’s self-congratulatory boosterism was par for the course. He and the town’s municipal leaders were signed up to a grandiose high-rise vision that would transform the modest commuter town in leafy Surrey into a glittering modern city, Singapore-style economic hub and “premier global business location”.

This week Woking filed for effective bankruptcy after running up a deficit of £1.2bn on a series of risky property and regeneration deals. The place perhaps best known as the inspiration for The Jam’s hit song Town Called Malice has become the biggest financial basket case in UK local government history.

The epic scale of the council’s collapse has sent shock waves through local government. As auditors sift through the wreckage, an astonishing picture is emerging of municipal recklessness, non-compliance with financial rules, over-optimism, egomania, incompetence, lack of transparency and regulatory neglect.

The numbers involved are staggering. Tiny Woking, with an annual council tax take of £11m, is paying £62m a year to service £1.8bn in loans on assets worth £600m less than what was paid for them. “It’s simply eye-watering,” said Rob Whiteman, the chief executive of Cipfa, the public sector accountants body. “It is almost impossible to comprehend.”

No one seems quite sure about how to fix the problem. Woking could put up council tax bills by 15%, sell off all its assets and cut local services to a skeletal legal minimum, and it may still not bridge the deficit. Experts say the government, which approved Woking’s debt pile, must now decide whether to write off the loans.

It is not just Woking council’s head-spinning profligacy – the skyscraper developments, the hundreds of millions pumped into town centre regeneration, the £11m loan to a local private school, the purchase of pubs and farmland – that is coming into focus. It is how, despite warnings, things were allowed to spin out of control.

One local politician who had questioned the plans said: “There were no controls, no proper project management, no financial risk assessment. Just this naive idea that it was cheap money and what could possibly go wrong … You had this magic money tree, and they started playing Monopoly.”

The blame game is in full swing. The ruling Liberal Democrats, who took power in May 2022, say the Tories, who had controlled or led the council for the previous decade, are entirely culpable. The Conservatives claim the Lib Dems supported all of the key investment decisions at the time.

Some point to the role of Woking’s former chief executive Ray Morgan, the most senior official at the council between 2006 and 2021, when he retired. Made an OBE in 2007 for services to local government, people who know him say he was outspoken, cocky and ebullient with a reputation for getting his way. “A big fish in a small pool,” according to one source.

A key architect of the regeneration vision, Morgan overreached his brief, some suggest. “All roads lead to Ray,” one local politician said. Morgan has always insisted decisions were taken collectively. “Various people accuse me of being a megalomaniac,” he told a public meeting in 2013. “But at the end of the day I do what the council decides.”

Morgan was perhaps uncharacteristically unforthcoming when approached about the council’s collapse this week. In a statement to the local news website Surrey Live on Thursday, he said: “I am no longer employed by the council, I do not think it appropriate for me to engage in a public discussion when I am no longer in possession of the facts of the matter.”

What is not in dispute is that Woking had become the most highly leveraged council in the country, with the debt levels of a major city. Yet as a government review revealed last month, it lacked commercial expertise, took major decisions without proper risk assessment or business cases and breached Treasury borrowing rules.

This week’s section 114 notice declaring the council’s insolvency said there was a high probability that much of the internal financial advice that underpinned the council’s investment decisions contained “inaccuracies and misassumptions”. Had these issues been understood earlier, the report suggested, Woking would have struggled to remain solvent as far back as 2018.

Why did the problems not come to light before? In the past three years, Anthony Fraser, a local resident, retired operations director and “armchair auditor” with a keen interest in local government finance, wrote a series of detailed letters to the council, its auditors and ministers at the Department for Levelling Up, Housing and Communities warning of the dire risks Woking faced.

Trawling through the council’s published financial documents, Fraser explained how it had become drastically overexposed, had failed to set aside money to service its borrowing and was in effect using Treasury loans to enable its struggling partner companies to meet day-to-day costs, in contravention of government rules.

The town’s borrowing was out of all proportion to its core ability to repay, putting its solvency at risk, he told Woking’s auditors, BDO, in 2021. “In effect, financially we are a relatively small town tacked on to and heavily dependent on the fortunes of a group of big development companies.”

That letter was not answered. Others were politely batted away. It was frustrating, he said, that no one was prepared to listen. Fraser’s concerns were largely borne out by this week’s section 114 report. “You spell it out to the people responsible for overseeing it, and it gets ignored,” he said.

Some still quietly insist the council was right to be ambitious. One local political figure said the dream of town centre regeneration, affordable housebuilding and green belt protection was basically sound, and would have prevailed had it not been for the pandemic. Over time, they said, Woking would be proved right.

But such optimism is rare. Many see Woking’s crash as a consequence of austerity and laissez-faire policies. Councils were hit by huge cuts in funding, and ministers encouraged town halls to be entrepreneurial and find alternative income streams. Government provided councils with billions in cheap capital loans while cutting core audit oversight of their finances.

Woking joins Thurrock, Croydon and Slough on the list of recent local government bankruptcies. All had borrowed heavily from the Treasury to invest in property and regeneration projects. Whitehall is closely monitoring several more highly indebted councils.

Before Covid, Woking’s financial wheeler-dealing brought in £22m a year to fund services, insulating it from the chilliest winds of austerity. Despite a 40% cut in funding since 2010, the council insisted its commercial prowess meant it had not had to close any frontline services for local residents.

Now, however, its future looks very different. The council’s interim director of finance, Brendan Arnold, signalled this week that things had changed. “The enriched service suite that the borough has enjoyed over a number of years will need to be removed,” he wrote.

In plain language, it means Woking faces a fire sale of assets, unprecedented budget cuts and council tax rises. Municipal austerity has finally arrived.

The number of people making money from renting out holiday lets has risen by nearly 40 per cent in a decade, as data shows holiday homes have now become more profitable than buy-to-let investments.

David Byers www.thetimes.co.uk

Figures released by HMRC after a Freedom of Information request show that 63,000 individuals received income from 65,000 furnished holiday let properties in the UK according to the latest data available — up from 46,000 making money from 50,000 properties in 2011-12.

Further statistics show the increasing profitability of owning a holiday let compared with the diminishing returns of being a landlord, with holiday let income rising by an average of 63 per cent in the past decade compared with just 5 per cent for buy-to-let. The average annual holiday let income actually exceeded buy-to-let income for the first time in 2020-21 — reaching £15,600 compared with £13,400 for buy-to-let. A decade ago, holiday lets generated an annual average of £9,600 compared with £12,800 for buy-to-let.

Critics say the figures further illustrate why tax rules that incentivise investing in holiday properties, while turning people against being traditional landlords, are driving up prices in rural hotspots such as the Lake District while simultaneously creating a chronic shortage of rental properties in cities.

For holiday lets, if your property qualifies as a self-catered holiday let — meaning that in England it must be let for at least 70 nights a year and available for at least 140 — you can switch from paying council tax to business rates. However, if your annual business-rates bill is less than £12,000 and you only rent out one property, you are exempt and will pay no tax. In Wales the rules are tighter — properties not let out for at least 182 nights a year and available for 252 are classed as a second home and the council tax bill is doubled. You can also get tax relief on mortgage interest payments, and tax relief on expenses such as furniture.

On the other hand, buy-to-let owners used to be able to deduct borrowing costs and some property management costs from their rental income before paying tax on it, but that has been phased out, ending completely in 2020.

The Freedom of Information figures on holiday lets relate only to those people declaring income in personal names, and therefore excludes anything in a company structure.

David Fell, a senior analyst at Hamptons, who submitted the request, says the number of people investing in holiday lets rose dramatically during the pandemic because so many more people were confined to staycations as a result of international travel restrictions. “While Covid undoubtedly distorted the market, the longer term upward trend in revenue predates Covid, and it’s a trend the government has been increasingly worried about.”

I am incredibly privileged to represent the most beautiful constituency in the United Kingdom. Westmorland and Lonsdale is home to the Lake District National Park, the Yorkshire Dales National Park, the Arnside and Silverdale area of outstanding natural beauty, the Cartmel peninsula and the rolling hills of south Cumbria.

But I’m very sad to say that wonderful and iconic towns and villages here face an existential crisis — a housing catastrophe, which means fewer and fewer homes for people to live in.

There are three principal causes: a lack of genuinely affordable homes being built; excessive numbers of second homes displacing full-time residential accommodation; and a short-term rented sector that has gobbled up the long-term private rented sector.

On the first, I have been proud to support affordable housing developments in every corner of my constituency, but we desperately need more of them.

On the second, this has been an issue I’ve been campaigning on since I became an MP in 2005. People are of course entitled to own a second home — and in many ways you certainly can’t blame them from wanting to own a home somewhere as stunning as here — but it means so many streets and hamlets stand empty for so much of the year.

On the third, this has been a more recent and startling development. Just after the pandemic, we saw a 32 per cent rise in holiday lets in just one year, and that is in the Lake District where there were already a huge number of them.

Those new holiday lets were until recently the homes of local people, who were evicted so their landlord can go to a short-term let, normally an Airbnb, and therefore cash in. There are no other places for those people to go and live so their kids are uprooted from the local school, and they have to give up their jobs and move many miles away, robbing our communities of life and of a workforce. We saw this largely because the government failed to scrap section 21 evictions at the time they said they would.

The consequences are huge and human. I think of the couple with two small children in Ambleside, she a teaching assistant and he a chef. They were evicted from their flat because the landlord wanted to go to Airbnb. They had literally nowhere else to go, so the children were taken out of school, a teaching assistant was lost to the local primary school and a chef lost to a local hotel. They had to move 25 miles away and out of the area.

I think of a mum and her 15-year-old son, who lived their entire lives in a village just outside Grange-over-Sands before they were evicted. Again, there was nowhere they could remain within the community. When people are evicted in communities like ours, there is nowhere else to go.

The holiday lets boom in places like Windermere in the Lake District means that many employees in the tourism industry can’t find anywhere affordable to live, Tim Farron says

Holiday lets obviously bring huge economic benefits to the tourism hotspots like the Lake District and the Yorkshire Dales. However, it’s gone too far. So many bars, cafés, restaurants and shops in that industry are struggling to recruit the staff they need to operate largely because their potential employees can’t find anywhere affordable to live.

It is not just the tourism economy that is affected, but the care sector and other professions. At one stage, earlier this year, 32 per cent of hospital beds in my local NHS Trust were blocked. Why? The bottom line is that we cannot get people out of hospital because there are not enough carers, because there is nowhere for them to live.

This week a consultation closed on the government’s plans to introduce a separate category of planning use for short-term lets. This is a move I have long been campaigning for and I remember putting it to Rishi Sunak in a debate I led in parliament back in 2019 when he was junior housing minister.

By doing this, we can give local planning authorities the power to put a lid on new short-term lets and instead ensure those homes remain for local people who can raise a family here and contribute to the economy and community life.

I really hope the government don’t waste any more time, crack on and put this into action, so we can start to turn the tide on Britain’s housing catastrophe.

Tim Farron is Liberal Democrat MP for Westmorland, Furness and Eden www.thetimes.co.uk