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  • Slough welcomes commitment that Office for Local Government ‘will not be a burden’

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News round-up: MMFs and Brexit, council spending plea, housing investment fund, treasury manager sought for GLA

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  • by Colin Marrs
  • in 151 News
  • — 30 Jun, 2016

Brexit: Fitch sees challenges for money market funds
Sterling denominated money market funds could face “material mid-term” challenges, according to the ratings agency Fitch.

In a statement this week Fitch said the challenge would come in terms of regulation and a shortage  of high-quality short-term debt. The agency added that near-term funds remain stable with “no material referendum-related flows following the vote”.

MMFs have proven increasingly popular with local authorities in recent years. According to Department for Communities and Local Government figures 2012-13 saw UK councils invested £3.6bn in MMFs with the value rising to £5.9bn in 2015-16.

Fitch also warned that the vast majority of MMFs are domiciled in Luxembourg or Ireland, problematic if the UK’s withdrawal from the EU brings about the end of “passporting” – EU legislation that allows entry to British markets.

Brexit: Corbyn calls for increased council funding
Jeremy Corbyn has said that the government must increase funding to local authorities following the vote to leave the European Union. Speaking on BBC News, he said: “‘My point throughout the campaign was that we have to have an alternative to austerity. We have to have greater resources going into areas where they have been huge changes. I strongly called for an introduction of a migrant impact fund, as well as proper funding of local authorities.”

Warrington behind housing association investment fund
Warrington Borough Council is planning to launch an investment fund to allow councils to invest in housing associations. According to a report in Inside Housing, the council’s corporate finance manager Danny Mather said the fund would allow councils to make a return over a period of up to five years. The council hopes to set the fund up by the autumn.

GLA seeks manager for mortgage backed securities
The Greater London Authority has published a tender seeking a treasury manager for corporate bonds and other securities including mortgage backed securities. The targeted sum in the medium term is around £150m, with separate sub-funds set to be created “to designate group and individually owned assets and for those under external fund managers”. The GLA said that the fund was expected to grow as more participants join its shared service arrangements.

Social care precept leads to 3.1% council tax rise
The average band D council tax set by English councils in 2016/17 will be £1,530, up 3.1% on last year, according to figures from the Department for Communities and Local Government. Stripping out the social care precept, the increase would be 1.6%. The department said that 144 out of 152 adult social care authorities will use some or all of the precept, which allows them to add an extra 2% to bills, on top of the 2% cap above which a referendum would be required.

MPs criticise devolution transparency
Devolution deals in England lack proper accountability arrangements for taxpayers, according to Parliament’s Public Accounts Committee. A new report released says that Local Enterprise Partnerships lack the ability to fulfil their agreed role in the devolution process. It adds that LEPs “are not meeting basic standards of governance and transparency, such as disclosing conflicts of interest to the public”.

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  • 151 BRIEFS – WHAT’s NEW?

    • Homes England agrees strategic partnership with two authorities
    • Soaring inflation and pay pressures to add £3.6bn to council budgets
    • Underfunded social care reforms could ‘exacerbate workforce pressures’
    • Nottingham City Council leader labels proposed intervention as ‘disappointing’
    • Government preparing to intervene in Nottingham City Council
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