News Round-up: Right to Buy, investment freedoms, outsourcing surge, tourist tax and money market funds
0MPs: ‘Councils should not fund Right to Buy extension’
The communities and local government select committee says councils should not be forced to pay for the government’s extension of the Right to Buy to housing association tenants. In a report released this week, the committee said: “We believe that public policy should usually be funded by central Government, rather than through a levy on local authorities.” It added that areas which have the fewest council homes are likely to be those in which the highest proportion of homes are sold.
Scottish councils sign up to cuts package
All 32 Scottish councils have accepted cuts imposed to their budgets by the Scottish government. The councils all responded before a deadline set by finance minister John Swinney. However, David O’Neill, president of the Convention of Scottish Local Authorities, said: “No matter how they try and package it up, the financial settlement offered by Mr Swinney to Scottish local government remains both unfair and more importantly undeliverable without an unacceptable level of cuts to services and staffing.”
Corbyn backs greater council finance powers
Councils should become “public entrepreneurs” with more freedoms to borrow to fund investment, according to Labour leader Jeremy Corbyn. The Labour party leader, speaking to the Association of Labour Councillors, said that he supported the idea that councils could take control of public utilities in their areas. He said: “After a generation of forced privatisation and outsourcing of public services, the evidence has built up that handing services over to private companies routinely delivers poorer quality, higher cost, worse terms and conditions for the workforce, less transparency and less say for the public.”
Local government outsourcing surges
The local authority outsourcing market saw substantial growth in 2015, with the total value of contracts signed by councils up 23% on the previous year. According to the Arvato UK Outsourcing Index, the average contract value rose by 30% to £37.8m while average contract lengths rose by 29% to 66 months. New agreements accounted for 55% of deals signed last year, up from 38% in 2014.
Edinburgh set for ‘tourist tax’
City of Edinburgh Council is looking to introduce a “tourism tax” to raise up to £15m a year. According to reports, Scottish ministers are set to agree the move as part of a £1bn city deal. Council officials said that guests in larger hotels could pay more than those staying in smaller ones and that the charge could vary depending on demand.
Warrington to create property vehicle
Warrington Borough Council is set to approve plans to create a limited liability partnership to manage its £250m property portfolio. The main purpose of the vehicle would be to attract private investment and provide the council with revenue income or capital receipts from the development of surplus land and builidngs.
Councils buy back Right to Buy homes
Councils have spent £27.3m buying back homes they were forced to sell under the Right to Buy policy, according to new research. Freedom of Information requests by trade magazine Inside Housing found that 66 councils spent the cash buying properties back at their full market value. Experts said that some councils saw the practice as a cost effective way of increasing stock within the three year deadline to spend RTB receipts.
Fitch identifies money market fund issues
Ratings agency Fitch says that European money market funds are suffering from a material decline in short-term supply from banks. It said: “The shrinking short-term bank supply is a consequence of the banking regulations and their liquidity requirements, which are discouraging banks from taking on short-term deposits and repo. The phenomenon is particularly acute at year-end and, since 2015, also at quarter-end, when banks report their liquidity coverage ratios.”
