Guardian letters on regulation, health and safety and austerity

“• The elephant in the room not mentioned in Steven Poole’s excellent article on deregulation was the de facto deregulation facilitated by the government’s savage cuts in local authority spending. Councils were inevitably going to respond to these cuts by reducing the resources available for statutory duties where cuts would be less likely to create an immediate outcry, such as regulation enforcement. It would be naive to think that a government obsessed with deregulation would not have been fully aware of this. This week’s news of tower block cladding investigations provides grim evidence of the effects of this strategy, if any were needed.
Jim Hooker
Chichester, West Sussex

• As long ago as 1840, when rapid expansion forced government at least to consider some degree of regulation of buildings, Thomas Cubitt gave evidence to the select committee on the health of towns. He warned that, without rules and regulations, builders would put up houses crammed into smaller and smaller spaces. “I am afraid a house would become like a slave ship, with the decks too close for the people to stand upright.”

Polly Toynbee was right to insist on the need for regulation (They call it useless red tape, but without it people die, 20 June). And they couldn’t, in 1840, even imagine 24 storeys high.
Enid Gauldie
Invergowrie, Perthshire

• Steven Poole provides an excellent account of the right’s professed hatred of regulation and red tape, but this ideological hostility only seems to apply to big business and the private sector.

By contrast, the last three decades have seen the public sector crushed under regulatory burdens and tied up in red tape, often in a bizarre attempt at making schools, hospitals, the police, social services and universities more efficient, business-like and accountable. Talk to most doctors, nurses, police officers, probation officers, social workers and university lecturers, and one of their biggest complaints will be the relentless increase in bureaucracy imposed by Conservative (and New Labour) governments since the 1980s.

Instead of focusing on their core activities and providing a good professional service, many frontline public sector workers are compelled to devote much of their time and energy to countless strategies, statutory frameworks, regulations, codes of practice, quality assurance procedures, government targets, action plans, form-filling, box-ticking, monitoring exercises, and preparations for the next external inspection.

A major reason for public sector workers quitting their profession, taking early retirement or suffering from stress-related illnesses is the sheer volume of bureaucracy that Conservatives (and New Labour) have imposed during the last 35 years. This bureaucracy, almost as much as underfunding, is destroying the public sector, impeding efficiency and innovation, and driving frontline staff to despair.
Pete Dorey
Bath, Somerset”

Corbyn: is housing a right or a marketing opportunity?

” … Speaking to NME [New Musical Express] backstage at Glastonbury after his speech on the Pyramid Stage earlier this afternoon (June 23), the Labour leader said: “I think we have to recognise that what happened at Grenfell Tower is a game changer in our society. It’s a game changer about safety. it’s a game change about attitudes to housing – do we treat housing solely as a marketing opportunity or do we treat it as something that’s a human right and a necessity?

He continued: “I don’t think the fifth richest country in the world should see predominantly poor people burning to death in a towering inferno any more than it should tolerate people sleeping on the streets around stations. We can and should do a lot better. I hope this is a massive wake up call for the entire community and I’m calling on people to campaign like never before for housing justice. …”

A million households could become homeless as they can’t afford rents

“More than a million households living in private rented accommodation are at risk of becoming homeless by 2020 because of rising rents, benefit freezes and a lack of social housing, according to a devastating new report into the UK’s escalating housing crisis.

The study by the homelessness charity Shelter shows that rising numbers of families on low incomes are not only unable to afford to buy their own home but are also struggling to pay even the lowest available rents in the private sector, leading to ever higher levels of eviction and homelessness.

The findings will place greater pressure on the government over housing policy following the Grenfell Tower fire disaster in west London, which exposed the neglect and disregard for people living in council-owned properties in one of the wealthiest areas of the capital.

The Shelter report highlights how a crisis of affordability and provision is gripping millions with no option but to look for homes in the private rented sector due to a shortage of social housing.

Shelter says that in 83% of areas of England, people in the private rented sector now face a substantial monthly shortfall between the housing benefit they receive and the cheapest rents, and that this will rise as austerity bites and the lack of properties tilts the balance more in favour of landlords.

Across the UK the charity has calculated that, if the housing benefit freeze remains in place as planned until 2020, more than a million households, including 375,000 with at least one person in work, could be forced out of their homes. It estimates that 211,000 households in which no one works because of disability could be forced to go.

Graeme Brown, the interim chief executive at Shelter, said: “The current freeze on housing benefit is pushing hundreds of thousands of private renters dangerously close to breaking point at a time when homelessness is rising.”

A total of 14,420 households were accepted by local authorities as homeless between October and December 2016, up by more than half since 2009 – with 78% of the increase since 2011 being the result of people losing their previous private tenancy. Local authorities are under a legal obligation to find emergency accommodation, such as in bed and breakfasts. …”

Local government property investment – the auditors’ roles

“Are these the magic money trees? The office blocks, shopping centres and petrol stations currently filling up the local government property portfolio with their promise of a harvest abundant enough to keep the fruit bowl full for years to come? Quite possibly, with a good soil for rooting, plenty of sunshine and lots of green-fingered attention. But also quite possibly not. Which is why you can expect a visit from your auditors, once they have remembered where they put their wellies.

It is a common scenario for auditors to have no knowledge of a substantial and risky project until it is too late for them to have any influence over it. Commercial sensitivities often lead to projects being run on a “need to know” basis, with external auditors joining internal auditors, scrutiny committees and sometimes even the section 151 officer on the other side of a firmly locked door.

The auditor may only find out about a project when the ink is drying on the contract, when there doesn’t seem much more to do than offer a sheet of blotting paper.

However, there is still a lot that the auditor can do that would be of benefit, even if there is nothing to be critical about.

For instance, the Spelthorne Borough Council £360m purchase of the BP campus with new borrowings of £377m against a budget requirement of around £13m is such a huge transaction that its mere existence surely justifies a public interest report from the auditors to reassure the local population that their new role as BP’s landlords will not weigh heavy upon them. There is no reason why public interest reports have to be reserved for bad news.

Unfortunately, auditors are not particularly keen on bringing good news. The best you will get is “negative assurance”: a declaration that, based on the investigations carried out, there is nothing that provokes the need for criticism. But this would still be a valuable contribution and is arguably what is required by the reporting duties in Schedule 7 of the Local Audit and Accountability Act 2014.

The least that we can expect is that auditors will eventually say enough to manage their reputation risk – limiting the possibility that someone at some point in the future could ask “where were the auditors?”. A couple of paragraphs in the audit letter affirming that it is an authority’s responsibility to make its own investment decisions and summarising the less reliable judgements by which those decisions have been taken.

So what will the auditors be particularly interested in?

Legal Powers

Since the introduction of the general power of competence, people seem more relaxed about identifying the legal powers supporting a decision. However, it is still important to know what powers are being exercised, particularly in understanding the implications of the limitations on those powers for a particular proposal.

For instance, the general power comes with restrictions on charging other than to recover costs and requires commercial activity to be run via a company. And the investment powers in the Local Government Act 2003 only extend to purposes relevant to an authority’s functions or the prudent management of its financial affairs. Advice confirming legality will be expected.

It is sometimes forgotten, by those without a legal background, that even if a power can be identified, then that power has to be exercised reasonably under the Wednesbury rules. Auditors will look for legal advice being properly grounded.

If an authority is borrowing to fund its purchases, there may also be questions about the propriety of borrowing to invest. Not so long ago this is something that would have rung alarm bells across the audit community. Judging by their appearance before the Public Accounts Committee in 2016, though, it does not seem a matter that DCLG and the Treasury are overly concerned by.

Finally, how are these projects integrated into the Prudential Framework? Arguments can be put that asset prices will rise to more than cover the cost of acquiring property and making good its depreciation, such that Minimum Revenue Provision (MRP) is not needed. But this is risking a potentially major funding problem if the value/cost relationship shifts adversely in the future. How can an authority demonstrate its legal duty to act prudently?

Value for Money

Auditors will be concerned to examine all the significant judgements, estimates and projections involved in a decision to invest. They will also review accounting treatments to ensure they align costs and benefits appropriately and look critically at funding and financing arrangements.

Exit strategies will also be relevant, particularly noting that if rental income falls sale of a property will only generate a capital receipt rather than revenue income that might fill the gap in the budget.

Any reporting in this area will be restricted to the adequacy of the arrangements put in place by the authority to achieve value for money and will not provide any comfort that it has actually been achieved.

Decision Making

Auditors will check that the authority has complied with its democratic framework and schemes of delegation, particularly if the proposal has proceeded on a “need to know” basis.

So, if you are in the process of bulking up your property portfolio, prepare for the muddy tread of your auditors as they come to gaze sceptically upon your magic money tree.

Stephen Sheen is the managing director of Ichabod’s Industries, a consultancy providing technical accounting support to local government.

Affordable homes in Budleigh Salterton? You’re having a laugh!

Owl says: two totally different plans? A new planning application called for. Show your mettle EDDC!

“The number of affordable homes in a 59-dwelling development being built south of the B3178 is set to be slashed by nearly half under altered plans.

At a meeting of the town council’s planning committee, it was also revealed that the amount of one- and two-bedroom ‘starter’ houses could be reduced from 39 to 12.

Town councillors raised concerns over the change while discussing plans to move plots due to the costs of relocating a foul drain on the site, which will be known as Evans Field when it is built.

The council backed plans to move the plots in phase one of the project, but expressed ‘disquiet’ about the changes lined up for phase two.

Planning committee chairman Councillor Courtney Richards said that changes, which could see the amount of people living on the new site increase, did not ‘sit easy’ with him.

He added: “It’s exactly the same number of dwellings; however, there’s one extra five-bedroom house, 11 extra four-bedroom houses, 15 extra three-bedroom houses, 22 fewer two-bedroom houses and five fewer one-bedroom houses.

“I find that a very significant change in the plan to what has been previously agreed. The two sets of plans are very, very different.”

Previously, an application to reduce the amount of affordable homes on the site from 50 per cent to 40 was rejected.

Thirty affordable homes were originally planned for the site, but under the variation proposal, this could be reduced to 16. The requirement for 50 per cent affordable homes would still be met as shared-ownership homes would make up the other 14 needed.

Deputy mayor and district councillor Tom Wright added: “We’re keen to have starter homes for people. The need in Budleigh is for young families to move into smaller homes to get onto the housing ladder.”

“Number of government-funded social homes falls by 97% since Conservatives took office”

The number of new government-funded houses built for social rent each year has plummeted by 97 per cent since the Conservatives took office in 2010, official statistics have shown.

More than 36,700 new socially rented homes were built with government money in England in 2010-11 – the year in which the Tories came to power in coalition with the Liberal Democrats. By the 2016-17, financial year that finished in April, that figure had fallen to just 1,102.

In the same period the total number of affordable homes built with government money more than halved – from 55,909 to 27,792.

Instead of socially rented homes that are typically available to vulnerable families at around 50 per cent of market value, the Government has prioritised the building of “affordable” homes for which rents can be charged at up to 80 per cent of market value. Critics say that, in many areas of the country, these rents are not genuinely affordable for people on low and middle incomes.

The Conservatives were forced to U-turn during the election campaign after Theresa May announced the Tories would deliver “a constant supply of new homes for social rent”. The Government was later forced to admit that the new homes would, in fact, be the significantly more expensive “affordable” homes.

The drop in social house building is likely to increase pressure on Theresa May and her Government in the wake of the devastating fire at Grenfell Tower in Kensington, which raised fresh questions about the Government’s record on social housing. …”

Telegraph: planning permissions being granted in wrong places

Planning permissions granted for new homes are being concentrated in the wrong areas, where there is less need for housing, according to new research by Savills.

It found that there is a lack of 90,000 planning consents for homes in the least affordable and most in-demand areas of the country.

Only 20pc of planning consents in 2016 were in the most unaffordable places, where the lowest priced homes are at least 11.4 times income. However, 40pc of the country’s total need for new homes is in these markets, while there is a surplus of consents in the most affordable locations.

Research found that in areas where the house price to earnings ratio is over 11.4, which includes London and much of the South East, there is a shortfall of 73,000 planning consents for homes.

Since the National Planning Policy Framework was launched four years ago, with the aim of simplifying the system, there has been a 56pc increase in the number of consents granted.

But analysis shows that there has not been any increase in the areas where affordability is most stretched and where housing need is the greatest.

The Savills report said: “This means we are not building enough homes in areas where they are most needed to improve affordability and support economic productivity.”

Only 41pc of local authorities have a housing plan which sets out housing need and a five-year plan of how to cater for it.

Savills also modelled the potential impact of the Housing Delivery Test, which was announced in the Housing White Paper last February and would assess need based on market strength in an attempt to build “homes in the right places”. It found that it would double London’s housing need to more than 100,000 homes.

Chris Buckle, Savills research director, said: “There continues to be a massive shortfall in London and its surrounds and it is this misalignment of housing need versus delivery which could ultimately hinder economic growth.”