News Roundup: Adult care costs, Mental health spending, Redundancy payments…

Adult social care faces funding gap
Adult social care spending faces a black hole of £4.3bn by 2020, according to new figures released by the Local Government Association and Association of Directors of Adult Social Services. The new data showed that over the past year, councils were forced to divert £900m of funding from other budgets to maintain current levels of spending. LGA chairman David Sparks said: “The Government should not be knowingly backing councils into a corner where they have to make impossible decisions about cutting other important services just to continue to manage caring and supporting our most vulnerable.”

Councils “skimp on mental health spending”
Some councils are not planning any spending on mental health this year, according to a freedom of information request by charity Mind. The mental health body said that councils are spending much more on preventing physical health problems each year. It argued that mental health problems cost the country an estimated £100 billion each year through lost working days, benefits, lost tax revenue and the cost of treatment, and account for 23 per cent of the total burden of disease in the UK

Plans to recoup redundancy payments published
The government has published legislative plans – outlined in the Budget – on how it will claw back some or all of redundancy payments from public sector workers earning over £100,000 if they take a new job in the same part of the public sector within less than a year. Both cash and pension top ups will be recoverable – except for those reformed public service pension schemes the right to a full pension is set out in scheme rules. Priti Patel, exchequer secretary to the Treasury, said: “It’s not fair that hardworking taxpayers were forking out for redundancy payments for people who then went straight back in to another public sector job.”

Funding structures “prevent housebuilding”
Local authority funding mechanisms are stymieing housing development, according to the Institute for Government. A study it released this week found that new development often implies additional costs through infrastructure and public services, while increases in revenues are more limited. “Local authorities themselves have few fiscal incentives to allow more development,” the report noted.

CIPFA to explore Islamic funding for councils
The Chartered Institute of Public Finance and Accountancy, is to examine how councils and other public bodies could make use of Islamic finance as a borrowing source. The move comes after the body held a round table event to explore the issue with local government finance officers, the banking sector and specialists in Islamic finance. CIPFA has now committed to explore products which could be tailored to meet the needs of local authorities and other public bodies.

Labour promises limited lifting of HRA caps
Councils presenting a strong business case and investment plan would see the cap on their borrowing for housebuilding lifted under any future Labour government. Shadow local government ministers have written to councils endorsing the move which was outlined in the party’s recent review of housing by Sir Michael Lyons. Councils would also be given powers to fine housebuilders which did not build out planning permissions.

Liverpool joint venture criticised over accounting
Auditors have raised concerns over record keeping and accounting at Liverpool City Council’s joint venture with BT to provide ICT and other services. A report by KPMG said that they faced “significant limitations” on information available to them. Liverpool City Council has agreed plans to scrap the deal to save around £10m a year.

Council company wins homes business
Norse Commercial Services and Great Yarmouth Borough Council have formed a new Joint Venture Company to manage and maintain the council’s community housing stock. The company,  a subsidiary of Norse Group Limited which is a company controlled by Norfolk County Council, will be responsible for asset management and building maintenance on Great Yarmouth’s 6,000 council homes. The 10-year agreement is initially worth around £6 million a year, and is expected to rise over the coming years.

Alcentra wins £80m Essex property mandate
Essex Pension Fund has appointed global asset management firm Alcentra as a manager for an illiquid real estate debt strategy. Alcentra, a subsidiary of Bank of New York Mellon will invest between £80m and £100m  – around 2% of the fund’s overall assets – in a pooled illiquid debt fund. The long-only debt portfolio will include direct corporate lending, real estate lending and distressed debt.