News Roundup: Business rates and ratings, LGPS fees and value, hedge funds, Gloucestershire’s pooling plans

Moody’s voices business rate worries
Ratings agency Moody’s claims that devolving business rate income to councils could “fragment” the creditworthiness of local authorities. In a note on government’s announcement that councils will be able to keep 100% of rises in business rates income, the agency said: “The transfer of powers over business rates to the local authorities marks a move towards localisation of revenues in what has traditionally been one of the most centralised systems in Europe. This change gives local authorities greater financial autonomy, and makes their credit profile more dependent on their own characteristics rather than on their links to the sovereign.”

Wild variation in LGPS investment management fees
LGPS funds paid a huge range of investment management fees during the last financial year, according to new figures. An LGPS Advisory Board secretariat’s analysis of annual reports from 2014/15 showed that fees ranged from two basis points to 86 basis points across the scheme. The lowest fees paid out were £50,000 and the highest was £81.2m, in a study covering 36 funds.

Newham creates ‘fund of hedge funds’
London Borough of Newham has created a platform for liquid diversified alternatives in a move it claims could save £1m per year. The council’s head of financial control Roy Nolan writes that £130m has already been invested into six hedge funds, with plans for another £160m. Writing for Local Government Chronicle, he said other LGPS funds could join the platform in a move consistent with the government’s drive for LGPS pooling.

LGPS value breaks £200bn barrier
The market value of LGPS funds at end of March 2015 was more than £200bn, up 13% on the previous year, according to data from the Department for Communities and Local Government. Income during the year was £15.2bn, an increase of £1bn on 2013/14. Expenditure on benefits rose by £400m to £8.3bn, an increase 5.4%. During the year, employers’ contributions totalled £6.9bn and employees’ contributions to the scheme were £1.9bn.

Rates decision scuppers pooling arrangements
A business rates pooling arrangement in Gloucestershire has been sunk after Virgin Media won a £10m rebate. The company successfully challenged the rateable value charged by Tewkesbury Borough Council for its local fibre optic network. The decision left councils across Gloucestershire on the hook for almost half of the cash, and it has been reported that Tewkesbury will now leave the pool.