News Roundup: MPs target housing borrowing cap, living wage challenge, Lambeth lends £300m, GMPF homes
0Treasury committee calls for housing borrowing cap removal
Parliament’s Treasury select committee has backed calls for a complete removal of the Housing Revenue Account debt cap. In a report on the Autumn 2017 budget, the committee welcomed chancellor Philip Hammond’s decision to raise the cap by £1bn. However, it said that the bidding process proposed by the Treasury to allocate this money may not direct resources to areas of greatest housing need. It said: “Raising the cap would have no material impact on the national debt, but could result in a substantial increase in the supply of housing, allowing local authorities to determine the level of additional housing needed in their area.”
Living wage causes headaches for Greenwich company
A standalone company set up by Royal Borough of Greenwich has lost £1.3m of contracts due to a requirement to pay the London Living Wage, according to a council report. Officers at the council said “a good number of catering, cleaning and ICT contracts have been lost as clients increasingly struggle to meet the annual wage increases due to budget cuts, etc.” Estimates show that the company will require almost £1.5m to fund living wage increases over the next five years. A report to councillors said: “A number of factors outside the control of the company continue to weigh heavily on its poise to maintain a healthy financial position for the foreseeable future. These factors not only impact on the company’s ability to compete on a level playing field, it also compels it to significantly reduce, and in some cases completely forego its profit margins in order to retain existing clients.” Despite this, it said that the future financial prospects are encouraging, as long as it is able to pursue “a number of planned expansion opportunities with relatively high margins”.
CIPFA warns over health and social care plans
Sustainability and transformation plans (STPs) being drawn up between NHS bodies and local government for health and care provision in England are being undermined by financial pressures, according to the Chartered Institute of Public Finance and Accountancy (CIPFA). In a submission to the Health Select Committee, CIPFA said that short-term financial pressures mean STPs are not being assessed for credibility. Institute chief executive Rob Whiteman said: “To ensure STPs can reach their full potential, it is important that they are supported by a greater level of resources and that their plans are realistic. Otherwise, the transformation agenda will be jeopardised and services will continue to be at risk.”
Appointments at LGPS Central
LGPS Central has announced four senior appointments to its investment committee. The pooling body has appointed Duncan Sandford as interim deputy chief investment officer, Mike Hardwick as investment director for infrastructure and property, and Omar Ghafur as investment director for private equity. In addition, Michael Marshall has been appointed as director for responsible investment and engagement. The four join David Evans, investment director for passive equities, who was appointed in December. The company also announced last week that it has received regulatory authorisation from the Financial Conduct Authority and would look to launch its first three funds — covering UK passive equities, global passive ex-UK equities, and global dividend growth equities — by April.
Brunel outlines asset transfer timetable
Brunel Pension Partnership has announced that it intends to complete the transfer of all £28bn of assets from its member funds by the end of March 2020. In a presentation, the LGPS pool said that it will create up to 25 portfolios covering bonds, equities and alternatives. It said that each portfolio would take between two and six months to transfer to the new portfolios. The pooling process will break even by 2023, with a target of £550m in fee savings by 2036, it said.
Pension fund invests in build to rent homes
Greater Manchester Pension Fund has joined a funding joint venture seeking returns from 683 build to rent properties. The fund has teamed up with NatWest, Lloyds Bank Commercial Real Estate and Greater Manchester Housing Fund to fund the £247m Affinity Living scheme in Manchester city centre.
Southwark pension fund opts for low carbon fund
Southwark Council has voted to move £150m — 10% of its pension fund assets — into a low carbon fund. The authority’s pensions advisory panel agreed to move the cash into the Blackrock Low Carbon Target Equity Fund, joining Avon’s LGPS fund, which joined in December. Panel chair, councillor Fiona Colley, said: “This was a decision based not just on our political and ethical concerns, but primarily on our belief that climate change and significant investments in fossil fuels present a long-term financial risk to our fund”.
Lambeth lends £300m to housing company
London Borough of Lambeth has agreed plans to lend £300m to its new standalone housing company. The council’s cabinet approved the Homes for Lambeth business plan, which outlines plans to build 300 homes initially. A statement from the council said: “Spending restrictions and the government’s housing policies mean that we cannot deliver these homes directly.”
Views sought on LGPS data services framework
Norfolk County Council has announced plans to create a multi-provider framework agreement for the provision of member data services to LGPS funds. It has issued a prior information notice seeking to consult on the framework, which it says would include identity verification, mortality screening, address tracing and correction services. The fund will hold a concept viability event on 6 February in London.
