Agenda item

The Chair asked Nicola Morton to introduce the update.

Nicola informed Members that the Budget was due to take place on 11 March and the indications were that it would have a heavy focus on capital and infrastructure investment. She said that officers would be writing an on-the-day briefing which would be circulated to Board members.

Nicola said noted that since the last Board meeting, the LGA had published Fair Funding Review (FFR) exemplifications for individual councils under the proposed younger and older adult social care relative needs formulae. Nicola informed Board Members that this was only one part of the picture and reiterated the LGA’s position that no individual council should lose out under the FFR.

On business rates, Nicola reported that the Government would be funding the business rate reliefs announced in the recent Queen’s Speech, which the LGA had called for. She added that the System Design and Implementation Working Group continued to meet and discuss the alternative model of business rates retention.

Nicola referred to the publication of the LGA survey on Business Rates avoidance survey which revealed that around £250 million was lost each year through this route. She added that MHCLG had indicated that they would work with the LGA to try and better understand the causes.

Nicola said that the LGA’s revised funding gap analysis would be released in advance of the Budget.

Nicola reported that the LGA had provided MHCLG with examples of capital schemes that were being reviewed by councils in the light of the increase in the interest rate charged by the Public Works Loans Board.

On audit, Nicola reported that Public Sector Audit and Appointments (PSAA) had consulted on freezing audit fees for 2020/21. She noted there were still concerns about delays to the signing off of local authority audits. Finally, Nicola highlighted the response from the Minister to the Chair’s letter on audit delays.

Following Nicola’s introduction Members raised the following comments and questions:

·       On audit delays, one member stated that her authority’s accounts had only just been signed off. Members expressed concern that changes to the accounting procedures were making the process more complex and therefore exacerbating the problem, and asked whether there was any initiative from the Government to try and remedy this? Nicola said that the Redmond Review was ongoing and that the Government may wait until after this has reported to propose changes. She added that the LGA was continuing to raise this at every opportunity.

·       It was noted that there are poorer authorities in the South East and concern was expressed about the Government’s ‘levelling up’ if it meant these areas were to lose funding.  The Chair reminded the Board of the LGA’s policy which is for no authority to lose out.

·       It was argued that the rise in the PWLB interest rate would be particularly detrimental to new house building projects and would effectively cancel out the removal of the HRA borrowing cap.  Nicola confirmed that the LGA was continuing to push the Government on this including in the LGA’s Budget submission and in ministerial letters to the HMT and MHCLG.

·       The National Audit Office report on commercial property investments by councils was welcomed, in particular its recognition that the vast majority of councils were investing wisely and proportionately to help address funding shortfalls and to boost their local economies.

Decision

Board members noted the update.