151 BRIEF

  • 89% of LGPS funds to increase local social investments

    Nearly nine out of ten (89%) Local Government Pension Scheme (LGPS) professionals in England and Wales say their funds are planning to increase local social investments in coming years, according to a survey from investment manager Alpha Real Capital.

    One hundred LGPS professionals took part in the survey. When asked for their fund’s definition of local investing, 54% said it was within their local council area, 26% said it was UK-wide, and 20% said it was within their pool.

    Alpha Real Capital said that place-based social investments aimed to deliver positive, quantifiable social outcomes in addition to attractive returns. They can help to develop infrastructure, enhance employment and increase environmental stability in an area.

    Stuart Hanson, associate director for client solutions at Alpha Real Capital, said: “If only 5% of LGPS funds’ combined assets were allocated to local investment, this would unlock as much as £16bn for investment in assets that contribute towards positive social outcomes.”

    His comments echoed the government’s stated target in the levelling up white paper for LGPS funds to invest up to 5% of their assets in infrastructure projects that support local areas.

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  • Chair of Levelling Up Committee warns PM over right to buy extension

    Clive Betts has insisted that the money generated by the government’s proposed extension to the right to buy scheme must go back into the social housing system.

    In response to the prime minister’s announcement today (9 June), the chair of the Levelling Up, Housing and Communities Committee said: “It is vital the money goes back into the system of social housing so that new homes can be made available for low-cost rent and purchase.”

    In his speech in Blackpool, Boris Johnson confirmed the extension of the right to buy scheme to target the 2.5m households whose homes belong to housing associations. Johnson also promised a “one-for-one replacement” of each social housing property sold and to build hundreds of thousands more each year.

    Betts called for further detail on how the right to buy scheme and the construction costs of the new homes would be funded. He suggested that the success of the initiative would be determined by its ability to maintain the social housing supply.

    “I hope the government will explain how this policy will safeguard the provision of accessible and affordable housing, particularly affordable rented property,” Betts added.

    According to the National Housing Federation (NHF), which represents housing associations in England, 4.2m people are currently in need of social housing in England.

    In response to the prime minister’s statement, Kate Henderson, NHF chief executive, said: “We support measures to help people buy their own home, and housing associations already build thousands of homes for shared ownership every year, helping people take their first steps onto the housing ladder.

    “However, we are deeply concerned about the long-term impact of right to buy, and any loss of social housing will make the challenge of providing homes for those in need even harder.”

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  • Four local transport projects receive £160m government funding

    The government has announced funding of £160.8m for four transport schemes in England following successful bids by local authorities.

    The Department for Transport (DfT) has confirmed that it will fund major road projects in Newcastle, Cornwall, Greater Manchester and Southampton. The successful bidders – Cornwall County Council, Newcastle City Council, Stockport Council and Hampshire County Council – will provide additional funding to complete the projects.

    In total, the schemes will generate an estimated £659.3m in economic benefits for the regions.

    Roads minister Baroness Charlotte Vere said: “This £160.8m investment will level up those opportunities from the North East to the South West, while giving motorists, cyclists and pedestrians the modern, safe and uncongested roads they deserve.”

    She said the funding will also increase green travel opportunities to support low-emission, active travel that will help achieve net-zero goals.

    Vere added: “These schemes also present yet another important stepping stone towards cutting emissions and building a clean, efficient road network that is truly accessible to all.”

    Nearly half of the funding (£78.5m) has been secured by Cornwall Council following its bid for a new road linking St Austell to the A30. It is estimated that this will generate £112m in wider economic benefits and increased investment in the area.

    Cornwall Council leader Linda Taylor said: “This link will make a huge difference for residents and businesses who have wanted it for many years. We put forward a strong bid to government and I’m delighted that the Department for Transport has now confirmed the funding.”

    The government will also invest £33.6m in the A34 Corridor Improvement Scheme to ease congestion and aid accessibility in Greater Manchester, £35.3m for refurbishment of the Tyne Bridge, and £13.4m for essential maintenance of Southampton’s A35 Redbridge Causeway.

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  • Social housing landlords to be subject to ‘Ofsted-style inspections’

    Underperforming social housing landlords could face unlimited fines and Ofsted-style inspections under the Social Housing Regulation Bill set to be introduced to Parliament today (8 June 2022).

    The bill will provide the Regulator of Social Housing (RSH) with the power to issue unlimited fines to housing associations and councils that are persistently underperforming. The RSH will be able to enter properties with only 48 hours’ notice (down from 28 days) and, where there is a serious risk to tenants, order emergency repairs with landlords footing the bill.

    As part of new satisfaction measures, residents will be able to demand information and rate their landlord. A 250-person residents’ panel will meet with ministers three times a year to raise issues and inform policy thinking.

    The Department for Levelling Up, Housing and Communities said that the bill forms a “key part of the government’s mission to level up across the country”.

    Levelling up secretary Michael Gove added: “We are driving up the standards of social housing and giving residents a voice to make sure they get the homes they deserve. That is levelling up in action.”

    The bill will remove the “serious detriment test”, which currently places a limit on when the RSH can use some of its enforcement powers.

    Fiona MacGregor, RSH chief executive, told Room151: “We welcome the introduction of the Social Housing Regulation Bill in Parliament today, which will give us the powers we need to deliver proactive consumer regulation. It will also give us new tools to strengthen our economic regulation of an increasingly diverse sector.

    “We look forward to working with tenants, registered providers and other stakeholders to shape this new framework. We’re clear that, where change is needed, landlords shouldn’t wait for new legislation – they should act now before we assess them against the new consumer standards”.

    Speaking last month at the Housing151 conference, Will Perry, the RSH’s director of strategy, warned that the new regulatory regime will make some councils “intensely uncomfortable”.

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  • Local government unions call for ‘inflation-busting pay rise’

    Three local government unions, representing 1.4m members, have submitted a claim for staff in England, Wales and Northern Ireland to receive a pay rise of at least £2,000.

    Unison, the GMB and Unite called for council employees to be given a £2,000 rise at all pay grades or an increase based on the rate of RPI inflation (currently at 11.1%). Each employee would receive whichever of these awards is the higher for them.

    The three unions claimed that staff working in local government have seen an average reduction of 27.5% on their pay since 2010.

    GMB national secretary Rehana Azam said: “For too long, our local government members have faced real-terms pay cuts. This year, without a significant increase in pay, workers will leave their jobs for higher-paid jobs in other sectors.”

    National Employers, the local government body responsible for pay offers, said that it would be consulting with the unions to inform its response.

    Sian Timoney, chair of the National Employers, added: “Local government continues to face significant financial challenges, which became more acute during the pandemic, having lost more than £15bn in government funding since 2010.

    “As well as rising inflation, cost of living, energy and fuel prices, the forecast increases to the National Living Wage also presents a significant cost to local government that will put further pressure on council budgets.”

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  • Councils disadvantaged by ‘optimism bias’ in Levelling Up awards, says PAC

    Some local authorities may have been at a “particular disadvantage” over the award of Levelling Up funds as ministers favoured projects that claimed to be “shovel ready” but subsequently faced delays, according to a report from the Public Accounts Committee (PAC).

    The report suggested that some bidders progressed through the selection process by being overoptimistic about how prepared their projects were. This negatively affected those councils with “realistic bids”, including from the devolved administrations, that were unfamiliar with presenting bids in this way.

    In November 2021, in the first round of the Levelling Up Fund, the Department for Levelling Up, Housing & Communities (DLUHC) distributed £1.7bn through 105 awards. In total, the government intends to allocate £4.8bn from the fund.

    The PAC report stated: “We are concerned that optimism bias has meant realistic bids to the Levelling Up Fund have missed out at the expense of ‘shovel-ready’ projects that have since been beset with delays.”

    It also found that ministers finalised the principles for awarding funds only once they knew the identities and scores of shortlisted bidders, which the PAC described as “unsatisfactory”.

    The report added that it was “disappointing” that the government had spent billions of pounds on local growth policies without a “strong understanding of what works” or how it will measure performance across different geographical areas and timescales.

    PAC chair Dame Meg Hillier said: “Without clear parameters, plans or measures of success, it’s hard to avoid the appearance that government is just gambling taxpayers’ money on policies and programmes that are little more than a slogan, retrofitting the criteria for success and not even bothering to evaluate if it worked.”

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  • Government legislation to allow councils to terminate Russian contracts

    Councils will be allowed to terminate contracts with companies that have “strong links to the states of Russia and Belarus”, according to draft secondary legislation.

    The legislation was laid in Parliament last week and seeks to give local authorities exceptions to section 17 of the Local Government Act 1988.

    The section prohibits councils from considering non-commercial considerations in their procurement decisions, including the termination of contracts.

    The new legislation is part of the government’s response to the Russian invasion of Ukraine.

    Michael Gove, Secretary of State for Levelling Up, said in a letter to council leaders: “As we have done since the invasion of Ukraine, this is another area in which the United Kingdom – both in central and local government – can demonstrate unified action the Russian and Belarusian regimes.”

    Many councils have contracts with Russian-owned oil and gas company Gazprom. Merton Council confirmed the cancellation of its £1m agreement with the supplier back in March.

    Cllr Ross Garrod, leader of Merton Council, told Room151: “We welcome the government’s move to introduce legislation allowing councils to exit contracts with morally questionable companies, an issue we first highlighted in March.

    “Merton was able to escape its deal with Gazprom without incurring any potential legal costs, but other councils were less fortunate.

    “Our intention in calling for a change in the law was to safeguard us and other local authorities from similar situations in the future, and we’re happy to see that the Secretary of State has acted on this.”

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  • ARGA confirmed as local audit system leader

    The government has confirmed plans to establish a new regulator, the Audit Reporting and Governance Authority (ARGA), as the “system leader” in local audit.

    Local audit requires a leadership body to help the system operate effectively – something that is particularly important given the audit delays currently being experienced in England. The Department for Levelling Up, Housing and Communities (DLUHC) has been acting as interim system leader since July 2021.

    Ahead of ARGA’s establishment as a replacement for the Financial Reporting Council (FRC), DLUHC said that a shadow system leader arrangement would start at the FRC from September 2022. Neil Harris, currently an EY audit partner, is to join the FRC as its first director of local audit tasked with setting up a dedicated local audit unit.

    Local government minister Kemi Badenoch said: “A robust system of local audit is key to maintaining public confidence in local government through assuring transparency and accountability.”

    CIPFA said that it welcomed the confirmation of ARGA’s role. “A strong system leader that’s focused on the needs of local audit is essential to push through the much-needed changes,” said Rob Whiteman, CIPFA CEO.

    Whiteman added that the institute still had concerns over the delays in the publication of audited financial statements. “These delays have a substantial impact on staff resources, which in turn affects policy delivery – including the government’s levelling up agenda.”

    The government also confirmed that audit committees will be compulsory for all English councils – with each audit committee required to include at least one independent member.

    “We believe that an effective audit committee is essential for good governance arrangements – so this is good news,” said Whiteman.

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  • Mel Creighton resigns as Liverpool City Council’s finance director

    Liverpool City Council’s deputy chief executive and director of finance has resigned and will leave her post at the end of August, Liverpool’s Mayor confirmed Tuesday (30 May).

    Mel Creighton has worked for the council for 3.5 years and was appointed deputy chief executive of the council earlier this year.

    Mayor of Liverpool Joanne Anderson said: “Mel Creighton has informed the council that she wishes to pursue new opportunities elsewhere, and we respect her decision.”

    Liverpool City Council chief executive Tony Reeves added: “I have today accepted Mel Creighton’s resignation. We are now having discussions with the commissioners about the arrangements to be put in place to recruit a successor.”

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  • Benchmark helps investors ‘objectively assess corporate mental health policies’

    CCLA Investment Management has launched a corporate mental health benchmark to be used as an engagement tool for investors and to support companies in developing best practice.

    The benchmark evaluates the public disclosures of 100 of the UK’s largest companies. Primarily aimed at investors, it provides an objective assessment of how listed companies approach and manage the mental health of people at work.

    The results show that, while most companies now publicly acknowledge mental health as an important business concern, many have a considerable way to go to formalise their approaches.

    While 93% of the companies in the report acknowledge workplace mental health as an important business issue, only 34% publish formal objectives and targets. Just 11% disclose any related key performance indicators.

    Centrica, Lloyds Banking Group and Serco are the only three companies to be placed in the top tier in this assessment period.

    Elizabeth Sheldon, co-chair of the CCLA Corporate Mental Health Benchmark Expert Panel and CCLA chief operating officer, said: “It is only in thinking and acting systemically that we can hope to meet the major sustainability challenges of our time. We consider corporate mental health to be one such challenge; healthy companies require healthy workers.”

    She added that she hoped the benchmark would be a “catalyst for change” in the investment industry. “Our theory is that being able to understand and compare corporate practice on mental health will inform and accelerate the progress that is needed to enable companies, investors – and, above all, people – to thrive.”

    CCLA said it planned to build on the UK benchmark and launch a “Global 100” report in October 2022.

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