151 BRIEF

  • WMCA signs £4bn investment agreement with L&G

    Asset management company Legal & General (L&G) has agreed with the West Midlands Combined Authority (WMCA) to invest £4bn in regeneration, housing and levelling up in the area.

    The seven-year deal, announced today (18 May), will see L&G fund commercial development, building on the WMCA’s 2022 Investment Prospectus.

    The programme was launched in March 2022 to provide possible development opportunities in the region as part of ambitions for a net-zero future and to drive economic growth.

    Mayor of the West Midlands and chair of the WMCA, Andy Street, said: “This major investment will help regenerate long-neglected areas across the West Midlands, provide affordable homes in the communities where the need is most felt, and supercharge economic growth in the years ahead.”

    Alongside investment into major projects, L&G will contribute to climate-friendly projects, local communities, and support the region’s target to deliver 215,000 new homes by 2031.

    WMCA portfolio holder for housing and land, Cllr Mike Bird, added: “The level of investment that L&G has set out will be an incredible shot in the arm for the West Midlands as we continue our recovery, helping to bring sustainable economic growth that benefits all our communities and supports our ambition to be a net-zero region by 2041.”

    L&G, which claims to be the UK’s largest investor with total assets under management of £1.4trn, has already invested £2bn into the area and over £30bn in regeneration in UK towns and cities outside London.

    CEO of L&G, Sir Nigel Wilson, said: “The West Midlands economic plan, resources and skills make it an attractive destination for trade and investment from across the world; our role in this is to put UK funds, including pension savings, to work here so UK savers benefit from UK prosperity.”

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  • Bill will give UK Infrastructure Bank power to lend directly to councils

    The UK Infrastructure Bank (UKIB) Bill, published as part of the Queen’s Speech, will establish the bank’s full powers including the ability to lend directly to local authorities.

    UKIB, launched in June 2021, has been tasked with accelerating investment into infrastructure projects, cutting emissions and levelling up across the UK. Currently, it works with the Public Works Loan Board to make loans at a preferential rate to eligible projects.

    “Since its launch nearly a year ago, the bank has already invested in important projects that will support people, businesses and communities across the UK,” said John Glen, economic secretary to the Treasury.

    “The bill sets out the bank’s long-term purpose as an enduring institution to continue to do this, helping tackle climate change and support levelling up.”

    UKIB will replicate the role of the European Investment Bank and is part of the government’s National Infrastructure Strategy. It will have £22bn of financial capacity to invest.

    Net-zero projects already financed include the South Bank Quay wind farm, a £250m investment into the UK’s largest solar farm in south Wales, and £50m to improve the digital connectivity for rural homes and businesses across Northern Ireland.

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  • £400bn pension group collaborates on climate transition initiative

    A group of UK pension funds with total assets of £400bn have joined together to address how to support climate transition in emerging markets.

    The group will explore ways to direct investments that support climate transition in emerging economies, while also supporting their economic growth.

    Twelve LGPS pools and individual pension funds have joined the initiative, including Border to Coast Pensions Partnership, Brunel Pension Partnership, Northern LGPS, and the Environment Agency and West Yorkshire pension funds.

    Rachel Elwell, CEO of Border to Coast, said the pool was “committed to working with other investors, governments, and regulators to deliver real economy emissions reductions”.

    The group aims to drive real world change to achieve net-zero targets by understanding the needs of emerging economies and the climate transition finance that will be required by governments and companies.

    Environment Agency Pension Fund Chair Emma Howard Boyd added: “If we are to reduce global emissions, green investment in emerging economies is vital but we are yet to see significant market shifts.

    “Meanwhile countries are frustrated that the $100bn (£82bn) in climate finance promised to them by industrialised nations in 2009 has not been delivered,” she said.

    The UK pension pools and funds will work with the UK COP26 presidency and other financial institutions to understand the most effective way to target and scale their funding.

    The initiative was announced at the Net Zero Delivery Summit and welcomed by the pensions and financial inclusions minister Guy Opperman.

    He said: “I look forward to working closely together to assess how we can further unleash the productive power of UK pensions in support of the climate transition in emerging economies.”

    The group will set out the steps it will take in delivering this scheme at COP27 in Egypt.

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  • CIPFA rejects proposal for vote on publication of fraud hub report

    CIPFA has rejected a proposal that could have allowed members to review in full the independent report into the failure of its London Counter Fraud Hub (LCFH).

    The LCFH collapsed in 2019 with an impairment cost of £3.7m. An independent report from former deputy auditor general Martin Sinclair has only been published in summary, and there have been calls for members to be given access to the full text.

    However, the CIPFA Council meeting on 4 May rejected a proposal – from Roman Haluszczak – that would have allowed a vote at the institute’s July agm on publishing the full report for members to review.

    CIPFA confirmed the decision in a statement: “Council rejected the member motion on the basis that CIPFA has shown transparency over the last two years with the report, including publishing the report recommendations as committed to at the 2019 AGM. The Sinclair report was not commissioned for an external audience and there is insufficient reason to overturn the original decisions taken by both the Board and Council.”

    It pointed out that CIPFA’s Council is its “sovereign body”, with the majority elected from the membership. The request, it said, had therefore been considered by “members at the highest levels of the organisation”.

    In response, Haluszczak told Room151: “I think this is a very sad day for CIPFA corporate governance and democracy. A dark cloud now hangs over the institute and further questions must be answered.”

    He added: “CIPFA cannot expect openness, transparency and inclusivity from the public sector bodies it advises if it is not prepared to adhere to these same principles itself.”

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  • John Turnbull elected president of the SLT

    The Society of London Treasurers (SLT) has confirmed that John Turnbull, strategic director of finance and governance at Waltham Forest Council, has been elected as the next SLT president.

    Turnbull succeeds Peter Turner, finance director at Bromley Council, who has taken on the role of honorary secretary/treasurer. SLT vice president is Clive Palfreyman, executive director of finance and corporate services at Hounslow Council.

    “It is an honour to be president of society that works so hard for London and local government generally so that finance departments can contribute to making a difference for our residents,” Turnbull told Room151.

    “Every year brings a new challenge and it is clear that this year it will be how we can help address the cost-of-living crisis for residents and the impact of inflation on the finances of our councils.”

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  • Pension pool identifies biodiversity as a priority

    The Brunel Pension Partnership has identified biodiversity as a new priority focus for its broader responsible investment mandate.

    The pool, which brings together ten local government pension funds, published its 2022 Responsible Investment and Stewardship Outcomes Report today (11 May 2022). This includes a biodiversity strategy that outlines Brunel’s own commitments, plus its expectations of asset managers and high-risk companies.

    Brunel’s own commitments include: identify nature- and climate-positive investment solutions; ask managers to evidence their approach; and support the development and report against the guidance of the Taskforce for Nature-related Financial Disclosures (TNFD).

    ‘Investors and corporations must recognise that accounting for biodiversity-related impacts is critical and, with a final framework coming down the line in 2023, companies must start preparing for the impending reality of nature-related disclosure,” said Laura Chappell, Brunel’s chief investment officer.

    Brunel said that it wanted to highlight the urgency of the issue of biodiversity loss. It cited research by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services showing that a million species are at risk from extinction in the coming decades and that, without action, extinctions will accelerate.

    The launch of TNFD, according to Brunel, offered “the first seeds of hope that investors could become part of the solution – if they make biodiversity an investment priority”.

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  • TfL latest to face credit-rating downgrade by Moody’s

    Transport for London’s credit rating has been downgraded by Moody’s Investor Service due to concerns over operating performance and long-term funding.

    Moody’s downgraded TfL’s long-term senior unsecured debt rating to Baa1 from A3 and its long-term EMTN (Euro Medium-Term Note) programme rating to Baa1 from A3. However, the outlook assessment has changed to “stable” from “negative”.

    “The downgrade reflects Moody’s view that TfL’s operating performance will be weaker than expected due to new hurdles, namely weaker economic growth and higher inflation, hindering the recovery of passenger growth,” Moody’s confirmed in a statement.

    “The downgrade also reflects the ongoing uncertainty around TfL’s long-term funding framework, especially for capital funding.”

    TfL is the local government body responsible for most of the transport network in London. A spokesperson said that passenger numbers were continuing to grow, with the tube now seeing more than two-thirds “ridership” on weekdays compared with pre-pandemic levels and buses consistently being at 75-80% of pre-pandemic levels.

    “With the forthcoming opening of the Elizabeth Line, the completion of the Bank station capacity upgrade and delivery of more UK-built zero-emission buses across the city, public transport will continue to make a vital contribution to the economic recovery of London and the wider country.

    “To ensure this recovery is successful, it is crucial that a longer-term settlement with government is confirmed. Our discussions with government on this continue.”

    Moody’s also recently downgraded Warrington Borough Council’s long-term issuer rating and senior unsecured debt rating to A3 from A2 and its baseline credit assessment to baa3 from baa2.

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  • Government proposes ‘fairer, more accurate’ business rates system

    The government has confirmed that it intends to introduce a bill to “create a fairer, more accurate business rates system” in England.

    This would involve: shortening the revaluation cycle from five to three years from 2023; improving valuation accuracy; tightening appeals against rates on the basis of changing circumstances; and introducing 12-month rates relief for improvements that increase the rateable value of properties

    A summary of the bill was included in a government document published as briefing notes for the Queen’s Speech.

    The document claimed the main benefits of the bill would be “modernising the business rates system with more frequent valuations based on more accurate data” and “driving growth by making rates bills more responsive to economic changes”.

    It would also incentivise business ratepayers to invest in their properties and decarbonise, with the  support of new reliefs.

    “Local authorities have been asking for reform of the business rates system for many years and now they will face the challenge of assessing the impact of the planned reforms on their finances, operations and strategies on regeneration and local economic development,” said Peter Cudlip, head of public and social sector at audit firm Mazars.

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  • Queen’s Speech confirms planning reforms

    The Queen’s Speech has confirmed that the government will be introducing a Levelling Up and Regeneration bill that will include planning reform.

    Prince Charles, delivering the speech on behalf of the Queen, said: “A bill will be brought forward to drive local growth, empowering local leaders to regenerate their areas and ensuring everyone can share in the United Kingdom’s success. The planning system will be reformed to give residents more involvement in local development.”

    It is thought that the bill will give councils new planning powers, including being able to force landlords in England to let out empty shops to rejuvenate high streets.

    “High streets up and down the country have long been blighted by derelict shopfronts, because they have been neglected, stripping opportunity from local areas,” said prime minister Boris Johnson.

    “We are putting that right by placing power back in the hands of local leaders and the community so our towns can be rejuvenated, levelling up opportunity and restoring neighbourhood pride.”

    Councils will also be given greater powers to drive regeneration through compulsory purchase orders, which will allow them to acquire buildings for public benefit without needing the consent of the owner.

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  • 18,000 affordable houses lost through ‘permitted development’

    More than 18,000 affordable houses have been lost in England as a result of office-to-residential conversions under “permitted development” according to the Local Government Association (LGA).

    Since 2015, a total of 73,575 new houses have been converted from offices under permitted development, where full planning permission is not needed and there are no requirements to provide affordable housing. With housing developments not using the permitted development route, the expectation is for affordable housing to comprise 25% of the total.

    The LGA, which represents 350 councils in England and Wales, said that permitted development rights should be removed to ensure all conversions and new developments contribute to the delivery of affordable homes across the country. Developments should go through the planning system, where they are subject to more stringent quality assurance, it added.

    “There is a need for more affordable housing across the country but, regrettably, premises such as offices, agricultural buildings, shops, restaurants and light industry can now be converted into houses without the need to provide any affordable homes,” said David Renard, the LGA’s housing spokesperson.

    “Giving planning powers back to councils will also support local ambitions to revive and reimagine high streets and town centres.”

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