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Policies from the 3 main parties affecting local government
As election fever strikes, we summarise key points from each of the 3 main political party manifestos that will affect local government.
Labour Party
The Labour manifesto covers local government in most detail in a section on devolving power:
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Ring-fenced budgets, central targets and indicators will be cut back
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Local government will be given new powers to lead in the provision and financing of social and affordable housing, to tackle climate change and to work with the NHS in a new National Care Service
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Petitioning powers will be introduced for local residents to demand action and neighbourhood agreements where citizens set out the standards of services they expect locally will be extended
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City regions will be able to gain additional powers to improve transport, skills and economic development and acquire greater borrowing flexibility
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Where new city region authorities are created, residents will be given the opportunity to trigger a referendum for directly electing a mayor, with London style powers
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More towns will be encouraged to apply for city status and have the chance to acquire it in future competitions
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Excessive rises in council tax will be capped
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A cross-party commission will be established to review the future of local government finance to ensure it is meeting the goals of accountability, equity and efficiency across the country.
www.labour.org.uk/manifesto/devolving-power
Conservative Party
The Conservative Party manifesto covers the following points. It will :
- freeze council tax for two years
- abolish plans for higher council tax bands
- abolish council tax inspectors’ rights of entry into people’s homes
- give local residents the power to veto high council tax rises by requiring an excessive rise to be endorsed in a local referendum
- abolish regional assemblies and regional planning and devolve the powers and funding of regional development agencies to local partnerships of councils and business
- require councils to publish online details of all spending and contracts over £500 and reveal the names, titles and salaries of staff earning over £60,000
- ensure councillors vote explicitly to authorise the salaries of their highest paid staff
- Allow councils to return to the committee system
- Enable local residents to hold a referendum on any local issue
- Abolish plans for new bin taxes and abolish bin fines
- Work with councils to reintroduce weekly rubbish collections
- Introduce a ‘community right to buy’ to allow local residents to take over a local service or venue threatened with closure and allow residents to bid to run community assets
- Curtail the current monitoring and performance regime and instead require councils to publish more on-line information on the quality of council services
- Support the Sustainable Communities Act devolving local spending and publish local spending reports.
www.conservatives.com/Policy/Where_we_stand/Local_Government.aspx
Liberal Democrat Party
The Liberal Democrat Party has set out its intentions as follows..
- Reform local taxation by introducing a local tax based on people’s ability to pay
- Return business rates to councils and base them on site values
- Review local government finance completely as part of the tax changes including reviewing the Housing Revenue Account system and the mainstreaming of central grants
- Introduce elected police authorities and health boards
- Abolish £1 billion worth of central government inspection regimes on local councils
- Abolish the Government offices for the regions and regional ministers
- Implement the Sustainable Communities Act Amendment Bill which gives local communities the right to propose actions in their area to improve sustainability.
www.libdems.org.uk/our_manifesto_your_say.aspx
A message from Chris Bilsland, Chair of CIPFA’s Public Finance and Management Board
As chair of CIPFA’s Public Finance and Management Board, I wrote in December 2009 regarding the implementation of International Financial Reporting Standards (IFRS) in local authority financial statements. As you know, this is an important and high profile professional issue, and there could be significant damage to local government’s strong reputation for financial management if authorities fail to implement IFRS successfully.
The recent Audit Commission report ‘Countdown to International Financial Reporting Standards’ identified a number of areas where authorities in England were falling behind the indicative timetable set out in the Local Authority Accounting Panel Bulletin number 80. It is likely that authorities in Scotland, Wales and Northern Ireland will have been in a similar position. Whilst most authorities were reported as only having minor issues at November 2009 (the date to which the information in the report relates), it is important that these are not allowed to escalate, and that those authorities with more serious issues address them as soon as possible. More generally, we all need to ensure that sufficient resources continue to be committed to implementing IFRS despite the competing pressures that all authorities are facing.
Implementing IFRS: the role of members
One of the key issues identified by the Audit Commission’s report was that a large number of authorities had not sufficiently engaged members (for example, the Audit Committee or equivalent). Members have an important governance role to play, and so need to be involved. IFRS will also impact on the financial statements members will be asked to approve as well as on decisions that authorities may make in future (for example, leasing decisions). It is therefore sensible to discuss these matters with members at the earliest opportunity.
A significant amount of guidance has been added to the CIPFA/LASAAC web site. This can be found at:
www.cipfa.org.uk/pt/cipfalasaac/transition_guidance.cfm
I would encourage you to ensure that your members are up to date with the published guidance. CIPFA is running courses to assist authorities and has recently launched a joint qualification with the ICAEW: the Certificate in International Public Sector Financial Reporting. This will help finance staff develop their knowledge of IFRS and embed the changes IFRS brings within their own organisations.
The start of the 2010/11 financial year – the first to be accounted for under IFRS – is now here.
I would therefore encourage you to ensure that your members are fully prepared for the changes this will bring. I would therefore be grateful if you can circulate this letter to your members for their urgent attention.
Finally, the CIPFA Policy and Technical team are more than happy to deal with questions as they arise. These should be directed via the Technical Enquiry Service (technical.enquiry@cipfa.org.uk) in the first instance.
Housing Finance Reform (CLG)
Communities and Local Government have recently published the Government’s proposals for the reform of the Housing Revenue Account (HRA) and abolition of the current subsidy system. The announcement and detailed documentation can be found at:
www.communities.gov.uk/housing/decenthomes/councilhousingfinance/.
The Government is formally consulting on its proposals with a closing date for responses of 6th July 2010.
CIPFA has drawn up a note intended to give some highlights of the Government’s proposals for HRA reform. It gives a broad understanding of the potentially wide ranging impact of the proposals and contains a number of pointers for Directors of Finance and Housing Directors in beginning to consider the Government’s proposals. Authorities will need to consider now not only the direct impact of the proposals but also any indirect impacts, for example on the General Fund or on Treasury Management costs. It will be important for authorities to check out how far the modelled figures in the consultation documents resemble the reality on the ground.
The note can be downloaded from :
www.cipfa.org.uk/panels/housing/download/housing_brief_310310.pdf
CIPFA’s Housing Panel is currently preparing more detailed commentary and guidance which will follow in due course and would be interested in hearing from local authorities their initial feedback and any areas of concern that they do not feel have been covered by the Government’s offer.
If you have any comments or queries, please contact Lesley Lodge, Finance & Policy Manager at CIPFA, in the first instance: lesley.lodge@cipfa.org.uk
School Funding Consultations (DCFS)
The long-awaited consultation on School Funding is now out and will be a key area of Children’s Services work over the next couple of months.
The consultation is deadline is 7 June, by which time of course we may have a new government. The Children’s Services Panel will be working to produce draft CIPFA responses for May. The context is one of very tight money for schools.
Summary details on the consultation are:
The Consultation on the future distribution of school funding has been issued alongside the publication of a document about the more immediate school funding settlement - Investing for the future: school funding 2010-13.
The first (and bigger) consultation document sets out the principles the Government believes should underpin the new funding formula and includes options for the proposed elements of the formula. It aims to reflect the priority the Government is giving to support deprived pupils to raise their achievement, signals the intention to mainstream many specific grants into the DSG and reaffirms the principle that needs in individual schools are best assessed at the local level. This principle is behind a proposal for a Local Pupil Premium. The Secretary of State has also announced the intention to set a Minimum Funding Guarantee and to include a minimum per pupil increase for local authorities.
The elements of the formula being proposed include: - a basic entitlement for every pupil, extra funding for pupils with additional educational needs, funding for provision for high cost pupils, a sparsity factor and an adjustment for local authorities which have higher labour costs. Options for allocating funding for these elements have been set out where appropriate.
The Secretary of State is also setting out more details about the funding settlement from 2010-13. The priorities are “to protect frontline provision for schools; to ensure that there is sufficient funding for the schools that need the most support, particularly those serving disadvantaged communities; to deliver a fairer funding distribution between local authorities which more accurately reflects current need; and to ensure best value for the considerable resources being put into schools”. The announcement provides more detail of the programme of support available to schools to help them secure value for money and further guidance on managing school balances.
Copies of both the main consultation documents are available at www.dfes.gov.uk/consultations/
The Role of the Chief Financial Officer in Local Government
The Statement on the Role of the CFO in Local Government describes the role and responsibilities of CFOs in Local Government. It builds heavily on CIPFA’s Statement on the Role of The CFO in Public Services and applies the principles and roles set out in that document to Local Government.
www.cipfa.org.uk/pt/download/role_of_CFO_in_LG_2010_WR.pdf
Application note to delivering good governance in local government: framework (CIPFA/SOLACE)
The Application Note advises on the application of the Statement on the Role of the Chief Financial Officer in Local Government under the CIPFA/SOLACE Framework Delivering Good Governance in Local Government. It illustrates:
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How the governance requirements to support the principles in the CFO statement build on the governance requirements that need to be reflected in an authority’s local code as set out in the CIPFA/SOLACE Framework and guidance note
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How the annual governance statement can reflect compliance with the CFO statement for reporting purposes.
www.cipfa.org.uk/panels/corporate_governance/download/Comply%20or%20Explain%20final%20(1).pdf
LAAP 84 - Closure of the 2009/10 Accounts and Related Matters
The Local Authority Accounting Panel has issued this bulletin to highlight areas that may cause authorities difficulties when closing the 2009/10 accounts. Click here to download the bulletin and related document in full.
CIPFA’s Annual Conference – The Turning Point 8 – 10 June, Harrogate
This year marks a turning point for the public services. Whatever the outcome of the general election, spending cuts and a new wave of public service reforms will create new challenges and new risks for people managing public money and public services. The coming years will require effective planning, difficult decisions, and confident leadership as the way public money is managed and spent comes under the spotlight as never before.
This year’s CIPFA annual conference aims to provide delegates with the strategic insight and skills they need to succeed in the challenges ahead. Ahead of the first formal day of conference, all delegates are invited to an international seminar and a guest lecture, this year featuring former Lib Dem leader, the Rt Hon Charles Kennedy MP.
Day one of conference will open with Göran Persson, the former Prime Minister of Sweden. In the early 1990s, with public debt doubling and the budget deficit increasing tenfold, Sweden faced similar challenges to those facing the UK in 2010. In an exclusive UK appearance, Göran will set out how he tackled the deficit and drove through reforms that are cited by many as models for the future of the UK public services.
The second day of conference will close with Nick Robinson, the UK’s most recognisable political broadcaster. Speaking just weeks after the election, Nick will share his observations from the campaign trails and outline what the election result means for the public finances and public services.
Other plenary sessions will feature some of the best-known faces in the public services and politics in a blend of speeches and panel debates.
www.cipfaannualconference.org.uk/
Surviving the crunch - Local finances in the recession and beyond Audit Commission report
Released 23 March 2010
[Download full report below this summary]
This report is the third in a series of publications looking at the impact of the credit crunch and subsequent recession on local authorities.
It says that councils must think bigger and act quicker to reduce costs, or funding cuts will cause more damage to services and jobs than is necessary. Most councils have been cushioned from the worst of the recession because the government stuck to its three-year funding settlement. But this ends in 2011. On average, councils receive two-thirds of their income from grants.
Even though the timing and extent of cuts in government support are unclear, the report says that councils must prepare now for leaner times. The sooner they get clarity the better. The best-prepared councils are taking action now to preserve services in the years ahead, but others have yet to make any financial plans beyond 2011.
Efficient Public Services Inquiry - CIPFA Submits Evidence
CIPFA has submitted written evidence to the most recent Scottish Parliament Finance Committee inquiry. The evidence was submitted at the request of the Committee. The focus of the inquiry is ensuring efficient public service delivery in Scotland within a period of tightening public expenditure. CIPFA's evidence sets out the three strategic options for radical change to public service delivery but also recognises that ongoing initiatives for efficient public services need to be maintained and developed. CIPFA has therefore drawn the attention of the Committee to the need to consider all options with no pre-conditions to protect services and has also drawn the attention of the Committee to recent initiatives throughout the UK including, 'Total Place' and 'Putting the Frontline First'. CIPFA has also been invited by the Committee to give oral evidence to the Inquiry on 20 April.
Click here to download the evidence.
Independent budget review – CIPFA submits evidenc
CIPFA has submitted evidence to the Independent Budget Review Panel. CIPFA has drawn attention to the need for a radical response and has reiterated CIPFA's three strategic options for changes to public service delivery. The submission also draws attention to the 'Total Place' initiative, benchmarking and to tax increment funding. The Panel, chaired by Crawford Beveridge, was commissioned in February 2010 to conduct a review of public expenditure in Scotland. The purpose of the Review is to inform public and Parliamentary debate in advance of the next UK Comprehensive Spending Review (which will cover the three years 2011-12, 2012-13 and 2013-14) about the challenges and choices which will exist in a significantly constrained public spending environment. CIPFA has also been invited to meet the panel to provide oral evidence in May. The Review Panel will report by the end of July 2010.
The review panel has a dedicated website at www.independentbudgetreview.org
Click here to download the response.
Statutory Guidance re Accounting For PFI and Similar Contracts
A significant change in the Local Government SORP 2009/10, which specifies the accounting requirements for local government organisations, relates to the treatment of PFI schemes and similar contracts. For 2009/10 where certain criteria are met assets provided under a PFI or similar scheme are to be brought onto the balance sheet, with a corresponding liability reflecting the long-term commitment to pay for the asset.
The Scottish Government has recognised the potential consequences on local government finances of this change and has issued statutory guidance to ameliorate the impact on fund balances.
Key points of the statutory guidance are set out at :
www.cipfa.org.uk/scotland/news_details.cfm?news_id=60836
Investment Regulations in Scottish Local Authorities from 1 April 2010
Scottish Ministers have under Section 40 of the Local Government in Scotland Act 2003, introduced a new regulatory framework to govern the investment activities of local authorities (the investment regulations). The regulations provide more autonomy to local authority investments subject to receipt of consent from Scottish Ministers. That consent is set out in Finance Circular 5/2010 from the Scottish Government. The introduction of the regulations is the culmination of representation by CIPFA and other stakeholders over a long period of time on the need for regulations. CIPFA Scotland submitted a paper in response to the Local Government Bill in 2002 which led directly to the inclusion of Section 40 in the Local Government in Scotland Act 2003.
Click here to access The Finance Circular.
The regulations can be accessed at:
Click here
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