News Roundup: Strathclyde’s equities, Welsh LGPS fees, PWLB loans, Moody’s EU fears, HRA accounting
0Strathclyde shifts equities emphasis
Strathclyde Pension Fund is looking to boost its investment yields by moving away from equity holdings. The fund is considering a range of options which would see its holdings in equities fall from the current 70% in favour of investments including hedge funds, absolute return strategies, real estate debt, direct lending, non-sterling and emerging market bonds, property, social housing, infrastructure debt, equity and farmland. Strathclyde is the UK’s largest local government pension scheme with £14.9bn of assets.
Welsh council rejects LGPS fee claims
A Welsh council has become the latest to reject claims that it is overpaying its pension fund manager. Swansea Council was named in a Financial Times article last month which claimed that local government pension schemes could be squandering millions on fees for advisors. A council spokesman said that high fees paid in 2013/14 reflected exceptional performance, and that in other years, much lower fees had been paid.
PWLB loan details revealed
The government’s Debt Management Office has released details of all loans taken out by councils from the Public Works Loan Board. Accounting practice requires all local authorities to disclose the value of their portfolios. Spreadsheets relating to major and minor authorities in England plus councils in Scotland and Wales can be viewed here.
Moody’s outlines EU referendum fears
Uncertainty over the outcome of the forthcoming UK general election is not affecting the sovereign’s credit profile, according to ratings agency Moody’s. However, it said that an increased likelihood of the UK leaving the EU could result in negative rating pressures over the medium-term. “As the EU accounts for around 50% of the UK’s goods and 36% of its services exports, a withdrawal from the EU could have negative implications for trade and investment, both ahead of the event and following it,” the report said.
DCLG looks to amend HRA accounting rules
Plans to protect housing revenue accounts from depreciation and impairment losses are to be placed under a consultation being prepared by DCLG, according to reports. It is understood that the department does not want councils to be deterred from building new homes due to accountancy rules. Prior to the HRA self-financing regime, introduced in 2012, impairment charges were written off as a ‘technical anomaly’.
Joint services legal company gets license
A standalone company providing legal services has been launched by two councils after receiving an alternative business structure license from the Solicitors Regulation Authority. LGSS Law will take on 85 staff from the existing shared legal team created by Cambridgeshire and Northamptonshire County Councils. It follows in the footsteps of two similar companies, one created by councils in Buckinghamshire and one by Harrow and Barnet councils in London.
Greater Manchester ‘could reject’ health devolution deal
Councils in Greater Manchester could abandon the recent deal with central government to receive devolved health spending, if they are unhappy with the sums they receive in the next comprehensive spending review, according to reports. In an interview with Local Government Chronicle, Sir Richard Leese, leader of Manchester City Council, said: “The partners, all of them, want to be satisfied that what they are entering into…they are adequately covered against risks.”
Taunton fails to make expected savings from shared services deal
An outsourced shared services contract covering finance services has failed to deliver anticipated savings, according to one of the councils involved. Taunton Deane Borough Council said it originally hoped to save £10m through the Southwest One arrangements with supplier IBM, Somerset County Council and Avon & Somerset Police. However, only £3m of savings have so far been identified. The contract is set to end in 2017, and Taunton Deane is examining an exit from the company.
