151 BRIEF

  • Hearing held into council’s decision to close day care centre

    Rotherham Metropolitan Borough Council is fighting a judicial review brought against its decision to close a day care centre for adults with learning disabilities.

    Law firm Irwin Mitchell was this week arguing its case at the High Court in Leeds, on behalf of a client who attended the Oaks Day Centre for five days a week over the past eight years.

    The closure of the centre, along with another centre and two respite facilities, is due to take place this month as part of a £4.2m savings package announced by the council.

    Faith Salih, associate solicitor at Irwin Mitchell, said: “Our client’s family feel that there have been missed opportunities for partnership working which could enhance day services and enable them to stay open.”

    The case claims that the council did not comply with the requirements for a lawful consultation.

    A 12-week consultation found the overwhelming majority of customers, carers, staff and the public wanted Oaks Day Centre to remain open, with over 70,000 signatures received on a petition against the closures, according to the law firm.

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  • Funding uncertain for mooted domestic violence duty

    The government has launched a consultation on introducing a statutory duty for local authorities to provide support to victims of domestic abuse.

    Under the proposals, lead authorities will each convene a multi-agency local domestic abuse partnership board, with functions dictated by statutory guidance from central government.

    The boards would assess the need and demand for accommodation, develop strategies for support provision and make commissioning decisions.

    Speaking to the BBC this week, communities secretary James Brokenshire said the amount of money available to support councils in the new duty would be decided as part of the forthcoming Spending Review.

    Simon Blackburn, Chair of the Local Government Association’s Safer and Stronger Communities Board, said: “We look forward to working with government and our member councils during the consultation to ensure there is adequate resources and funding in place in the areas which need it.”

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  • LGA calls for clarity on youth offending cash

    Councils remain in the dark over how much money they will receive to tackle youth offending this year –two months after they had to set their budgets, the Local Government Association (LGA) has complained.

    The LGA is urging the Ministry of Justice to announce this year’s funding to help them plan services that support young people and keep them out of the youth justice system.

    Anntoinette Bramble, chair of the LGA’s Children and Young People Board, said: “The wait goes on for councils to find out how much money they will receive this year to fund youth offending teams.

    “This unacceptable uncertainty is making it extremely difficult for them to plan the services which play a vital role in supporting young people and preventing them from getting involved in criminal activity such as knife crime or county lines drug dealing.”

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  • Leeds signs JV to deliver rail station renewal

    Leeds City Council has signed a joint venture agreement with London and Continental Railways (LCR) to deliver the 450m redevelopment of the city’s main railway station.

    It is anticipated that the joint venture arrangements will be in place for 20 years, reflecting the timeline for the delivery of the HS2 and Northern Powerhouse Rail projects.

    LCR is a UK Government (DfT) owned company which specialises in railway led regeneration.

    A statement by the council said: “This redevelopment and regeneration is critical to supporting the Council’s Inclusive Growth Strategy call for 21st century infrastructure to support the growth of the city and region (creating jobs and social/economic development).”

    The two parties will prepare a business plan to identify each of their resource commitments, the programme of work and costs together with an outline three-year plan to show forward programme and strategy.

    Returns will be split 50/50 between the two partners.

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  • 2012 Olympics report calls on Newham to improve investment decision-making

    London Borough of Newham’s decision to invest in the venue for the 2012 Olympic Games in its borough was reasonable, but improvements  are needed in decision-making and scrutiny processes, according to a report released this week.

    The authority acquired a 35% shareholding in the London Stadium in 2011, which it decided to withdraw from in 2017 because it had become clear that the stadium, operating under the name of E20 Stadium LLP, would be loss-making over the long term and “presented a risk of insolvency” unless the shareholders underwrote the losses.

    Newham was not repaid its initial investment made through a £40m loan.

    The council set up the Newham Legacy Investments (London Stadium) Scrutiny Commission to investigate the history of the council’s involvement and to identify any lessons that could be learned.

    The report of the commission recommends that in future the council should be cautious about taking minority stakes in organisations whose operations could have serious financial consequences for the council.

    It says that the final decision on ‘significant investments’ should not be left to officers of the council, and that tolerances need to be established to define a ‘significant investment.’

    The council should introduce a training programme for members of its audit board, its investment and accounts committee, and its budget working party.

    It should make sure members are briefed for all significant decisions, that leading officers make available clearly defined time slots for members to contact them regarding those decisions, that the risks of the investments are clearly identified to members, and that a risk management strategy is drawn up.

    The council should develop a report template for its decision-making bodies that highlights risks under a separate heading.

    Urgency procedures should only be used where there is a genuine risk to the legal, financial interest or reputation of the council, and then only endorsed as a last resort.

    The report’s last recommendation is that its overview and scrutiny function needs to be fully engaged with by the administration.

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  • Business rates unsustainable and unintelligible says CBI boss

    John Allan, president of the Confederation of British Industry (CBI), has called on the main political parties to adhere to their manifesto promises to undertake a comprehensive and independent review of business rates.

    Addressing the industry body’s conference on the tax last week, he said: “The business rates system has – over time – become uneconomical, unsustainable, and frankly unintelligible.

    “In short, it’s a system in need of reform.”

    Allan criticised the way the tax discourages businesses from investing in their property, as improvements will result in a higher valuation.
    He said any revaluation cycle beyond one year – currently a three-year period is envisaged – will mean that the system will lag behind the economic cycle.

    The long gaps between revaluations mean that rates do not reflect falling property values in areas that are struggling, burdening businesses with unfairly high taxes.

    However, non-domestic rates also undermine areas that are doing well, as their businesses become liable to sharp increases in their bills.
    Allan cited the case of Hackney which has seen vibrant growth, attracting nearly 20,000 start-ups last year, but where the latest revaluation has led to firms facing an increase of almost 50% in their business rates.

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  • Hampshire Pension Fund names multi-asset credit managers

    Hampshire County Council has appointed Alcentra Ltd and Baring Asset Manager to manage its multi-asset credit fund.

    The overall Hampshire Pension Fund was valued at £6.6bn at March 2018, and has a new strategic allocation to multi-asset credit of 10%.

    The fund’s objective is to return 300bp to 500bp over three-month sterling Libor, net of fees over three- and five-year rolling periods.

    It will invest primarily in high-yield fixed and floating-rate debt issued by North American and European corporates.

    Hampshire estimates the fees for managing the mandate will be between £12.8m and and £14.1m over a four-year period.

    Eight tenders were received for the mandate, which was awarded on 8 May, and which was for up to three asset managers.

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  • City looks to external borrowing for first time

    The City of London Corporation has said in its Draft Capital Strategy that it will borrow for the first time from external sources in order to  finance its large current infrastructure initiatives.

    The corporation’s latest budgets state that it could borrow more than £1bn during the next three years.

    Its financial activities are divided into three arms: the City’s Cash – its endowment fund; the City Fund which is carries out its more traditional local authority and police functions; and the Bridge House Estates Trust, which is a charitable trust originating in the need to maintain London Bridge, and which supports charitable causes, environmental initiatives and social investment.

    The latter’s capital plans have been excluded from the Draft Capital Strategy, pending the outcome of the Bridge House Estates Governance review.

    The City is engaged in four major projects: the relocation of the Museum of London, the consolidation of the area’s markets, and the construction of a concert hall, and of a combined courts building.

    The strategy says: “These projects represent a substantial funding requirement of unprecedented scale in the context of the City Corporation’s more recent capital plans.

    “They therefore present a significant challenge to the finances of the organisation, requiring a step change in the previously debt-free status of the both City Fund and City’s Cash.”

    The Corporation has authorised £241m of borrowing for the City Fund for 2019-20, which will rise to £513m by 2021-22.

    The City’s Cash has a borrowing limit of £356m for 2019-20, which increases to £528m by 2021-22.

    The City Fund will probably borrow from the Public Works Loan Board (PWLB), while the City’s Cash could turn to banks and other private investors.

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  • Liverpool’s cabinet to vote on commercial property fund

    Liverpool City Council’s cabinet will meet this week to discuss approval of its Commercial Property Investment Fund Strategy, which will aim to invest an initial £50m in rent-generating property.

    Liverpool cites the reductions in government funding, along with increasing demand for its services and rising costs as pushing it to seek alternative sources of revenue.

    The fund will aim to invest in good-quality, low-risk commercial property, with transaction sizes of £5m to £15m, yielding 5% to 7%.
    Assets will be bought across the UK, in order to achieve geographical diversification. The £50m will be funded 50% from capital receipts and 50% borrowing from the Public Works Loan Board.

    The plan anticipates an annual distributable surplus from the fund once it is fully invested of £1.3m or more, and expects this figure to rise over time, in line with rental growth. At the end of the loan period of 40 years, the portfolio will be sold in order to repay the outstanding balance on the loan and to generate capital receipts.

    The report to cabinet says: “A core principle behind the funds that it is a long-term (40 year) project that will generate sustainable and secure income streams for the council.”

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    • 14 May, 2019
    • — in Blogs

    THE INDEPENDENCE of THE TREASURER of PUBLIC FUNDS by George Jones

    We seldom get letters from abroad at Room151, so we were particularly grateful to receive an email recently from 84 year-old, David C. Jones FCPA, resident of the United States and public finance professional of many years. As a keen reader of our pages, David thought we might be interested to see a CIPFA presidential address of yesteryear by his namesake George C. Jones, former treasurer of Reading Borough Council.

    In his letter, David describes the paper, THE INDEPENDENCE of THE TREASURER of PUBLIC FUNDS, with great affection:

    “When I was studying for what was, then, the IMTA, and in the early stages of my qualification, one of the key purveyors of the concept of “treasurer independence” was the Borough Treasurer of Reading and a one-time Institute president. His name was Mr. George Jones (no relation!). He wrote, then, a widely circulated article about “treasurer independence”. It was printed on IMTA documents for students and members. I have always kept a copy for reference, as it is impressive and meaningful to me.”

    At a time when council finance officers have increasingly felt under pressure to compromise (57% of 487 respondents in a recent CIPFA ethics survey said they had been put under pressure or felt under pressure to act in a professionally unethical way) it comes as a useful reminder that fellow professionals for many years have endeavoured to set themselves the highest standards of independence and professionalism.

    If you can forgive Mr G C. Jones the now outdated use of personal pronouns – you may find, like we did, that there are some very interesting talking points in here.

    As David, who penned the paper’s foreword, puts it:

    “I feel sure that Mr. Jones would be delighted to have his paper re-circulated, in whatever suitable format that you choose. This would repeat and enhance its circulation as an important historical document of the Institute. His original paper was greatly circulated in professional journals and teaching material. I, therefore, heartily support your suggestion for its re-circulation.”

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