A round up of key recent stories and events in finance
NOTE: Click on the headlines for more on the stories.
TOP FOUR STORIES
Capital receipts generated by English councils plummeted from £4bn to £1.4bn in the last financial year as a result of the effects of the recession, government statistics have revealed. The 66% dip was the most severe drop-off in recent years, although the receipts have been in decline since the £4.7bn recorded in 2004-05.
Public sector borrowing hit £163.4bn in the fiscal year that ended in March, the Office for National Statistics said last week. The figure was less than that predicted by Chancellor Alistair Darling, who last month estimated the deficit would be £166.5bn. Total public sector debt stands at £890bn - 62% of gross domestic product.
The ONS also said that the UK’s gross domestic product increased by 0.2% in the first quarter of 2010, and growth declined by half since the last quarter of 2009 and by 0.3% since the first quarter of 2009. The contribution to growth due to government services was at zero, up from -0.5% in the first quarter of 2009. Further figures revealed that the public sector deficit increased to £14.8bn in March 2010, compared with a £12bn deficit in March 2009.
Chancellor Alistair Darling launched a pilot to assess the business case for accelerated development zones, under which councils could fund regeneration projects by borrowing against the projected future uplift in tax revenues. A £120m capital grant would go to selected pilots, after which their success would be assessed.
Labour’s manifesto pledge to set up a cross-party commission on local government finance was given short shrift by council finance chiefs who said the proposal was tantamount to kicking the issue “even further” into the long grass. Finance directors cited the lack of action following previous reviews, including by Sir Michael Lyons, and said they expected little from another review.
Local government has a major opportunity to take advantage of the private sector’s recovery before severe cuts hit public spending, a report from consultancy firm PricewaterhouseCoopers said. It called on councils to collaborate with other agencies and the private and voluntary sectors to achieve deep budget cuts with the least harm to services.
The Chartered Institute of Public Finance & Accountancy has urged the Scottish Government to accelerate its tax increment finance programme, as Edinburgh City Council edges towards becoming the first council to use the mechanism, for an £84m waterfront regeneration project. CIPFA said the government should “recognise the limitation of local authority borrowing powers and examine other means of funding”.
Council taxes in Scotland are to be frozen for a third successive year after MSPs this month agreed a £70m package to fund the move. Finance secretary John Swinney claimed the deal would ease financial pressures on struggling families.
1-2 July, Norwich
Chartered Institute of Public Finance & Accountancy’s introduction to children’s services finances, 13 May, York.