News Roundup; Exit payments, new lending venture, LGPS powers, DCLG cuts
0Treasury to ignore exit cap opposition
The Treasury will press ahead with a £95,000 cap on exit payments for public sector staff due to a lack of alternatives, it has said. A consultation on the issue revealed widespread opposition to the proposal. However, a document summarising responses said: “Given there were few responses suggesting an alternative cap level, the government will pursue a £95,000 cap on payouts in legislation as it believes this best meets the policy intention of ending six-figure exit payments in the public sector.” Individual schemes will have the flexibility to set a lower limit where it is more appropriate to do so.
Councils make £2m Funding Circle contribution
Two Suffolk councils have launched a £2m partnership with online lending firm Funding Circle. Babergh and Mid Suffolk Councils will lend in tranches of around £100k each, with about half of each funding round going to help local businesses across Essex, Norfolk and Suffolk. The contribution is understood to be the largest by local authorities through the site so far.
LGPS pool applies for greater powers
An investment pool created by London Pensions Fund Authority and the Lancashire County Pension Fund has applied for regulatory permission to run the assets of third-party pension schemes. The move opens the way for other LGPS funds to join the partnership as part of the pooling arrangements being forced on the sector by central government.
DCLG agrees budget cuts
The Department for Communities and Local Government has agreed a 30% cut to its budget over the next four years, according to chancellor George Osborne. The department is one of the first to reach agreement with the Treasury in advance of the forthcoming Spending Review. Lord Porter, chairman of the Local Government Association, said: “Today’s announcement on departmental spending settlements covers DCLG’s own budget and not local government funding. We hope this is an early indication that DCLG is leading by example by looking at ways to absorb some of the funding cuts it will need to make as part of the Spending Review rather than passing them onto local government.”
Ratings agency confident over housing associations
Ratings agency Fitch has affirmed the ratings of two housing associations at A+ with stable outlooks and short term IDRs at F1, despite fears that government policy moves could undermine the sector. Fitch said: “The affirmations reflect Fitch’s view that although these entities will see a significant reduction in turnover over the next four years compared with the previous business plans as a result of the rent cut announced in the summer budget, they should be able to compensate for this by cost reductions and efficiency savings as well as increases in other (commercial) activities in order to continue reporting a steady performance.”
