Next year ‘could see first failed council’
2016 could see the first council move into special measures on financial grounds, according to accountancy firm Grant Thornton. A report into the financial health of local authorities found that, with large funding deficits still looming, service reduction or even failure is “becoming a distinct possibility”. But it added: “Our evidence suggests that the large majority of councils will continue to meet their legal duty to deliver a balanced budget and the number moving into deficit by 2020 will be very small.” The research found that the majority of chief financial officers conceded the possibility of reaching a tipping point, with particular concern among councils in the South West.
Pension fund in South West pool bid
Oxfordshire’s Pension Fund is bidding to join an investment pool being created by South West funds, according to reports. Local Government Chronicle said that the fund had also considered joining pools in the South East and Midlands. In October, seven South West funds announced they were working on plans for a pool, but at £19bn-20bn in combined assets, they need more members to meet government expectations of scale.
Authorities warned over value for money
Seventeen councils have been issued with qualified audit conclusions on value for money in their 2014/15 accounts, a watchdog has announced.
Public Sector Audit Appointments, which manages audit contracts following the abolition of the Audit Commission, said that no councils have so far had their accounts qualified. But, with 345 of 356 councils assessed, PSAA said questions on value for money were raised in 4% of cases.
Pension fund chief slams proposed divestment rules
Kieran Quinn, the chairman of the Greater Manchester Pension Fund, has criticised government moves to restrict LGPS funds’ ability to use investment decisions for political ends. In October, Conservative aides promised new rules to stop politically-motivated boycott and divestment campaigns against UK defence firms and Israeli companies. But quoted in the Financial Times, Labour party councillor Kieran Quinn said: “[The government] talks about freeing [local pension schemes] to be more autonomous, and then they slap handcuffs on us.”
North West authorities to receive flood relief funding
Councils affected by flooding caused by Storm Desmond will be compensated by central government. Environment secretary Liz Truss announced that the government has opened the Bellwin scheme for local authorities affected by flood waters, and that 100% of eligible costs above the threshold will be met by the government. Communities secretary Greg Clark also announced business rates and council tax relief for the affected communities.
Building societies ratings ‘stable’
Low risk business models and limited opportunities for diversification mean that the 2016 outlook for UK building society ratings is stable according to Fitch Ratings. In a note released this week, it said: “We maintain a stable outlook for the sector, underpinned by the supportive operating environment and reflecting the low risk, well-collateralised asset profile and better prospects for profitability.”