News Roundup: MP presses councils on reserves, Carillion contract woes, Land sale rules
0MP presses councils on reserves
Bob Blackman, Conservative MP and member of the communities and local government select committee, told Radio 4 that councils need to “come clean” on the amount of reserves they are not using.
Speaking on The World at One on Thursday, he said: “The criticism that will always be used is that reserves can only be spent once, which is equally true but there is no reason why, given the financial challenges local authorities face, they can’t draw on some of those reserves and reduce them marginally down to a reasonable rate.”
Responding on the programme Paul Carter, chairman of the County Councils Network and leader of Kent County Council, said: “There is a lot of rubbish talked about reserves held by local government, if you look at the level of reserves compared to the amount of risks that we carry, the amount of capital borrowing we carry to build roads and schools. We have a borrowing limit of more than £1bn at Kent County Council and our revenue reserves, with a £1bn revenue budget as well, are in the order of £28m to £30m pounds. That would only run the council for a few weeks if we had serious and significant problems.”
Blackman also called for a review of senior pay in councils. “Is it right that people who are very senior in public service in LAs should be paid very large sums of money, indeed, particularly when we are looking at a period of difficulty in funding local authorities?” he asked.
Councils raise Carillion contract cost worries
A number of councils have raised concerns about being charged substantial increases in contract fees by the official receiver for Carillion.
A statement from the LGA said: “We raised this issue with central government who have advised that all customers will be required to pay more than the contract price with Carillion to reflect the direct cost for ongoing provision of service, including support functions.
“This additional cost is estimated to be around 20%, although it is likely to increase as contracts are re-let or taken in house. We have advised councils that a pacey transition to new arrangements is likely to be the best way to minimise exposure to escalating costs.”
Government changes land sale rules
Planning permissions on council land will still be valid if the land is sold to another owner, under new government proposals.
Under existing rules, such permissions on land owned by two-tier authorities are considered null once sold on. However, the government says it will change the rules in order to help councils benefit from the uplift in value from the granting of planning permission.
A government statement said: “The government considers that all local authorities should be placed on the same footing in terms of handling their own development proposals.”
Fears rise for council finances
Eight out of 10 councils fear for their financial sustainability, according to a new report by the Local Government Information Unit. Responding to the findings, Lord Porter, Local Government Association chairman, said: “Some councils continue to be pushed perilously close to the financial edge. Many will have to make tough decisions about which services have to be scaled back or stopped altogether to plug funding gaps. “Extra council tax raising powers will helpfully give some councils the option to raise some extra income but will not bring in enough to completely ease the financial pressure they face. This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.”
Rob Whiteman, chief executive CIPFA
CIPFA calls for greater clarity on business rate retention
Councils need more detail on new responsibilities passed to councils under business rates retention, according to CIPFA chief executive Rob Whiteman.
Speaking to the communities and local government select committee this week, he said: “It is good that there is certainty that it will happen, but there is uncertainty over how it will happen. So, in terms of councils financial plans, there isn’t enough certainty yet to set out to members the difference that it will make in the medium term and to make different plans accordingly.”
Gateshead goes speculative on office block
Gateshead Council has submitted a planning application for a speculatively-built 5,000m² office block. Councillor Martin Gannon, leader of Gateshead Council, backs the project and explained: “At a time when there is limited office space available, and the Gateshead economy is going from strength to strength, the decision to build the first speculative office development in the borough reflects our confidence in the area.”
GLA invests in social impact project
Social impact investment firm Resonance has received £15m investment from the Greater London Authority to purchase affordable housing for the homeless in the capital.
The GLA’s investment is going into the Real Lettings Property Fund 2, launched in January 2017 when the London boroughs of Croydon, Lambeth and Westminster committed a total of £45m.
The target size for this fund is at least £100m, potentially providing around 330 affordable one, or two, bedroom flats in the Greater London area.
James Murray, deputy mayor for housing and residential development, said: “One person being homeless in London is one too many, and this project offers us an important chance to provide an affordable, stable home for those who need it, as well as easing the demand on local authorities.”
