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Fear. Unease. Uncertainty. These are all feelings and emotions senior officers and managers have become accustomed to coping with over the past decade but sometimes those sensations are more acute.
Three weeks ago the sector was reeling from the fact the Department for Communities & Local Government had “effectively suspended” reforms to the way councils are financed after the government failed to set out any plans to legislate for the national rollout of 100% business rates retention in the Queen’s Speech.
In the immediate aftermath the sector’s sustainability beyond the current four-year funding settlement was questioned.
The government would have to do something otherwise councils “won’t be able to look after old people, we won’t be able to look after children, we won’t be able to help grow the economy, and we might struggle to sweep the streets,” warned Jo Miller, president of the Society of Local Authority Chief Executives & Senior Managers at the time.
Many officers and politicians headed to the Local Government Association’s annual conference in Birmingham last week in search of answers. All they got from the secretary of state was a bucket of cold sick, and nowhere among that mess was a regurgitated Local Government Finance Bill.
Another week, another city, another annual conference – this time the Chartered Institute of Public Finance & Accountancy’s. LGC attended the event in Manchester yesterday expecting to find section 151 officers scratching their heads.
While there was a feeling of impending doom, it wasn’t due to bewilderment about business rates reforms (or lack of). That’s not to say finance chiefs are not concerned about what, if anything, will replace 100% rates retention or how the proposed fair funding settlement will play out. It’s just there is a feeling there are far more pressing matters affecting local authorities’ finances at the moment – the funding of adults and children’s social care services chief among those.
There is also a rapidly rising sense of fear, unease, and uncertainty about the boom in councils investing in property. As Cipfa’s new president Andrew Burns noted, councils buying up properties to get a return is nothing new. However, local authorities have paid £2.7bn for commercial properties since 2015, up from £500m over the previous three years, according to The Times.
Two separate workshops touching on this topic and the risks involved were packed out at Cipfa’s conference yesterday. Questions were asked as to whether councils’ investments were proportional and if they were putting themselves at “undue risk”.
Concerns were also raised about whether the government might be persuaded by the private sector to put a stop to councils, which benefit from cheaper borrowing rates, from investing in this way.
Such an intervention would be unjust, though, given it has been central government which, through a combination of severe budget cuts and the development of the business rates retention system to incentivise economic growth, has proactively pushed councils into exploring such innovative ideas as they seek to become self-sufficient.
Recent reports in the national press about councils’ commercial investments have referred to this activity as a “bet” and a “punt”. Finance experts at Cipfa’s conference were quick to say it was far more sophisticated than that.
Still, they thought councils could do a lot more to ensure they undertook thorough due diligence on all of their investments. That has only got to be a good thing because if they do not it could, as Norse group managing director Mike Britch said in one of the workshops, all “end in tears”.