151 BRIEF

  • Finance settlement ‘fails to deal with impact of National Living Wage’

    The Local Government Association (LGA) has voiced disappointment the government has not addressed funding issues for councils due to the forthcoming rise in the National Living Wage in the final local government settlement.

    The settlement was announced last week, with local government secretary Robert Jenrick saying it delivers an increase in core spending power from £46.2bn in 2019/20 to £49.2bn in 2020/21.

    The LGA welcomed the extra funding, but said local authorities face £220m of pressures due to the living wage rise.

    LGA chairman James Jamieson, said: “Councils fully support the National Living Wage but this unforeseen new cost pressure needs to be funded to avoid the fragile care provider market being further destabilised.”

    He also urged the government to publish the public health settlement as soon as possible “so councils can properly plan how to provide vital services which help people stay healthy, while reducing the strain on the NHS and social care”.

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  • Scottish Budget ‘results in £95m cut for core services’

    The body representing councils in Scotland says that the Scottish government’s budget means a cut to local government core budgets of £95m.

    The Scottish government last week said that £495m extra would be available for local authorities in 2020/21.

    However, the Convention of Scottish Local Authorities (COSLA) said councils would be expected to delivery central commitments of £590m.

    COSLA resources spokesperson Gail Macgregor said: “On the face of it this looks like a good Budget for local government with a cash increase of £495m and whilst we acknowledge this money, the reality behind this figure unfortunately is quite different.

    “What we are left with when you factor in the Scottish government commitments of £590m – is a cut to local government core budgets of £95m.

    “This is £95m in hard cash that will need to be taken out of front line services for communities.

    “We campaigned hard to ensure that this position did not happen – it is disappointing our message has not been listened to.”

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  • Auditors find governance failures over LOBO loans

    Auditors have issued a list of recommendations to Cornwall Council to help it avoid a repeat of what it said were “some serious failings of governance at predecessor bodies” surrounding the taking out of four Lender Option Borrower Option (LOBO) loans.

    In its annual audit letter, audit firm Grant Thornton said that the council should “undertake a detailed review of its treasury management function and ensure that all decisions sheets are available and maintained as part of all decision-making processes when refinancing, taking out loans, restructuring both loans and investments”.

    Other recommendations include ensuring officers present clear, transparent and detailed information to members, and seek advice from “suitably qualified and appropriate treasury advisers” at all times.

    The letter said that the council should review the value for money of the four LOBO loans identified, which “appeared to have higher rates of interest attributed to them compared to the Public Works Loan Board rates at the time”.

    The letter concluded: “Given the passage of time, the fact this issue is very much in the public domain and the fact that Cornwall Council has redeemed a number of LOBOs, we do not intend to take any statutory action.

    “However we will be closely monitoring the council’s current investment strategy and we believe it critical that the council exercises much stronger governance arrangements than its predecessors.”

    Room 151 contacted Cornwall Council for a comment on the letter but had not received a response by the time of publication.

    Cornwall Council inherited the LOBO loans when it was created in 2009 through a merger between the former county council and its six boroughs and districts.

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  • LGA calls for rise in Local Housing Allowance rates

    The Local Government Association (LGA) has called on the government to lift Local Housing Allowance (LHA) rates in the forthcoming Budget.

    The LGA says the move would protect 100,000 people from financial hardship and homelessness.

    New research for the association by research firm Policy in Practice shows the LHA rate now available for nine out of 10 private renters across 279 local areas across the country is lower than their rent.

    Richard Watts, chair of the LGA’s resources board, said: “Scrapping the LHA rate freeze this year is a step in the right direction by the government to help provide much-needed security to tenants, but more needs to be done.

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  • LGPS Central appoints former LPP chief executive

    Pooling body LGPS Central Limited has appointed former London Pensions Partnership chief executive Susan Martin as a non-executive director.

    Martin also previously held multiple senior roles at the London Pension Fund Authority, including more than two years as chief executive.

    Colin Greatorex, chair of the LGPS Central shareholders’ forum, said: “Susan has proven her leadership skills in a number of senior roles throughout her career.

    “We were especially impressed with her wide-ranging experience in the world of pensions and are sure she will bring rounded knowledge input to the LGPS Central Limited Board.”

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  • More than half of councils change financial plans after PWLB rate rise

    The Public Works Loan Board (PWLB) interest rate rise has forced more than half of councils to alter their 2020/21 financial plans, according to a survey.

    According to a poll of senior council decision makers by the Local Government Information Unit, 59% have changed tack following the Treasury’s move.

    The survey said that 22% would look to borrow from an alternative source, while others are still intending to use PWLB but are scaling back their plans, the survey found.

    Despite this, 87% of councils still hope to borrow from the PWLB this year, with 23% planning to use the Municipal Bonds Agency.

    The survey found that 77% of respondents lack confidence in 100% business rate retention as a mechanism to fund local government

    Nearly all councils (97%) plan to increase council tax in 2020/21, with 93% saying they will raise it by more than 1.5%.

    In addition, nearly all councils (97%) plan to increase fees and charges in 2020/21, with some being forced to raise them ‘by the maximum possible amount’ (14%).

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  • Attempt to restore Scottish councils’ business rate powers fails

    A bid to give back Scottish local authorities the power to set business rate levels has foundered.

    Green MSP Andy Wightman thought he had garnered support from the Labour and Conservative Parties for an amendment to the Non Domestic Rates (Scotland) Bill, which would have allowed councils to set the poundage rate and impose additional levies and supplements on retailers.

    However, in a vote in the Scottish Parliament, Labour and Conservative MSPs joined with the SNP to vote against the amendment.

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  • Salford ends built environment joint venture partnership

    Salford Council has brought planning, building control, property, highways and infrastructure services in-house after the end of a 15-year joint venture partnership with Capita and housebuilder Galliford Try.

    The council has brought all services provided by Urban Vision back in-house and it will examine how they can now be used to boost the city’s economy.

    Simon James, partnership director, Urban Vision, said: “All three organisations recognise the partnership has reached its natural conclusion and that the end of the contract is both timely and appropriate.”

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  • LAPFF reappoints PIRC as research and engagement partner

    LGPS fund representative organisation The Local Authority Pension Fund Forum (LAPFF) has reappointed corporate governance and shareholder advisory consultancy PIRC as its research and engagement partner.

    Following a tender process, PIRC will help LAPFF deliver a responsible investment programme, including company research, engagement and shareowner initiatives.

    Alan MacDougall, PIRC’s managing director, said “We are proud to have retained LAPFF as a client and we look forward to implementing the innovative and challenging activities of the work programme for the forum executive over the next phase of LAPFF’s development.”

    PIRC was first appointed by LAPFF in 1998 and has been successful at each subsequent tender review.

    LAPFF has 82 LGPS scheme members and six asset pooling companies, with assets of more than £300bn.

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  • LGPS managers ‘find passive strategies less risky’

    Fears of underperforming the market outweigh the appeal of outperformance for many LGPS fund chiefs, according to a new report.

    The report, by investment research firm CAMRADATA, published conclusions reached at a recent roundtable that gathered experts in the local government pension sector.

    According to the report, active managers in attendance touted the benefits of owning a select portfolio of thoroughly-researched companies as the best way to invest responsibility.

    However, Sean Thompson, managing director of CAMRADATA, said that many local authority pensions pools are opting for passive approaches over active ones.

    He said: “Both strategies have got off to promising starts, but the pension fund managers on the panel warned that these are challenging times for active management.

    “For many pension funds, the risk of underperformance of the index seems to remain more pressing than the appeal of actively-managed outperformance.”

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