Room151 Quarterly Magazine – Issue 1 Highlights

Keep your eyes peeled for the first issue of the eagerly awaited Room151 Quarterly magazine, landing on desks over the next few days. To whet the appetite, here are some of themes our various contributors and interviewees have commented on for the launch issue.

Stephen Hughes, Chief Executive, Birmingham City Council
We’re quite keen on something similar to the Manchester earn-back model, but there might be a more radical solution. Suppose the government took away all of our grant, left us with retained business rates, council tax and some percentage of locally collected VAT receipts. There would be a number of advantages. Firstly we wouldn’t have to worry about what grant we’d get next year, giving some stability. And you’d have an inbuilt incentive, because there’s a close correlation between improvement in employment and those things, and VAT.”

Alex Colyer, S151, South Cambs DC
So we’re also looking at commercial ventures to create investment returns as part of the medium-term strategy. We’ve set up a company and are looking at private sector housing schemes which will involve buying properties and/or managing third party properties to generate income. We’re also looking into launching a property company, county-wide, that would own all of the public sector assets in Cambridgeshire. Each of the organisations that puts its property assets into the company would own shares or units in the new body and share in the profits.

Richard Harbord, Chief Executive, Boston Borough Council
I see no change in the risk of lending to local authorities. Everyone talks of the possibility of default and fondly mentions a particular North Western authority. But that was not default: it had nothing to do with credit worthiness and more to do with political management. It has long been known that given that all authorities are equal in the eyes of statute, that a differentiating point for lenders might well be whether the authority is one they would be happy to be associated with.

Agent 151
The S151 officer is an easy scapegoat when things go wrong, because there is always money involved, and if it has a pound sign it must be the responsibility of the finance director. The children’s services director overspends their budget? Blame the finance team. A big contract fraud happens in housing?
Internal audit must be to blame. Certain events can create pressures of their own. For example, when there is an election coming, politicians can take a very unreasonable position on the required level of reserves, or have unrealistic expectations of the S151 producing a rabbit from a hat.

John Harrison, Senior Adviser, AllenbridgeEpic
The outlook for inflation is highly uncertain. Some economists believe that the scale of the liquidity that has been pumped into the financial system during the period of quantitative easing means a marked pick-up in inflation is almost inevitable. Others believe that the size and duration of the recession following the financial crisis means there is enormous spare capacity in the economy, so it will be a long time before any inflation pressure is evident. The Bank of England believes inflation will remain low for at least the next few years. Because inflation is arguably the single biggest risk that determines whether or not LGPS pensions will be affordable in the long term, the issue is not that inflation will return but that it could.

Sir Merrick Cockell, LGA
Councils should retain the full growth in the local share of business rates including growth from inflation
without a netting off from grant funding. This is particularly important as under current funding arrangements, we are approaching a situation where services will be most stressed at precisely the time when growth may be moving toward full recovery. In that situation, residents would find it hard to understand why services are even more under the cosh when the economy is visibly growing. Central control over fees, charges and council tax discounts should be removed to allow local areas the power to make decisions in consultation with local people.

Steve Bishop, Vale of White Horse & South Oxfordshire DCs
One of the areas that Gershon highlighted was property and facilities management. To my mind, this remains something of an elephant in the room for local authorities. In the main, managers have found it easier to weed out human inefficiency and automate previous manual activities, despite the obvious discomfort that comes with dealing with colleagues and making redundancies. Building a case for reducing staff count, though, is generally much easier than rationalising your physical assets and looking for savings there.

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