LGA Governance


Agenda item

Agenda item

Update Reports

Minutes:

2a – Local Government Finance Update

 

Nicola Morton, Head of Local Government Finance, introduced item 2a, the Local government Finance Update. 

 

Nicola said that her update focussed on Business Rate Retention, the Fair Funding Review and Audit issues, as there was a separate agenda item on the Spending Round.

 

Nicola reported that, as part of the Spending Round announcement, the Chancellor of the Exchequer had confirmed that there would be a one year delay to the implementation of the Fair Funding Review and 75 per cent Business Rate Retention. A number of joint working groups with MHCLG would continue to take place with various models still being looked at.

 

Members asked whether the Ministry of Housing, Communities & Local Government (MHCLG) was undertaking a fundamental review of distribution through the Fair Funding Review or whether smaller scale changes were being considered. The Chair responded by saying that given the nature of local government finance reform, some authorities would benefit more than others in any new system and so it would not be easy to reach a common LGA position. He said that although the proposals that have emerged so far seem quite fundamental, it is still not clear how individual councils will fare.

 

With regard to audit, Nicola reported that there have been significant delays with auditing in a large number of councils due to resourcing issues at the auditing firm EY. She said that the Chair of the Resources Board has written to both the Minister for Local Government and the PSAA seeking reassurances that councils will not be penalised as a result of this and had received positive responses. She added that the Redmond Review into the effectiveness of local authority financial reporting and the audit regime was launched in July and Sir Tony Redmond has been invited to the next meeting of the Resources Board on 19 November to update members.

 

Cllr House, a board member of PSAA, noted that the delays to audits were wider than EY and this issue will continue due to the availability of auditors and the overlap of timing with NHS audits. He said that the problem is mainly to do with the early deadline in July and that this needs to be pushed back. He suggested that the LGA, through the Resources Board, should give this feedback to the Redmond Review.

 

Cllr Taylor, thanked the Chair for his letters and welcomed the responses from PSAA and the Minister for Local Government.  She noted that it is now a wider issue as there are over 200 councils with late audits. She stated that local authorities have had operated commercial accounts for years so the work is not new, and she pointed to the impact the delay to the audit was having on Stevenage Borough Council. This includes potential financial penalties for late housing benefit audits. Cllr Taylor was keen for the LGA to feed into the Redmond Review.

 

Cllr House also wanted assurances that local authorities would not be affected by late audits due to factors outside of their control.

 

The Board agreed that the Chair would write to the new Minister for Local Government outlining their concerns.

 

 

Decision

The Board noted the update.

 

Actions

 

Cllr Watts to write to the new Minister outlining the Board’s concerns around late audits.

 

 

2b - Workforce update

 

The Chair noted that Item 2b was a confidential update and asked any press and public present to leave the room.

 

Naomi Cooke – Head of Workforce – introduced item 2b, the Workforce Update. She updated members on developments with the various pay negotiations and other issues since her paper was written.

 

Cllr Sharon Taylor provided the Board with an update on her work as the LGA’s Equalities & Diversity Champion. In particular, she highlighted the fact that the LGA Diversity and Inclusion conference on 1October was now fully booked.

 

The Chair thanked Naomi and Cllr Taylor for their updates and returned the meeting to public session.

 

Decision

 

The Board noted the updates.

 

 

2c - European Structural Investment Fund update

 

Paul Green - Adviser, gave a verbal update on the European Structural Investment Fund. In particular, he highlighted the following points:

  • There are still huge delays in the allocation of European Social Fund (ESF) and pressure is being put on the Department for Work and Pensions (DWP) to improve its performance so that the money is not lost when we leave the ESIF programme. The LGA has called for there to be an evaluation of the ESIF programme, which is being undertaken.
  • The next Growth Programme Board is taking place w/c 16 September and therefore cannot provide a further update.
  • There is concern that the launch of the UK Shared Prosperity Fund (UKSPF) will take longer than expected, increasing the likelihood for a gap in funding for schemes funded by the ESIF programme. However, there is scope for a more radical scheme that is a localised, place based fund.
  • The Government restated in the Spending Round that a domestic replacement will be introduced even in the event of a ‘no deal’ Brexit. This has been a key win for the LGA and has provided a level of certainty for local areas.

 

Board members raised the following points:

  • Concern about the lack of progress or consultation by the Government on an ESIF replacement.
  • The process for allocating funding under the UKSPF will be crucial. It is important that the money gets to those communities who really need it, rather than just those that are good at bidding.
  • It would be helpful if good practice from around the country could be shared in relation to councils’ preparedness for Brexit.

 

The Chair thanked Paul for the update.

 

Decision

 

Members noted the update.

 

 

Action

 

Members to provide examples of ESIF programmes in their community to Paul.

 

 

 

2d - Universal Credit / Welfare Reform update

 

Rose Doran, Senior Adviser, gave a verbal update on Universal Credit and Welfare Reform and made the following points:

 

  • The new Secretary of State at the DWP is Therese Coffey MP.
  • The regulations on Universal Credit passed through Parliament just before the recess.
  • The LGA has been doing a lot of work over the summer on Local Housing Allowance (LHA) developing a shared position with stakeholders, namely, to restore LHA rates to at least the 30th percentile of rents when the freeze ends next year.
  • The Government has allocated an additional £40 million for Discretionary Housing Payments but the identified gap in funding is more like £800 million.
  • The LGA has commissioned research to look at the impact of the freeze on LHA on local authorities as most research to date has looked at the impact on residents.
  • Contributing to the Government’s ‘breathing space’ consultation and seeking a statutory moratorium on any debt recovery for individuals who have engaged with debt advice agencies.
  • The protocol with Citizens Advice on recovering debts is having a positive effect. It includes the need for fair collection and enforcement policies and the ability for councils to take back cases involving vulnerable families.

 

Members asked whether there was any feedback from the DWP on the effect of the freeze on LHA. Rose explained that although it has reduced the amount of Housing Benefit paid out, there was evidence that it had shifted costs onto local authorities, and landlords had not lowered their rents as the Government had hoped.

 

 

Decision

Members noted the update.

 

Supporting documents: