Category Archives: Local Government Finance

Standard

Posted by

Posted on

24 Jan 2019

Posted under

Accountability, Austerity cuts, Inequality, Local Government Finance, Privatisation

Comments

1 Comment

“What It’s Like To Lose Your Local Post Office”

Another in the Huffington Post series of the effects of local authority cuts:

“Mole Meade is dedicated to the Post Office. The trade union rep has spent half of his life working as a clerk, while also representing its thousands of employees.

But after 30 years, his expresses his loyalty to the firm in a different way. He now frequently fights alongside councillors and community leaders to halt the disappearance of post offices from British high streets, as branches are closed across the country.

“I’ve seen it go through rack and ruin,” says Meade, who is now an executive at the Communication Workers Union.

Last year, Lewisham in London lost the last two Post Offices branches directly controlled by the company, known as “crown” sites, as Sydenham and New Cross pulled down their shutters for good in a move local councillor Alan Hall described as a “national scandal”.

But the Post Office has been under immense pressure to shut down those branches. Crown post offices now make up just 2% of the national postal network, having fallen from 373 branches in 2009, to 262 in March last year. Mostly, they have been subsumed into local news agents, or WHSmiths.

The closures are particularly poignant in light of rising concerns about the death of the high street, and discussions about how to draw more customers in as numbers continue to fall nationwide. Forecasters predict some 175,000 jobs could be lost as footfall declines again this year.

“You’ve got a government currently banging on about ‘oh, we’ve got to do something about the high street’, and they’re the ones killing it off,” Meade said.

The Sydenham closure was “probably one of the most offensive” closures, he said. It wasn’t just a place to post a letter or a package – as a full service site it was also where people could apply for work permits, or sort out issues with their immigration status.

“What happened in Sydenham, this happens in every office that’s got UK border agency facilities. People who come to Britain for economic, political, asylum reasons have to get UK border agency facilities at some point and with the closure of Sydenham, those facilities evaporated,” he told HuffPost UK.

But like so many decisions driven by austerity over the past few years, the closure made sense on paper. Services were not withdrawn completely, and people could go to WHSmith stores for some of the things the post office provided them with. But as with similar cuts across the UK, there was a quiet but profound impact on the people who relied on it.

The slow decline of the post offices is just one of the cuts that we have been examining in our new series, What It’s Like To Lose. After nearly eight years of shrinking local budgets, HuffPost UK has been focusing on the disappearing bus routes, leisure centres, clinics and job centres that together paint a picture of what life is like for millions of people who rely on public services in the age of austerity.

Now, the shuttered branch in south London’s New Cross stands vacant. “This was a post office that was very well used – always queues out the door. So there was very much a need in the neighbourhood, and we didn’t want either of them to go,” says Laura Wirtz, a local resident.

Wirtz was an instrumental figure in the campaign against the New Cross closure, heading up the petition of 3,000 signatures which was eventually presented to Downing Street last February.

She told HuffPost UK: “When I started the campaign and started taking the petitions around the pubs, I would hear comments like ‘Oh, we’re going to lose that as well?’.”

“We’d already lost the bank, and the library was only kept open for two days a week but then volunteers are running it. We’re just losing all of our essential services and the only things that still exist are private, promotional spaces.

“There’s nothing owned by us, nothing that’s for the community and so there’s just a general feeling that the amenities we depend on, they’re not going to be open for us, and there’s nothing we can do about it.”

But this is not simply a story of one post office being closed, says Lewisham councillor Joe Dromey, who opposed the closure of the New Cross crown site. This was a whole constellation of pressures. “It’s part of a wave of closures of Crown post offices we’ve seen in recent years which has been an effort by the post office to save money and cut costs,” he told HuffPost UK.

“The reason why it delivers big savings for the Post Office is because it replaces decent, well-paid union organised jobs on secure terms, with low-paid, insecure work. The savings are on the back of undermining decent, quality work,” he said.

Grievances were aired at local council meetings last year, with local residents fearing the economic impact of the closure, as well as longer queues and poorer service. Consultations were even held between residents and Post Office bosses, which councillor Liam Curran labelled a “cosmetic exercise”.

A campaign was launched online, adopting the #SaveOurPostOffice hashtag. Their action culminated in a number of petitions being presented to Downing Street. But it didn’t stop the closures.

Curran told HuffPost UK: “They all closed down one by one. Last year, there was about just under 300 that were crown branches. But before that, there was thousands and thousands of them. Now they’re closing, despite all the lobbying a petitions from people up and down the country, they’re being ignored.”

Founded in 1986, Post Office Ltd now has a network of 11,500 branches across the UK, directly employing 8,000 employees in its Crown branches, and 50,000 in its sub-post offices. It broke off from the privatised Royal Mail in 2012 to become an independent, state-owned firm as part of the Postal Services Act 2011.

But it has weathered challenging conditions, and faced questions over its viability as it began to report losses reaching £108m in 2007.

In a bid to overhaul the brand’s fortunes, the government provided a £1.7bn cash injection in 2007, in hopes that it could become profitable again by 2011. Part of this deal saw 85 Crown sites close, most of them sold to retailer WHSmith.

The 2007 government subsidy was followed up in 2010 with £1.3 billion in funding to help the firm further. As part of efforts to modernise, it introduced two new types of shop – open plan ‘main sites’ with longer hours and more services, and ‘local style’ post offices which are housed within corner shops and are open during retail hours.

Simultaneously, the number of Crown sites fell, with figures showing that by the end of March, there were 262, making up 2% of the entire network, compared with 373 in 2009. A 10-year deal was drawn up between Post Office Ltd and WHSmith, in which 61 sites are to be sold to the high street giant until 2026.

Curran said he fears that the government is set on privatising the Post Office completely. “It’s the equivalent to a national service like the railways, water, power, that actually should be under the ownership of the public through the government, and that provides a service that benefits people.”

He said it is part of “the story of wider privatisation, and government priorities.”

The Post Office told HuffPost UK it does not take branch changes lightly.

“The Post Office is not immune to the pressures facing all retailers, and we must respond to the unprecedented change taking place on high streets and adapt to changing customer needs.

“We want our services to remain at the heart of communities, including in Lewisham, in a way that’s financially sustainable, not just for today’s customers but tomorrow’s too. 98% of the Post Office network is run in this way, on an agency or franchise basis. It’s a model that works through delivering the benefits of shared overheads and footfall.”

The company reassured customers that they would still be able to rely on the facilities they expect, adding that there are “very rarely changes” to services over the counter.

“We do not make changes to our branches lightly – but we need to make them if we are to ensure that our services remain at the heart of towns and cities, not just in the short term, but for the long term too.”

It is clear that, amid the changing face of New Cross high street, the loss of the Crown post office signifies the fall of yet another constant, a reliable community nerve centre.

Meade said: “It affects the very fabric of our high streets and our society, because what you can’t put a price on is a person, whether young or old, can go to the post office weekly, and that’s probably the only people they speak to.

“You can’t put a price on that.”

https://www.huffingtonpost.co.uk/entry/what-its-like-to-lose-your-post-office_uk_5c46f58ae4b0bfa693c6e267?guccounter=1

Standard

Posted by

Posted on

21 Jan 2019

Posted under

Accountability, Austerity cuts, Inequality, Local Government Finance, Poverty

Austerity: Death by a thousand (local) cuts

“Brexit is one of the great issues – and news stories – of our time. But austerity, now nearly a decade old, has been just as transformative – in a slow, attritional way that is all too easy to overlook.

The reality is a picture of a thousand small decisions taken in grey council meeting rooms, a thousand deductions from spreadsheets, and countless lives quietly made a little worse. Sexy news copy and television report material it is not.

And while it would be wrong to say the bigger picture hasn’t received a lot of coverage over the past eight years, the real-life impact is rarely “news”. These small stories seldom pass muster in newsrooms where reporters pitching ideas are asked by their editors daily: “But is it new?”

Meanwhile at a local level, councils faced with impossible budgetary decisions are having to make hard choices. So how do we mark the slow, incremental, and sometimes devastating disappearance of local services? How do we serve our readers by making sure our coverage reflects what they see where they live?

This is why HuffPost UK is devoting a week of coverage on the impact of local cuts – properly local cuts. In this series, What It’s Like To Lose, we have stepped away from considerations about what is traditionally “newsworthy”, ignoring the usual measures of scale, to look at some of the holes left in communities over the past few years, and to write about things that people tell us are important to them.

The fact is that the closure of a single leisure centre, or a library, is a local issue. If the council stops cutting the grass in your park, or doesn’t mend the swings that have been broken for a month, you don’t expect to see it on the News at Ten. And these cuts are often enacted by people working hard to make the least-worst decision. Do we consider a mother-and-baby swimming class or a judo club as essential a service as keeping streetlights on, or collecting rubbish?

When Birmingham Council recently decided to no longer employ lollipop ladies, they did so in order to prioritise other services. In narrow terms, the logic might have seemed inescapable. But with that, a familiar feature of the landscape of British childhoods is gone in one city. Where will it be gone next?

So to pay closer attention, and to understand the ways in which austerity is linked to wider political issues, we’ve spoken to an old lady whose bus into town on a Sunday has been discontinued, and a teenager who won’t travel further afield to a sexual health clinic area after the one nearby was closed. We’ve spoken to people who have to travel miles to their local job centre, or who are missing their leisure centre and can’t find an affordable alternative.

And while this can only be a snapshot of the nationwide reality, we’ve found that the stories that matter to one person can tell us something about what it’s like to lose that ought to matter to all of us, in a society that is quietly changing.”

https://www.huffingtonpost.co.uk/entry/austerity-what-its-like-to-lose_uk_5c3c8e54e4b01c93e00bbd26

Here is the first of those stories:
https://www.huffingtonpost.co.uk/entry/what-its-like-to-lose-your-leisure-centre_uk_5c1d1b41e4b08aaf7a885786

Standard

Posted by

Posted on

17 Jan 2019

Posted under

Accountability, Audit (EDDC), EDDC, Local Government Finance, Scrutiny

Auditers warned about council manipulation of funds for commercial ventures

“Auditors have been encouraged to scrutinise council accounts to ensure that balance sheets are not being manipulated in order to justify commercial ventures.

The National Audit Office has released a new guidance note for local government auditors, covering a range of issues thrown up by recent changes in regulation and council practice.

The section on commercialisation has been produced in response to the growth in council commercial activity as a means of dealing with substantial funding reductions, the note said.

“Auditors should be mindful of any incentives to achieve a particular balance sheet position that arise from an authority’s commercial activities when planning their audit work,” the note said.

The note also brought auditors’ attention to the changing nature of investment activity, primarily in commercial property, carried out through asset-backed joint-venture arrangements, rather than traditional debt-backed approaches.

It said: “The scale and nature of authorities’ commercial activity brings both risks to the auditor’s value for money arrangements conclusion and the opinion on the financial statements.

“The former covers the reasonableness of decision making, including the relevant risk assessment, appropriate skills of the authority and the appropriateness of advice.”

Councils need to consider the impact of commercial ventures both on the accounts of any standalone entities, as well as the group accounts, it said.

The note also warned councils that the general power of competence, introduced in the Localism Act 2011, does not give them unlimited powers over their decisions relating to commercial ventures.

It said: “Auditors in considering their value for money arrangements conclusion will need to assure themselves that schemes have been entered into following appropriate legal and financial advice, having regard to Wednesbury principles of reasonableness.

“While the general power of competence has made it easier for authorities to undertake commercial activity, this power does not override the need for authorities to comply where there is already an existing legal duty, for example, compliance with the capital financing regulations.”

Elsewhere,the NAO note encourages auditors to ensure that councils are complying with rules allowing councils to use certain capital receipts on revenue funding.

“With pressure to find revenue funding authorities may incorrectly apply the guidance to apply capital receipts for a revenue purpose contrary to the requirements of the capital financing regulations,” the NAO said.

In March last year, auditor KPMG warned that warned that plans by Northamptonshire County Council to spend £40.9m in capital receipts on transformation projects were “not on any view achievable”.

Auditors,the NAO said, should determine whether councils have complied with the capital receipts flexibility guidance, and review the “reasonableness and realism” of councils’ assumptions.

“Auditors should be alert to the risk that authorities may misapply the flexibility to convert ineligible capital receipts to support their general fund expenditure,” it said.

The NAO note also reiterated the role of the auditor in cases where councils might decide to issue a section 114 notice.

In situations where a section 114 notice could be issued, auditors should seek discussions with the NAO and “engage with the section 151 officer regarding consequent courses of action should the section 151 officer’s actions not be successful in averting an unbalanced budget.”

Stephen Sheen, managing director of local government finance consultancy Ichabod’s Industries, said: “Auditors are required to have regard to the guidance when planning and carrying out their audits.

“This doesn’t mean that they have to agree with it, but they must have considered it in arriving at any position that they take on the relevant issues.”

http://www.room151.co.uk/funding/nao-urges-close-watch-on-commercialisation/

Standard

Posted by

Posted on

15 Jan 2019

Posted under

Accountability, Audit (EDDC), DCC, EDDC, Local Government Finance, Scrutiny, Transparency

“Spending watchdog urges ministry to address weaknesses in local authority governance”

“The National Audit Office has sounded the alarm about local authority governance and audit for the second time in a week.

In its latest report, Local Authority Governance, the spending watchdog said the government should improve its oversight of the local governance system in the face of increasing financial pressures on councils.

It said councils’ responses to these pressures had “tested local governance arrangements”, as some had pursued large-scale transformations or potentially risky commercial investments that added complexity to governance arrangements.

But spending to support governance fell by 34% in real terms between 2010-11 and 2017-18.

The NAO said external auditors issued qualified conclusions for around 20% of unitary and county councils, and “several authorities did not take appropriate steps to address these issues”.

A NAO survey of auditors found 27% did not agree that their authority’s audit committees provided sufficient assurance about governance arrangements.

Some councils had questioned the contribution of external audit to providing assurance on their governance arrangements, with 51% of chief finance officers wanting to see changes, including a greater focus on the value for money element of the audit.

The NAO said the Ministry for Housing, Communities & Local Government (MHCLG) did not systematically collect data on governance, and so it could not assess whether issues that arose were isolated incidents or symptomatic of failings in aspects of the system.

Ministry intervention at councils was not always made public “meaning its scale and effectiveness is not open to scrutiny or challenge”, the watchdog said.

The report’s recommendations include that the MHCLG should work with local authorities and stakeholders to assess the implications of, and possible responses to, the various governance issues it had Identified.

This would include examining the status of section 151 officers and the efficacy of their statutory reporting arrangements, the effectiveness of audit committees, the effectiveness of overview and scrutiny functions, and the sustainability and future role of internal audit. …”

http://www.localgovernmentlawyer.co.uk/index.php

Standard

Posted by

Posted on

11 Jan 2019

Posted under

Accountability, Austerity cuts, Local Government Finance, Transport (local)

“Local councils blame austerity for lack of investment in road improvements”

“Council leaders have hit back at suggestions rising revenues from car parking charges are not re-invested in roads in Great Britain.

All surplus income generated from parking charges was funnelled back into “essential transport projects”, the Local Government Association said, responding to a report from price comparison website confused.com.

Councils in Great Britain made £847m from parking activities in the 2017-18 financial year, according to confused.com’s analysis of government data.

This was a 24% increase (£165m) on the £682m they earned in 2013-14, the report calculated from local authorities’ published accounts. Over the same period, however, their spending on road improvements fell from £2.8bn to £2.4bn, confused.com said.

Amanda Stretton, confused.com motoring editor, said: “While councils are often justified in charging for parking and issuing fines for illegal parking, many motorists are confused about why this money isn’t being re-invested into our roads.

“Poor road conditions is a major concern for drivers, with roads riddled with potholes and unclear markings, it’s no wonder drivers want councils to be putting more into making these better.”

The LGA said the report ignored the effects of austerity on councils.

Martin Tett, Transport, spokesman for the Local Government Association, which represents 370 councils in England and Wales, said: “Any income raised through on-street parking charges and parking fines is spent on running parking services and any surplus is only spent on essential transport projects, such as tackling our national £9 billion roads repair backlog and other local transport projects that benefit high streets and local economies.

“This report completely ignores central government funding reductions. Between 2010 and 2020, councils will have lost 57p out of every £1 the government had provided for services, which is a much more significant source of funding for roads than surplus parking income.”

He added: “Surplus parking income is not the only source of money for roads and not all transport spend is spent on roads but can still be helpful to motorists, such as supporting concessionary bus fares to help reduce congestion.”

A government-commissioned report recently advised councils to slash parking charges to bring shoppers back to the high street. The High Street Report was carried out by a panel led by retail expert John Timpson.”

https://www.publicfinance.co.uk/news/2019/01/local-councils-blame-austerity-lack-investment-road-improvements

Standard

Posted by

Posted on

10 Jan 2019

Posted under

Accountability, Audit (EDDC), EDDC, Local Government Finance

Many local authorities not providing value for money

“The number of public bodies in England failing to provide value for money is “unacceptably high” and increasing, the public spending watchdog has warned.

Of the nearly 1,000 councils, police, fire and NHS bodies across England, 208 (22%) were found to have “significant weaknesses” in securing value for money in 2017-18, a National Audit Office report out today revealed.

This was higher than the 170 (18%) of public bodies awarded a ‘qualified’ audit conclusion – signifying the significant weaknesses – in 2015-16.

“This increase varies between local government and NHS sectors”, the report found – with NHS bodies seemingly faring worse than other public bodies….

Financial performance issues that can lead to a qualified conclusion, include failure to meet financial targets, such as annual spending limits or delivering planned savings.

The NAO report said: “Qualified conclusions on arrangements to secure value for money locally are both unacceptably high and increasing.”

It continued: “The proportion of local public bodies whose plans for keeping spending within budget are not fit-for-purpose, or who have significant weaknesses in their governance, is too high. This is a risk to public money and undermines confidence in how well local services are managed.” …

The report also suggested that a large proportion of local bodies may not fully understand the purpose of an auditor’s conclusion on arrangements to secure value for money.

Of 61 local public bodies that responded to the NAO, 82% said auditors identified issues they were already aware of, but the NAO stressed that the auditor’s report is to provide public assurance on the adequacy of arrangements in place, not to uncover new issues.

While 95% of respondents said they had plans in place to address issues in the auditor’s report, only 5% said had already dealt with their auditor’s concerns.

Rob Whiteman, CIPFA chief executive, said: “Value for money conclusions should be treated as a cornerstone on which local bodies can show their dedication to transparency and accountability, crucial aspects of good governance in the public sector.

“Local auditors, councillors and directors should exercise their powers to hold executives to account, especially where local bodies are not taking sufficient action to address issues raised.

Meg Hillier, chair of the Public Accounts Committee, said: “It is deeply concerning that local auditors are raising increasing numbers of concerns about local bodies’ arrangements to secure value for money, but these are often not being listened to and there is no consequence for the local bodies themselves.

“With ever stretched public services, citizens deserve to know that there are effective arrangements in place to make sure they are getting value for money.

“Local auditors should be using the full range of their powers and local bodies should be acting on their findings transparently, with departments holding them to account.”

https://www.publicfinance.co.uk/news/2019/01/more-public-bodies-failing-provide-value-money-says-nao

Standard

Posted by

Posted on

10 Jan 2019

Posted under

Accountability, Audit (EDDC), Austerity cuts, Local Government Finance, NHS (local)

“NHS and councils full of financial problems, says watchdog”

“National Audit Office shocked by state of bodies including police and fire authorities.

The number of NHS and local government bodies with significant financial weaknesses in their ability to give value for money is unacceptably high and increasing, according to Whitehall’s spending watchdog.

The National Audit Office has examined the financial statements from nearly 937 local health authorities, councils, police and local fire bodies which are responsible for about £154bn of net revenue spending every year.

Auditors conclude in a report published on Wednesday that the number of local bodies with significant weaknesses increased from 170 (18%) in 2015-16 to 208 (22%) in 2017-18.

It follows the publication of an International Monetary Fund report in October which found that the UK’s public finances were among the weakest in the world after the 2008 financial crash.

Sir Amyas Morse, the head of the NAO, said he was shocked by the persistent high level of qualified audit reports at local public bodies.

“A qualification is a judgment that something is seriously wrong, but despite these continued warnings, the number of bodies receiving qualifications is trending upwards,” he said.

“Let us hear no cries of: ‘Where were the auditors?’ when things go wrong. The answer will be: ‘They did the job, but you weren’t listening.’

“This is not good enough. Local bodies need to address their weaknesses, and departments across government should ensure they are challenging local bodies to demonstrate how they are responding.”

Each year, local auditors give an opinion on whether local public bodies have produced financial statements which comply with reporting requirements and are error-free, and conclude whether local public bodies have arrangements to manage their business and finances.

Wednesday’s report examined accounts from 495 local authorities, local police and local fire bodies in England; and 442 local local NHS bodies in England, which include clinical commissioning groups, NHS trusts and NHS foundation trusts.

In the NHS, the number receiving qualified accounts rose from 130 (29%) to 168 (38%) across the same period. The number of local government bodies receiving qualified conclusions was 40 (8%) in 2015-16, but 18% of single-tier local authorities and county councils received a qualification in 2017-18.

Meg Hillier, the chair of parliament’s public accounts committee, said: “It is deeply concerning that local auditors are raising increasing numbers of concerns about local bodies’ arrangements to secure value for money, but these are often not being listened to and there is no consequence for the local bodies themselves.

“With ever-stretched public services, citizens deserve to know that there are effective arrangements in place to make sure they are getting value for money.

“Local auditors should be using the full range of their powers and local bodies should be acting on their findings transparently, with departments holding them to account.”

https://www.theguardian.com/society/2019/jan/10/nhs-and-councils-full-of-financial-problems-says-watchdog

Standard

Posted by

Posted on

17 Dec 2018

Posted under

Accountability, Dorset, Local Government Finance, Unitisation

New Dorset unitary council may not be able to balance the books

“… In today’s report, the programme director for the council Keith Cheesman revealed that, whilst most of the transitional costs have been around what was expected, the cost of taking on interim staff to carry out projects related to changing to the new council have been far higher than anticipated and need extra funding.

Cheesman’s report said that the ongoing dispute between the shadow Dorset Council and Bournemouth Christchurch and Poole Council over the transfer of debts and reserves is yet to be resolved, and also warned that years of reducing employee numbers has left internal employee resources “very limited.”

The merger between Dorset County, East Dorset, North Dorset, Purbeck, Weymouth & Portland, and West Dorset councils was given the green light back in May, followed by a lengthy legal battle with Christchurch Borough Council.

Last week, Christchurch BC, which will be part of the second new council, said it was still split over the need to contribute £420,000 towards merger costs.”

http://www.publicsectorexecutive.com/Public-Sector-News/new-dorset-council-faces-unbalanced-budget-as-dispute-over-transfer-of-debts-remains-unresolved

Standard

Posted by

Posted on

17 Dec 2018

Posted under

Accountability, Austerity cuts, Education (local), Environment (local), Health and Social Care (local), Local Government Finance, Police (local)

Local authority settlement fails to address major funding issues and shortfalls

AND government has said if councils need more money they should hold referendums which might, or might not, agree to further council tax rises to make up for the shortfall.

“Last week’s provisional settlement for local government was predictably disappointing, says Richard Harbord, while the big issues of funding social care and council tax reform wait unaddressed in the political long grass.

The delayed settlement was eventually published last week, leaving local authorities little time to do any detailed work on it before Christmas.

It has to be said it was never going to be earth-shattering, being the last year of an agreed multi-year settlement negotiated four years ago.

The actual settlement says that the government are planning to increase resources by £1.3bn next year, but this seems to include a number of separate issues such as Winter Pressures Funding for social care, the bulk of which comes with conditions, and the removal of the threat of negative grant.

The Local Government Association in a somewhat low-key response says that this settlement will still leave local authorities some £3.2bn short of the resources they require to maintain a reasonable standard of service.

Other announcements were expected at the same time but a number of these did not appear. The amount of time and energy spent on leaving the European Community has left a large void in moving forward to resolve the many problems local government faces.

There was a consultation paper on business rate retention, but this has been so long discussed in the joint working parties between central government and the LGA that it is hardly new. It is now set at 75%, this is somewhat less than Eric Pickles’ 100% and the various other figures talked about over the last few years, and is perhaps a disappointing increase on the 50% which has been the scheme for the last few years.

The announcement says that the government continues to work on the Fair Funding Formula which was also expected to go out to consultation. This was never intended to take effect next year, but local authorities need to know if there are to be major changes to distribution and to account and allow for them in their medium-term financial plans.

We had already been warned that perhaps the most important of all – the options for dealing with the increasing expenditure on social care – had been put back until next Summer. This was, it will be remembered the subject of a bungled announcement during the last general election campaign which had to be withdrawn with a Green Paper promised for immediately after the vote.

This has been delayed several times. It is just too difficult to find options that are acceptable to the majority. If there is to be a central funding solution rather than an insurance solution, it will have to come from additional taxation. Politicians continue to believe that increases in taxation are to be avoided at all costs but a relatively small increase in taxation could produce workable options.

The LGA urges the government to reconsider and to improve the offer by the time of the final settlement early next year. This is extremely unlikely to happen.

The fact is that this settlement does nothing to help local authorities become sustainable and to save them from having to make even more serious cuts in services going forward.

Business rates retention may have been sorted, but the government really needs to address the issue of council tax. Hopelessly outdated and not understandable to owners of properties, it is in desperate need of reform.

The government argue that it is open to local authorities to run referendums to increase council tax by over 3 % , indeed they have encouraged local authorities to do so but the limited gains and negative publicity have put authorities off.

At the very least the values used need to be current values and the banding system needs drastic revision to reflect the fact that so many properties are valued at over £1m and should be contributing more to local services.

We do now look forward to the spending review, but there cannot be widespread optimism that all will be well.”

http://www.room151.co.uk/blogs/provisional-settlement-does-nothing-to-help-local-authorities/

Standard

Posted by

Posted on

15 Dec 2018

Posted under

Austerity cuts, Local Government Finance, Post-Brexit Adjustments

Irish local authorities prepare for Brexit – ours lag behind

“Local authorities face a number of uncertainties due to Brexit but are focussed on building resilience in their areas to prepare.

Addressing the recent conference ‘Local Authorities – Implications for Local Authorities and their Areas,’ Jackie Maguire, Chair of the County and City Management Association (CCMA) said Brexit has been to the forefront of local authority considerations since the UK vote to leave the EU.

‘Preparing for the unknown is a huge challenge. In the local authority sector, our approach has been to consider all our plans and actions through the lens of Brexit, while maintaining close contact with Government and relevant departments throughout the negotiation period,’ she said.

The conference heard that as well as the potential impact on local business and economic development, there are a number of practical implications for local authorities, particularly in border regions.

Citing the current arrangement, where the Northern Irish Fire Service provides first response to call outs in parts of Donegal and giving the further example of an ongoing cross-border greenway project, she said:

‘While both the Republic and Northern Ireland have been members of the EU, we have been able to work collaboratively on shared infrastructure development and shared service provision. We now face into an unknown situation as to whether that can continue.’

The CCMA Chair also highlighted the impact Brexit may have on environmental standards, ‘Currently we apply relatively consistent environmental policies north and south; this is the best way to achieve results. The Water Framework Directive, for example, is implemented in both jurisdictions to manage river basins and improve water quality but rivers don’t stop at borders.’

‘Local authorities will do what we can to proactively mitigate against the worst impacts of Brexit and capitalise on any opportunities.’

‘This will involve not only our economic development and tourism teams but teams across our organisations – in planning, roads, housing, infrastructure and other areas. We will ensure efficient, responsive services and ambitious plans that will encourage enterprise, entice visitors and allow our areas to thrive.'”

https://www.independent.ie/regionals/argus/news/local-authorities-prepare-for-brexit-uncertainty-37611830.html

Standard

Posted by

Posted on

11 Dec 2018

Posted under

Accountability, DCC, EDDC, Local Government Finance, Scrutiny, Transparency

Comments

1 Comment

Effective scrutiny essential when councils fail – as they will do more often in future

“There needs to be a “thorough rethink” about how to approach failure in local government, think-tanks have warned.

Methods of addressing failure in local government are “no longer fit for purpose” according to a briefing paper published on 10 December by the Centre for Public Scrutiny and Localis.

They identified four main types of failure including: a failure of culture, a failure of service, a failure of function and a failure of duty.

CfPS and Localis said councils experiencing these types of failure often become less outward looking, more introspective and more defensive. The warning was timely, they said, because of the recent high-profile failures at Northamptonshire County Council, and increasing pressures on the sector more widely.

Jacqui McKinlay, chief executive of the Centre for Public Scrutiny, said: “Our recent experience of working with local authorities shows that it is time for a thorough rethink about local government failure.

“Failure in local government is not something that is going to go away – in fact, a range of looming pressures mean that the problem is likely to become more prevalent in the years ahead.”

McKinlay urged local government needs to prepare for increasing instances of failure in the years ahead.

She added: “We are clear that improved scrutiny processes at the local level will be crucial in this effort.” …”

https://www.publicfinance.co.uk/news/2018/12/call-rethink-councils-approach-failure

Standard

Posted by

Posted on

7 Dec 2018

Posted under

Accountability, Local Government Finance, Outsourcing, Privatisation

Outsourcing: Carillion and potential crimes affecting councils

“The collapse of the construction giant Carillion has hit the headlines again as auditing failures among the Big Four accountants have come to light. For many, the real impacts (and horrors) of the collapse are only now emerging.

Oxfordshire county council has spent £1.7 million on an audit of the council’s ten-year services contract with the company. It reveals shocking levels of oversight — missing building certificates, fire safety issues, unmet planning conditions — and the scale of the damage done, in health and safety and in financial terms, is breath-taking, especially when you consider the council spent a total of £123 million with Carillion on 602 municipal projects.

We are still to find out exactly what happened behind the scenes, and the results of the Financial Conduct Authority’s (FCA) criminal investigation is hotly anticipated.

The news of the collapse in January was reported alongside photos of the directors’ properties, and details their extravagant pay deals. In June this year the FCA said it was “looking into” allegations of insider trading. Perhaps this was a result of a complaint made in February, by people who say they have been the victims of the directors’ crimes. Increasingly the police are failing to investigate financial crimes, through sheer lack of resources. Will the FCA be able to do any better?

The long story short goes like this: Carillion’s directors had a stack of duties and obligations because they ran a PLC. The huge pay deals are supposed to be there for a reason. One of their many obligations was to keep the market informed of the company’s financial situation. Dishonestly failing to do that is a crime called “misleading statements”. Making misleading statements is related to the crime of insider trading. The point of both crimes is the same: to keep the markets fair. The victims, or at least the people making a complaint against Carillion, are the bosses of a firm called Kiltearn Partners. Kiltearn is an institutional investor: a business which invests large sums in stocks and shares on behalf of lots of smaller investors, such as people putting money into a pension.

In January 2017 Kiltearn owned 10 per cent of Carillion’s shares on behalf of their clients. In March that year Carillion published its 2016 accounts, and everything was painted in rosy colours. Kiltearn staff had no reason to think they should be selling its shares in Carillion. Not until a couple of months later anyway. Because on July 10, 2017, Carillion told the market about a massive problem — there was an £845 million hole in its cash flow. It said it needed to make provision for this, and basically wrote it off. Unsurprisingly the share price tumbled, and Kiltearn was left with the feeling it had been had. Bosses called for an investigation into whether Carillion’s management knew, or should have known, about the cash flow issue — with this statement Kiltearn was reporting a crime.

If there turns out to be solid evidence that the Carillion directors have committed market crimes, it looks likely to follow there will also be evidence that they have committed fraud. It could even be a first prominent outing for “fraud by failing to disclose information”, a section of the Fraud Act 2006.

It will be interesting to see if the FCA has the skill and determination — and ultimately the evidence — to bring the directors to book. In the meantime, it is likely we will continue to see other victims of Carillion’s collapse emerge.”

The author is a barrister at 23 Essex Street

Source: The Times

Standard

Posted by

Posted on

6 Dec 2018

Posted under

Accountability, Austerity cuts, Inequality, Local Government Finance, Poverty, Universal Credit

“The Government Thinks No-one Will Notice Their Devastation Of Local Government – We Won’t Let That Happen”

“Unless this Government changes tune, elderly people will be lonelier, disabled people will get sicker, vulnerable children will fall through the net.

Despite unprecedented pressure and growing warnings, Councils are bracing themselves for the biggest cuts they’ve had to face since 2010. That is the prospect of the Tories’ local government settlement set to be announced.

The past eight years have seen councils forced to make cuts – but they’ve reached the end of the line, with so-called “non-essential services” being cut to the bone, leading to even deeper reductions to the services that we all rely on like street cleaning, libraries, and children’s centres, and to many of the preventative services that previously reduced the pressure on the NHS and police.

So severe and urgent is the crisis facing our councils, that the UN’s special Rapporteur on extreme poverty and human rights mentioned it in the opening paragraph of his recent report, saying that local authorities had been “gutted by a series of government policies”.

Despite all the warnings, the Government will announce a further 36 per cent cut to local government funding, the largest annual deduction in almost a decade.

Councils of all parties are facing a funding crisis with devastating effects on key public services – children at risk, disabled adults and vulnerable older people – and the services we all rely on, like clean streets, libraries, and children’s centres.

In one of the wealthiest countries in the world, this is an unacceptable position to be in. It is a national scandal that 1.4 million older people are now not getting the necessary help to carry out essential tasks such as washing themselves and dressing – up 20% over the last two years. The deterioration of social care alone will fundamentally damage the fabric of society as we know it. Huge amounts of money have been taken out of the system, despite obvious rising demand.

This is a crisis of the Tories’ creation, but as ever they are pushing the blame on to councils, communities, carers and families. Our councils were the first target when the coalition government came into power, losing 60p out of every £1 that the last Labour Government was spending on local government in 2010.

As a result of these cuts, the Tory-led Local Government Association is predicting that next year, councils will be facing a funding gap of £3.9 billion just to maintain current services, including £1.5 billion gap in adult social care funding.

Instead of showing the leadership that is needed in this crisis, the Government continues to put sticking plaster after sticking plaster, on what is now, an open wound.

Previous local government settlements under this Tory government have been unacceptable, unfair and unhelpful. Unless this Government changes tune, elderly people will be lonelier, disabled people will get sicker, vulnerable children will fall through the net, and our communities will become more unpleasant, unsafe and unattractive places to live. All councils are now reaching breaking point and short term sticking plasters will not keep the wolves from the door for much longer.

Andrew Gwynne is the Shadow Secretary of State, Communities & Local Government and Labour MP for Denton & Reddish”

https://www.huffingtonpost.co.uk/entry/local-council-cuts_uk_5c07d022e4b0a6e4ebda854a

Standard

Posted by

Posted on

4 Dec 2018

Posted under

Accountability, Asset sweating, Austerity cuts, Local Government Finance, Scrutiny

Comments

1 Comment

“The public service gamble: Councils borrowing billions to play the property market”

New report from the Bureau of Investigative Journalism:

“In the last two years, the number of councils investing in property has doubled. In the past financial year alone, councils spent a total of £1.8 billion on investment properties, a six-fold increase from 2013-14.

Of biggest concern is the scale of debts accrued by four of the smallest local authorities in England – including Spelthorne Borough Council in Surrey, which says it is “heavily reliant on investment income” to fund the services it provides.

Spelthorne has so far borrowed £1 billion despite having a net annual budget of just £22 million – this equates to 46 times its spending power. Three other councils, Woking, Runnymede and Eastleigh, have borrowed more than ten times their budget.

The Bureau has obtained details of the property investments made by more than 100 local authorities. Today we have published the details in full, providing unprecedented insight into how councils are becoming property speculators – with additional details on the millions paid to property and finance consultants.

Properties bought by councils include a BP business park in Sunbury purchased by Spelthorne for £392 million; a Tesco Extra bought for £38.8 million by East Hampshire District Council; branches of Waitrose and Travelodge acquired by Runnymede District Council for £21.7 million and a B&Q store that is now owned by Dover District Council. Other acquisitions range from farmland and gyms to a Royal Mail depot and a solar farm.

Councils say they have been forced to find new ways to generate income given the steep cuts in central government funding, which the National Audit Office calculates has fallen by half in real terms since 2010.

But experts warn that commercial property investments are volatile, and the fact that councils are financing them through borrowing makes them even riskier. If anything goes wrong, the consequences for taxpayers could be severe.

“This is a risk that local authorities have never been exposed to before”
“If you look at the most extreme examples, there are public services used by vulnerable people which are dependent on how well rental income in the property market is doing,” said Don Peebles, Head of Policy for the Chartered Institute of Public Finance and Accountancy (CIPFA), which oversees council finance and publishes the guidelines local authorities are supposed to follow.

“This is a risk that local authorities have never been exposed to before and you have to ask whether they are equipped to handle that risk.”

Warnings unheeded

The spending spree has been made possible by councils’ easy access to low interest loans from the Public Works Loans Board (PWLB), a national government body. There are no limits to how much councils can borrow and they do not have to prove they can afford it – the PWLB leaves this up to councillors to decide. … “

https://www.thebureauinvestigates.com/stories/2018-12-04/councils-borrow-billions-to-buy-real-estate

Standard

Posted by

Posted on

2 Dec 2018

Posted under

Accountability, Austerity cuts, Local Government Finance

“Councils appeal for cash injection to avoid ‘catastrophic collapse’ “

“Council leaders from some of Britain’s biggest cities are demanding an emergency cash injection to stop a “catastrophic collapse” of authorities that have faced the biggest cuts to their support.

Bosses from Manchester, Newcastle and Birmingham are among almost 80 Labour council leaders to write to James Brokenshire, the communities secretary, demanding that a forthcoming cut in funding of £1.3bn is cancelled “at an absolute minimum”.

It comes as several councils warn they are facing bankruptcy and one, Northamptonshire council, is effectively bailed out by the government after hitting a financial crisis. English councils face a funding gap of £5.8bn by 2020, according to the Local Government Association.

The plea from Labour councils comes ahead of this week’s financial settlement for local government. In their letter, they warn that by 2020, councils will have lost 60p out of every £1 they were given by central government in 2010.

“As leaders of councils representing millions of citizens, we are writing to make clear that you must use the settlement to truly end austerity in local government and immediately provide the funding we need to avoid catastrophic collapse in key council services,” they write.

“The most deprived areas of the country have been hit much harder than the richest areas – nine of the 10 most deprived councils in the country have seen cuts of almost three times the national average. After eight years of austerity, many councils have reached breaking point and council budgets are perilously close to collapse.”

“At an absolute minimum, you must use the funding settlement to cancel the planned further cut of £1.3bn to next year’s Revenue Support Grant. To blindly press on with further cuts at a time when local government is on the brink of collapse would be hugely irresponsible.”

A Ministry of Housing, Communities and Local Government spokesperson said: “We’ll be confirming local government funding for the financial year 2019/20 soon.

“Already we’ve committed to providing councils with £90.7bn over the next two years to help them meet the needs of their residents.

“In the budget we announced more than £1bn in extra funding for local government to address pressures on their services.”

https://www.theguardian.com/society/2018/dec/02/councils-appeal-cash-injection-avoid-catastrophic-collapse

Standard

Posted by

Posted on

29 Nov 2018

Posted under

Accountability, Local Government Finance, Scrutiny, Sleaze, Transparency

“Tory-run Northamptonshire county council bailed out by government”

Owl says: just as well it is a Tory council that’s allowed to break the rules!

“Permission granted to spend £60m cash received from sale of HQ.

The government has in effect bailed out Tory-run Northamptonshire county council after giving it unprecedented permission to spend up to £60m of cash received from the sale of its HQ on funding day-to-day services.

The highly unusual move – accounting rules normally prevent councils using capital receipts in this way – means the crisis-hit authority is likely to escape falling into insolvency for the third time in less than a year.

Ministers gave the go-ahead for the bailout after commissioners sent in to run the council issued a stark warning that without a cash injection, Northamptonshire would be unable to meet its legal duties to run core services such as social care.

Opposition councillors called it a political move to save ministers from having to directly bail out the council. Labour group leader Mick Scrimshaw said: “It is clearly politics. The Conservative government did not want the political embarrassment and for that reason they have been allowed to use these capital receipts.”

Northamptonshire declared itself effectively bankrupt in February after it realised it could not balance its books. It declared insolvency again in July after a review revealed it had understated the extent of its financial problems. It must make good a £70m deficit by the end of March to avoid insolvency for a third time.

Although the council has already set in train a draconian cuts programme for the current financial year to try and overturn the £70m budget shortfall, the commissioners said this alone would not be enough to prevent insolvency.

In a report to the communities secretary, James Brokenshire, the commissioners Brian Roberts and Tony McArdle said the “extraordinary” scale of cuts to services needed in one year to fill the funding gap would breach councils’ legal obligations.

The report said: “Considered against the concomitant need to maintain the integrity of critical public service delivery, it is a challenge that is beyond being met in a single year. We are compelled to the view that the finding of an alternative mechanism for addressing this legacy will be unavoidable.”

The report notes that the council has been dysfunctional and that morale is poor among “long suffering” staff. It also criticises its “lack of credible leadership and direction over many years”, though it notes there have been some improvements in culture and management over the past few months.

The council’s leader, Matt Golby, said: “I am delighted the commissioners have been successful in their request for a capital dispensation. This will enable us to use our own resources to tackle the £35m deficit from 2017-18 and replenish our reserves to put us on a sustainable financial position.” The council is hoping to save a further a £35m this year from its cuts programme.

Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy, said the move was effectively a bail out for Northamptonshire. Although it went against accepted accountancy rules and practice, it could be justified on the grounds that the council was being abolished.

Northamptonshire is to be replaced by two unitary authorities under plans approved by ministers earlier this year after the inspectors’ report concluded that the council’s management and financial problems were so deep-rooted it could not be easily turned around.

Enabling the council to convert some of the £60m it received from the fire sale of its new state-of-the-art HQ earlier this year – just months after it moved in – will allow it to clear an underlying £35m revenue deficit, and removes the need for ministers to pump money into the council directly.

Ironically, a highly critical inspectors’ report in March was scathing of the council’s preparedness to compromise generally accepted accounting principles to present the councils’ finances in a better light. Earlier this month a task force was sent into oversee its failing child protection services.

Brokenshire said: “Clearly, the situation in Northamptonshire is very serious. I am grateful to the commissioners for uncovering the council’s true financial position and the robust steps they have taken to improve its financial management and governance.”

https://www.theguardian.com/society/2018/nov/29/tory-run-northamptonshire-county-council-bailed-out-by-government

Standard

Posted by

Posted on

21 Nov 2018

Posted under

Accountability, Audit (EDDC), Grant Thornton, Local Government Finance

Company auditing EDDC under investigation for “Patisserie Valerie” black hole

“Accountancy firm Grant Thornton is under investigation for its role as the auditor of Patisserie Valerie, the bakery chain which nearly collapsed last month after it discovered a £40m black hole in its accounts.

The Financial Reporting Council (FRC) said it was investigating the audits of the financial statements of Patisserie Holdings – the chain’s parent company – for the years ended 30 September 2015, 2016 and 2017.

The accountancy watchdog said it was also investigating the “preparation and approval” of financial statements by Chris Marsh, the former finance director of Patisserie Holdings who was suspended from the company when the black hole was found in October. Marsh was subsequently arrested on suspicion of fraud and bailed, before resigning from the company.

A spokesman for the FRC said it had moved quickly to consider whether the case required an investigation and that this was just the beginning of a process which could take up to two years to complete.

“The important thing is to do a thorough job and get the right decisions. Investigators could have thousands of emails and different pieces of paper to examine, so it’s not something that can be done quickly,” he said.

Once the FRC has completed the investigation, it will decide whether it has a case against Grant Thornton and Marsh to be presented to a tribunal, which could ultimately lead to a fine or, in the case of individuals, banning them from practising as accountants.

A spokesman for Grant Thornton said: “I can confirm we have received a letter from the Financial Reporting Council informing us of its decision to commence an investigation, and we will, of course, fully cooperate in this matter.” …

https://www.theguardian.com/business/2018/nov/21/patisserie-valerie-accountants-face-black-hole-investigation

Standard

Posted by

Posted on

19 Nov 2018

Posted under

Accountability, Conflict of interest, EDDC, Local Government Finance, Scrutiny, Transparency

“Huge amount of taxpayers’ money’ used for gagging orders at East Devon council”

Owl says: 10 people with some very interesting stories we will never know ….. and which will never be scrutinised.

“Figures obtained using a Freedom of Information request show that East Devon District Council has spent more than £200,000 on gagging orders over the past four years.

A total of £205,074 has been spent by East Devon District Council on gagging orders for former members of staff since 2014, according to figures obtained by the Journal.

The information, obtained through a Freedom of Information request, reveals 10 settlement agreements, or gagging orders, were agreed by EDDC between 2014 and October 31, 2018.

Gagging orders are often referred to as confidentiality clauses and are usually agreed when an employee leaves an employer due to redundancy, a work place problem or a disagreement.

A number of opposition councillors have said they are shocked by the amount of money spent on gagging orders.

Independent group leader at EDDC, Ben Ingham, said: “When any one of us is thinking about how we can afford to pay our latest council tax bill, I do not believe we expect one penny to be spent on gagging orders.

“If we did, non payment may become a real expectancy. As Leader of EDDC Opposition, I can tell you at no time has the current leadership contacted me to discuss this issue at all.

“This is not acceptable, but to me not surprising. Merely another piece of evidence against an exhausted regime.”

A spokeswoman for EDDC said: “Settlement agreements are legally binding contracts that waive an individual’s rights to make a claim covered by the agreement to an employment tribunal or court.

“The agreement must be in writing. They usually include some form of payment to the employee and may often include a reference. They are voluntary and have therefore been entered into on that basis by the individuals.

“Part of the agreement is that they must seek independent advice from an employment lawyer.”

Exmouth district councillor Megan Armstrong said: “I am extremely concerned at the huge amount of taxpayers’ money, which should have been used to provide services for the people of East Devon, which has been spent on gagging orders.

“The council has a duty to be open and transparent; yet over £200,000 – a vast sum – has been spent on suppressing information. Exactly what is the Conservative administration trying to hide?”

http://www.exmouthjournal.co.uk/news/gagging-orders-at-east-devon-district-council-1-5785868

Standard

Posted by

Posted on

16 Nov 2018

Posted under

Business Rates, Local Government Finance

Councils face £500m bill after bank cash machine business rates ruling

“Councils face an estimated combined bill of up to £500m to refund supermarkets after the Court of Appeal ruled that cash machines should not be assessed separately for business rates.

Retailers Tesco, Sainsbury’s and The Cooperative Group, along with ATM operator Cardtronics Europe have won their challenge to a 2010 decision by the Valuation Office Agency to create separate entries for the sites of supermarket cash machines.

Property consultancy firm Altus estimates that the backdated bill which businesses will be due via rebates at £382m, while property consultancy Colliers put the figure at £496m. …”

http://www.room151.co.uk/resources/councils-face-500m-bill-after-atm-business-rates-ruling/

Standard

Posted by

Posted on

15 Nov 2018

Posted under

Accountability, Austerity cuts, DCC, Economy, Local Government Finance

DCC overspend jumps to nearly £10 million

“Phil Norrey, chief executive of Devon County Council, said he wanted to reassure councillors, staff and taxpayers about the impact of the savings strategy, saying it was ‘tight and good housekeeping’.

He said: “We are making sure that we have our house in order rather than panicking and walking over a cliff and the range of measures we are implementing we have looked at very carefully.

“There are pressures across the country and after around eight or nine years of extreme pressures on budgets, it has to come a point when we reach the end of the road on spending, and that will come in the next two or three years.”

https://www.northdevongazette.co.uk/news/devon-10m-overspend-2018-1-5782070