£16.5bn black hole, Adult social care funding, Watford waste, LAMS, MMF exposures, SIBs
‘Day in the sun’ for Social Impact Bonds
Consultant KPMG says that public bodies in the UK should use Social Impact Bonds to fund innovation. Commenting as the company launched a guide to social impact bonds director Caroline Haynes said: “I foresee Social Impact Bonds having their day in the sun during the coming months for projects that can meet [the] criteria and are innovative and demonstrably different.”
LGA predicts £16.5bn black hole
Councils are on their way to failing their communities if cuts to local government finance continue, according to new figures from the Local Government Association. By 2019/20 there will be a £16.5bn black hole in finances (the difference between projected funding and the predicted cost of providing today’s level of service). “Under this scenario almost all of councils’ money would have to be spent on explicit statutory responsibilities like social services, waste collection and concessionary travel,” said the LGA, “meaning that the money available for all other services, such as libraries, road maintenance and leisure facilities would have been cut by 90 per cent.”
Adult social care system in ‘danger of collapse’: LGA
The LGA also this week commented on a survey from the Association of Directors of Adult Social Services, saying that the care system could be “in very real danger of collapse”. The Association’s annual survey is entitled Social Care Funding: A Bleak Outlook is getting bleaker. The LGA said that taking a further £800m out of the care system would have a severe impact on support for the elderly and disabled.
And following the announcement in the Queen’s Speech that the Local Audit Bill would seek to include increases in non-council levies in the calculation of council tax referendum limits, the LGA also said that such a move would cause a new threat to funding for essential services. “The existing 33% cut in funding from central government, combined with the cap on council tax increases and restrictions on raising income in other ways has left local government with few options in dealing with the rapidly rising cost of adult social care,” said LGA chair Sir Merrick Cockell. “This move would place a further limit on those options.”
Watford outsources waste
Watford Council has awarded a £35m, seven year contract to Veolia Environmental Services to outsource its waste and recycling collections. The contract should save the council £730,000 a year and marks the first time such services have been outsourced in the area. The deal will also see Veolia take charge of street cleaning, grounds maintenance services, commercial waste and the operation of a call centre for residents. The company already provides services in the nearby areas of Lambeth, Richmond, Bromley, Croydon and Kingston.
LAMS for the Highlands
Highland Council has become the first authority in Scotland to launch a Local Authority Mortgage Scheme. It will guarantee loans for up to 20% of mortgage value for first time buyers, using £1m from its cash reserves.
MMFs exposures to UK banks at record low
US Money Market Funds (MMFs) exposure to UK banks fell to a new low of 4.3% of assets under management for the end of March according to Fitch Ratings. The exposure represents a 16% decline over the last nine months. Said Fitch: “We do not expect MMF flows to UK banks to dip significantly below this level as the banks need to maintain some access to this form of short term funding as part of their strategy to diversify funding sources.”