Labour to offer councils direct access to Westminster

“Labour has announced proposals for a new representative body for councils to give them a regular voice at Westminster and a direct say on policy.

Andrew Gwynne, the shadow communities and local government secretary, will set out the plans for a local government commission, made up of leaders from all types of local authority.

Under Labour, the representatives would meet every month with the communities secretary and other cabinet ministers and “inform decision-making”, Gwynne will say in a speech to the Local Government Association (LGA) conference in Warwick.

Labour said the current communities secretary, James Brokenshire, had met directly with just one council in April to June last year, the last three months for which records were available.

There have been significant cuts to central grants for councils since 2010, and the LGA says its members are facing a funding gap of £3.2bn in the next financial year.

In his speech, Gwynne will argue that councils are hugely neglected by the centre of government, all the more so given that a Labour calculation found that 44% of the commitments in it 2017 manifesto would have fallen directly or indirectly to local authorities in England to implement.

He will say: “For nine years, ministers have sat in meetings in Whitehall and cut funding to councils hundreds of miles away, never having to see the library that is closed, the potholes that go unfixed and the elderly people that go without care as a result.

“To fix our broken political system which has left people disconnected and disillusioned with Westminster politics, we need to put local people and communities at the heart of decision-making.”

The new commission would “ensure that councillors can influence every decision that affects local councils”, he will say. “We need their guidance, your support and your advice, in ensuring that from Whitehall to our town halls we are being as effective as possible in helping our hardworking communities. Gone will be the days when we have a secretary of state for local government that doesn’t want to know local government.”

https://www.theguardian.com/society/2019/feb/09/labour-unveils-plan-to-give-voice-to-neglected-councils

Oh noooooo…..”£20m investment fund to be set up so East Devon can buy property and raise cash to balance budget”

Owl says: THAT COST-NEUTRAL MOVE TO HONITON SEEMS TO HAVE COST AN AWFUL LOT!

Owl can see it now …. and it isn’t nice …

“East Devon District Council is set to join the growing number of councils who are investing in property to help balance its budget.

The cabinet have recommended to full council that up to £20m be allocated to an investment fund, either from existing resources or funding from the Public Works Loan Board.

The money would then be drawn down and invested as and when required and would be expected to give the council a net return of £450,000 a year.

East Devon District Council is set to join the growing number of councils who are investing in property to help balance its budget.

The cabinet have recommended to full council that up to £20m be allocated to an investment fund, either from existing resources or funding from the Public Works Loan Board.

The money would then be drawn down and invested as and when required and would be expected to give the council a net return of £450,000 a year.

Any decision on investment of more than £5m would have to be made by the council, but delegated authority to the Deputy Chief Executive in consultation with Leader, Portfolio Holder for Asset Management, Portfolio Holder for Finance and Portfolio Holder for Economy would be given for anything less than that.

Tim Child, Senior Manager – Property & Estates, told the cabinet on Wednesday night that the Commercial Investment Framework was a strategy to help deliver income that would be gleaned from land and property and that the overview committee had supported the principle of it.

He added: “This is a method tried and tested by other authorities. Some have done this and others are trialling it. The model we are set to go with reflects the low risk appetite for East Devon and some of the investments will be within East Devon.”

Chief Executive Mark Williams added: “As the new council prepares for the 2020/21 budget and the £2m funding gap and a 13 per cent reduction in our budget, we will have to do something and a lot of engagement with the public around it. As part of that engagement, I dare say public will say what are you doing to protect the services, and one of those things is to engage in low risk activity to try and generate some income by investing in property.”

Cllr Philip Skinner, portfolio holder for the economy, said that he was very supportive of the idea and was the kind of work the council needed to do. He said: “I look at Torbay, and they are known as a basket case, but they have put together a fantastic financial team and have made some phenomenal investments up and down the country.

“They are doing a really good job, and want to make investments in our patch, so we need to make sure we get there first, as there is a speed that you need to move at in the commercial world as good deals don’t last long as other people recognise that there are good deals.

“We need to make these investments to ensure we can find a way to cover the funding gap we will be facing. We need to wake up and smell the coffee on this. I am very supportive of this and this is the kind of work we need to be doing.”

Among the investments Torbay Council has made includes purchasing a bakery in Bodmin from Proper Cornish Ltd for £3m, with a council spokesperson saying that investment in properties from Cornwall to Kent will raise an estimated £2.8m and that they need to generate more income to fund local services due to budget cuts.

Cllr Mike Allen added: “This strategy is very important. The amounts are small compared to other authorities who are borrowing up to £100m, but this is a prudent way of filling the black hole gap we have in the revenue income.”

Leader of the council, Cllr Ian Thomas, added that the council was taking a very professional approach to an area that they historically haven’t covered very well.

Concerns though about the strategy were raised by Cllr Roger Giles, who said that he would have thought that people generally would want the council to borrow money to provide services for residents and to borrow to provide additional housing for the less well-off residents.

He said that property investment brings with it the potential for significant risk if things go wrong and there were concerns about the public perception of making these investments, particularly if they are outside of East Devon.

Concerns though about the strategy were raised by Cllr Roger Giles, who said that he would have thought that people generally would want the council to borrow money to provide services for residents and to borrow to provide additional housing for the less well-off residents.

He said that property investment brings with it the potential for significant risk if things go wrong and there were concerns about the public perception of making these investments, particularly if they are outside of East Devon.

The cabinet agreed with the overview and scrutiny recommendation hat there should be a Council Tax increase of £5 a year made on an Band D council tax property, taking the meaning the average tax payer will be charged £141.78 a year for 2019/20.

They also agreed to recommend that a vacant post within the Economy Portfolio at a cost of £25,000 be reinstated. The deletion of this vacant post in the draft budget was agreed by the Strategic Management Team as a saving in line with Transformation Strategy “Fit for Purpose” imperative as they believed the saving could be made through efficiencies and would not impact the service, but the cabinet disagreed and said that it would help free up the economy and planning teams from their current pressures.”

https://www.devonlive.com/news/devon-news/20m-investment-fund-set-up-2525158

Just about everyone puts the boot into the government on local authority funding

“The UK government is “in denial” over the sustainability of local government finances, a group of MPs has warned.

Councils are overspending on social care, reducing key services, relying on reserves and resorting to generating income from alternative sources, the Public Accounts Committee has claimed – adding that the government’s insistence that the sector is in fact sustainable is “extremely troubling”.

A PAC report, published today, noted that local authorities in England have seen their core funding from central government slashed by nearly 50% since 2010/11.

It added that such cuts have coincided with increasing demand for services such as housing – the number of homeless people in the UK has risen by one-third in the past eight years – adding that increased demand for social care means councils have had to cut spending in other areas. Spending on services outside of social care has fallen by 32.6% between 2010/11 and 2016/17, it stated.

The report added that, despite these figures, the Ministry of Housing, Communities and Local Government insists the sector remains sustainable.

“The government is in denial about the perilous state of local finances. It insists the sector is sustainable yet is unwilling or unable to back up this claim,” said Meg Hillier, chair of the PAC.

“Flimsy assertions have no place in financial planning. The fact that government has bailed out councils with short-term fixes should be evidence enough that all is far from well.

“Government needs to get real, listen fully to concerns of local government and take a hard look at the real impact funding reductions have on local services. And then it needs to plan properly for the long-term,” she added.

The cross-party group of MPs added that it was “deeply dismayed” that MHCLG views the financial sustainability of local authorities solely in terms of a “small set of statutory services”, such as social care, rather than the full range of services local people need.

“It is extremely troubling that the government views the financial sustainability of councils solely in terms of statutory services, rather than the full range of services local people need and can reasonably expect councils to provide,” Hillier said.

Overall local authority spending on services fell by 19.2% in real terms between 2010/11 and 2016/17, which the PAC says has pushed the MHCLG into using short-term cash injections, such as the £1.4bn allocated in the 2018 Budget.

Permanent secretary at MHCLG, Melanie Dawes, told the PAC in November: “We believe the sector as a whole is sustainable if the amount of resources available to it can deliver the statutory services that it is required to deliver.”

The report recommended that MHCLG should work with local authorities to collect evidence on the impact on service users of providing funding through one-off funding boosts as opposed to long-term funding arrangements.

In the 2019/20 local government finance settlement communities secretary James Brokenshire said that core spending power would increase from £45.1bn in 2018-19 to £46.4bn in 2019-20 – a cash increase of 2.8%.

“This year’s settlement paves the way for a fairer, more self-sufficient and resilient future for local government. That is why local authorities will have more control over the money they raise and a real terms increase in their core spending power,” he said.

The Local Government Association recently warned that discretionary services are under threat due to cuts to central government funding.

Further reaction to the report:

Rob Whiteman, CIPFA chief executvie, said: “It is widely accepted that the current funding model for local authorities is no longer viable, and without bold policy solutions vital public services will continue to be eroded in order to balance the budget.

“We should all share the concern that if current trends are allowed to continue, it will be some of the most vulnerable in society who will be missing out on services and experiencing worsening outcomes as a result.”

Richard Watts, chair of the Local Government Association’s resources board, said: “We agree with the Committee that the financial sustainability of local government cannot be defined by the ability of councils to just provide statutory duties.

“Pressures continue to grow in children’s services, adult social care, and efforts to tackle homelessness, and this is leaving increasingly less money for councils to fund other discretionary services, such as the maintenance of parks, certain bus services, cultural activities and council tax support for those in financial difficulty.”

Andrew Gwynne, shadow communities and local government secretary, said: “Nine of the ten most deprived councils in the country have seen cuts of almost three times the national average.

“And when you cut vital support services in such areas, social problems grow – and demand for those services only becomes greater.”

https://www.publicfinance.co.uk/news/2019/02/local-government-finances-unsustainable-mps-warn

Local authorities – cut, cut, bleed dry

Huffington Post has done a long article on the effect of austerity on six councils all over the country – Labour and Conservative.

It ends with this summary:

“The Facts And Figures

Cuts to local authority budgets began in 2010 under the coalition Conservative and Liberal Democrat government, as part of the wider reform agenda to reduce the deficit following the financial crisis of 2008.

But almost a decade on the Local Government Association (LGA) says more and more councils are struggling to balance their books, facing overspends and having to make in-year budget cuts.

Some of the basic facts and figures highlighted by the LGA are;

– Between 2010 and 2020 councils will have lost almost 60p out of every £1 the government provides for services.

– Main government grant funding for local services will be cut by a further £1.3billion (or 36%) in 2019/20.

– It is estimated councils would need an additional £8billion more than they are expected to have in 2024/2025 to deliver the same services as today.

Against this financial backdrop, the LGA says there is an ongoing surge in demand for council services.

Town halls are being asked to take on larger caseloads providing statutory services in adult and children’s services, and housing homeless families.

All of this leaves less money for day-to-day services such as running libraries or filling potholes.

The size of local government staffing has also shrunk significantly over the last 20 years by 629,000 (or 23% of the directly employed council workforce), while central government staffing has increased by 31%.

The LGA has called on the chancellor to tackle this “funding crisis” and says it is working hard to try and bring money back into local government.

Cllr Richard Watts, chair of the LGA’s resources board, said: “Losing a further £1.3billion of central government funding at this time is going to tip many councils over the edge.

“Many local authorities will reach the point where they only have the funds to provide statutory responsibilities and it will be our local communities and economies who will suffer the consequences.

“In his Spring Statement last March, the Chancellor said he would invest in public services if public finances improve as recent forecasts have suggested. It is therefore vital that the government addresses the growing funding gaps facing councils in 2019/20 in the Autumn Budget.”

https://www.huffingtonpost.co.uk/entry/council-leaders-spending-budgets_uk_5c503229e4b0f43e410acaa1?guccounter=1

Councils investing in commercial property and regeneration feel the chill

Owl wonders how EDDC is getting on with Grenadier in Exmouth …..

“Uncertainty over the impact of Brexit on the UK property market has hit two major council investment projects.

Essex County Council this week formally removed £6m from the budget for its £50m property investment fund after pausing further purchases due to worries over Brexit.

Meanwhile, Brighton & Hove City Council has been forced to delay the signing of a development agreement on a regeneration scheme in which it is planning to invest £8m.

The problems emerged in a week that communities secretary James Brokenshire announced allocations for councils under a new £56m fund to help them prepare for Brexit.

In a report to councillors, Margaret Lee, executive director for corporate and customer services, recommended the £6m reduction in Essex’s property investment fund, saying: “Due to the uncertainties caused by Brexit and the potential impact on the property market, the scheme has been paused with no further purchases planned.”

The pause in investment was originally agreed by Essex councillors in November, after advice from its adviser Hymans Robertson not to expand its commercial property programme “due to the current market conditions including the unknown impact of Brexit”.

However, the council has now decided to remove £6m from the investment programme budget as part of a package of measures that will help the authority reach a forecast underspend of £29.6m in its 2018/19 capital spending programme.

Before the programme was halted, £44m of the fund had been spent on property, which the council says is already yielding £1m for council services.

Essex is set to review whether to restart commercial property investment through the fund during the summer.

Meanwhile, in Brighton, councillors have been forced to delay a deadline they set for housebuilder Crest Nicholson to sign the development agreement on the King Alfred leisure centre and housing regeneration scheme.

Originally, councillors had proposed to walk away from discussions with the developer unless it signed the deal by 31 January.

However, it extended the deadline until 30 March – the day after the UK’s date for leaving the European Union (EU), following a last minute plea from Crest.

In a letter to the council, it cited “challenging economic uncertainties surrounding Brexit and the impact this could yet have on the construction industry workforce and wider confidence and stability of the property market”.

It added that “as soon as we have greater certainty over the nature and form of the Brexit arrangement which we all hope and expect will be achieved shortly, and assuming this does give reasonable certainty over the future trading relations with Europe, then we will enter into the development agreement and commit the team and resources required to promote the scheme, develop the design and seek planning in accordance with the conditions and programme”.

In 2016, the council committed £8m to the project, which comprises a sports centre, swimming pool, underground parking and 565 homes in blocks of up to 18 storeys high.”

http://www.room151.co.uk/funding/brexit-fears-hit-council-property-investments-as-contingency-funds-confirmed/

Bankrupt Tory council gets special treatment and audit bill balloons

Owl wonders how it would have been treated if it had not been a Tory council …

Its audit bill has ballooned:

“In its final audit report released this week, auditor KPMG said delays have been caused by the slow and patchy provision of information by the council and departures of key staff at the authority.

The extra work caused by the delays would more than quadruple its original fee of £71,250, it said.

The report said: “We stated during the audit committee on 26 November 2018 that this had now risen, at that date, to approximately £300,000 in total (i.e. including original scale fee).”

http://www.room151.co.uk/funding/delays-cause-northampton-audit-bill-to-balloon/

and

It is being allowed to raise an extra 2% on council tax without the (legal) need to hold a referendum:

“The council had already proposed raising council tax by 2.99%, the maximum amount it could do before holding a local vote.

The final settlement stated: “For 2019-20, the relevant basic amount of council tax of Northamptonshire County Council is excessive if the authority’s relevant basic amount of council tax for 2019-20 is 5% or more than 5% greater than its relevant basic amount of council tax for 2018-19”. …

When classified as “excessive”, a local authority must hold a referendum on its proposed tax hike.

In November, in a bending of the rules by the government, Northamptonshire was given permission to use £70m of capital receipts to help balance its budget.

The final statement otherwise largely confirmed what was contained in the earlier provisional settlement in December, with core spending power rising by 2.8% in cash terms from £45.1bn in 2018-19 to £46.4bn in 2019-20.

In real terms this is almost a freeze.”

http://www.room151.co.uk/funding/northamptonshire-thrown-a-lifeline-again/

Auditors: what are they FOR?

EDDC’s auditors say they aren’t there to detect fraud:

“The former auditor of the collapsed cake chain Patisserie Valerie has argued that it is not the role of accountants to uncover fraud.

Grant Thornton is under investigation for its audits of the chain that collapsed into administration earlier this month following the discovery of a £40m black hole in its accounts. Patisserie Valerie’s former finance director has been arrested on suspicion of fraud.

David Dunckley, chief executive of Grant Thornton, which was replaced by RSM as the chain’s auditor in mid-January, told MPs on the business, energy and industrial strategy committee that there was an “expectation gap” that “needs to be fixed”.

“We’re not looking for fraud, we’re not looking at the future, we’re not giving a statement that the accounts are correct,” he said, adding that his firm audits 7,000 companies. “We are saying [the accounts are] reasonable, we are looking in the past and we are not set up to look for fraud.”

In a heated exchange with Rachel Reeves, the Labour MP and committee chair, Dunckley reiterated: “If people are colluding and there is a sophisticated fraud that may not be caught by normal audit procedures.”

He said in an ideal world it would be spotted. Reeves replied: “But in a shop that sells tea and cakes, you’d sort of think that might be spotted. It’s not a multinational complex organisation. …”

https://www.theguardian.com/business/2019/jan/30/ex-patisserie-valerie-auditor-says-not-his-role-to-uncover

and it seems, even when they DO detect major fraud, they don’t seem to feel obliged to do anything about it:

“Deloitte has been fined 2.2m ringgitt (£415,000) by Malaysian regulators for failures in its audit of a firm linked to the scandal-ridden state fund, 1MDB.

The Securities Commission Malaysia said Deloitte was reprimanded because it failed to report the irregularities detected in the Sukuk Murabahah Programme, an Islamic bond issued by Bandar Malaysia Sdn Bhd (BMSB).

Deloitte was the statutory auditor for BMSB and its holding company 1Malaysia Development Berhad Real Estate (a subsidiary of state fund 1MDB) for the financial years ending March 2015 and 2016 when the bonds were issued.

The securities regulator said Deloitte’s failure to immediately report irregularities may have a material effect on the ability of BMSB to fulfil its obligations in repaying sukuk holders any amount under the programme.

Imposing a fine of 2.2m ringgit , the regulator said it “finds the breaches committed by Deloitte serious in nature as it has failed to discharge its statutory obligations”.

https://www.theguardian.com/business/2019/jan/30/deloitte-fined-by-malaysia-over-breach-linked-to-1mdb