One fund to rule them all...

The CLG has published a consultation in response to a Local Government Association (LGA) bid for improvement funds.

Money is currently top-sliced from Revenue Support Grant (RSG) to fund organisations responsible for providing services to local authorities. The LGA proposes:

1. A reduction in annual top-slice funding. The consultation is not overly concerned with the actual amount, as this will be revealed during this autumn's Spending Review.
2. Defining a 'sole specified body' to receive all top-slice funding.
3. That the 'sole specified body' will decide how to allocate top-sliced funds to deliver key objectives.

Perhaps unsurprisingly, the LGA has nominated either itself or Local Government Improvement and Development - formerly the IDeA - to be the sole body for fund distribution.

The 'key objectives' mentioned above in point 3. would need to be agreed with Eric Pickles before delivery could take place.

There are currently nine specified bodies which the LGA wants to 'delete' from the Revenue Support Grant (Specified Bodies) Regulations 1992. 

Annex A of the CLG's consultation charitably suggests that, 'A decision to de-specify these bodies would not necessarily result in their closure...' The Nine are:

• Improvement and Development Agency for Local Government (IDeA)
• Employers’ Organisation for Local Government
• Local Authorities Coordinators of Regulatory Services (LACORS)
• Public Private Partnerships Programme (4Ps)
• Fire Services Examinations Board
• Local Government International Bureau
• National Foundation for Educational Research in England and Wales
• National Institute of Adult Continuing Education
• National Youth Agency

CLG has broadly approved the LGA's proposals, provided they agree to adopt the localist principles of transparency, openness and accountability.

The LGA has slowly emerged as a key delivery agent of the coalition's decentralisation agenda. Their Chairman Baroness Margaret Eaton said, "We are delighted that the Government has responded so positively and creatively to this initiative".

While the Baroness' remark probably isn't an example of Pluralis Majestatis - or 'the royal we' - it will be interesting to watch future developments.

Eversheds look at HR fallout of local government cuts

With likely local government savings of 25% over the next four years, Eversheds' recent local government HR e-briefing considered some of the issues for local authorities to be considering in the HR context.

"Although formal clarification is expected, the two-year public sector pay freeze only looks to be applicable to pay deals which ministers agree directly, and therefore is not applicable to local government."

"That said, the sector will no doubt be under pressure to exercise similar pay restraint. It is not therefore clear whether the flat £250 pay rise for lower paid workers will be agreed for local government."

Staff and staffing issues will be integral to achieving efficiencies, and changes will need to take place over a relatively short timescale. Eversheds identify the following issues:

• Redundancies
• Changing terms and conditions
• Increasing use of shared service and shared management arrangements and greater use of private sector outsourcing
• More aggressive performance management in terms of those not good at the job and those with poor sickness records
• Strikes and industrial action
• Potential impact on the equal pay agenda
• Pensions issues
• Threats to national pay bargaining

In some authorities voluntary reductions in pay have been agreed with staff to avoid job losses. Flexible working is also key and may help to rationalise accommodation costs.

A Financial Times article published this June also mentions 'a mighty 25 per cent reduction [in departmental spending] over four years.' But it goes further, hinting that NHS funding may be ringfenced, while education and defence funds could receive, 'a degree of protection'.

A key point is that protecting those areas is likely to increase spending cuts in other departments above the average 25 per cent rate mentioned here.

The FT sensibly says, 'Precise details of where the axe will fall will not be known until the autumn spending review.' We await the outcome with bated breath!

- LK & JR

Cuts to the English Housing Survey

The CLG published a cost review consultation on the English Housing Survey (EHS) on 13 August. This paper makes it clear that the EHS has been earmarked for savings.

Section 2.1 of the consultation says, 'As part of the current wider drive to deliver cost savings across government, research budgets are being closely scrutinised to identify where savings can be made. It is therefore necessary that savings are also sought from within the EHS running costs.'

The consultation identifies a cut in the overall sample size as, 'the only viable means of delivering the significant cost savings required.'

According to Inside Housing, 'The consultation includes a choice between two cuts to the number of people interviewed of either 20-25 per cent or 35-40 per cent.' Another option being considered is to drop certain questions from the survey.

RIP NTV

The Government officially axed the National Tenant Voice (NTV) following a meeting between Grant Shapps, Richard Crossley and Michael Gelling. According to an article in Inside Housing dated 15 July, Government officials saw the NTV as 'too distant', and poor value for money.

More in-depth comment is available from 24-housing. Peter Marsh said, "Tenants do need to have a national voice and I hope the likes of TPAS and TAROE are able to do something to ensure the framework continues even in the absence of government funding."

Inside Housing on 23 July carried a long article on the meeting, and on 6 August reported that the NTV has put in a bid for £50,000 from the Tenant Empowerment Grant to work out a plan to sustain the NTV without government funding.

"Michael Gelling, chair of the NTV, explained that the four national tenants groups - the Tenant Participation Advisory Service, Tenants’ and Residents’ Organisations of England, Confederation of Co-operative Housing and National Federation of Tenant Management Organisations - still intended to set up a separate ‘joint national tenant scrutiny committee’.

"The groups announced their intention to form the independent committee in April. They saw it as a way to provide an alternative form of scrutiny because, at the time, the NTV was government-funded and unable to speak out during the general election campaign."

 A further IH report on 19 August said that the NTV was to wind down its company structure.

More details on Audit Commission scrappage

Since the Audit Commission scrappage announcement was made on Friday afternoon, more details have emerged across the media. This article summarises the key points of Pickles' announcement and links to the source material.

Eric Pickles' announcement to scrap the Audit Commission (AC) was due to be revealed in an exlusive interview in Saturday's Daily Telegraph, but was leaked by AC staff on Friday afternoon.

The Telegraph interview rather flippantly describes Mr Pickles actions that day: "[He] later began telephoning staff at the Audit Commission to tell them that their jobs are gone – the quango will be all but abolished within three years, saving millions for the taxpayer."

The official story from CLG

The CLG's press release is (back)dated to Friday 13 August. It states that the AC's "responsibilities for overseeing and delivering local audit and inspections will stop". Audit functions will shift to the private sector and research will cease completely.

Councils will be allowed to hire their their own independent external auditors, the NHS will have a new audit system. There is no mention about social housing providers.

The CLG's press release continues, "councils and local health bodies will still be subject to robust auditing. Protections will be developed to ensure independence, competence and quality, including audit quality regulated within a statutory framework, overseen by the National Audit Office and profession." Again, no mention of housing providers.

The aim is for the changes to be in place from the 2012/13 financial year, with the necessary legislation being sought in this Parliamentary session.

The CLG is to work with the Audit Commission, the accountancy profession, and the local government and health sectors to develop the detailed design of new audit systems.

The National Audit Office's central government role will expand to take in local government. There is also mention (again) of the Local Government Ombudsman to "strengthen individual citizens' rights of redress should they receive poor council services" by having legally enforceable judgements.

The Audit Commission's response

The Commission's Chairman, Michael O'Higgins, has made a statement on the AC's website. He expresses regret that they will be abolished, but also says, "there are a range of options for the future of the audit practice, including sale, a management buyout, and the setting up of some sort of mutual organisation."

Blogs and opinion pieces

The FT's 'Westminster' blog article contains a copy and paste of the email sent to AC staff. It puts forward a 31 Dec 2012 end date for the AC by stating that the "government has reappointed two commissioners to serve terms until 31 December 2012." This isn't mentioned elsewhere.

Tony Travers, writing in Public Finance, said:

Since May, Pickles has intervened in Doncaster Council on the basis of Audit Commission investigations. In a small country such as England, ministers will often feel under pressure to act in an attempt to mitigate gross failure within local provision.

If Pickles and his colleagues are true radicals, they will now have to accept that there will, from time to time, be public service failures that will be left to the electorate to sort out through the ballot box, or through some kind of ‘market’ solution.

Central intervention would surely be misplaced – you cannot be a ‘half localist’. We will have to wait to find out how far David Cameron’s government will be willing to defend such painful outcomes.

Clive Betts MP of Local Government Select Committee says abolition will cost in the long term.

Many articles refer back the Audit Commission's "day at the races junket". Someone has posted a riposte on Sky News website (scroll down to comments). It was to hire out Newmarket race course's conference facilities on non-race days. By that token HouseMark has had jollies at sporting venues up and down the country!

Other relevant press articles

BBC article reporting the AC's defence of its record and some video footage of Eric Pickles

The Guardian reported the story late on Friday - quite a good summary

Reuters has pulished details estimating the value of the AC's audit services at between £100-150m.

Audit Commission to be scrapped

The BBC has announced that the Audit Commission will be scrapped. According to the BBC's source this announcement came 'out of the blue'.

The Financial Times (FT) has published a leaked memo addressed to the Commission's staff.

The memo contains what has rapidly become the coalition's signature phrase that, 'Nothing happens immediately.'

The Audit Commission is a key HouseMark partner, and they have been the source of a great deal of our positive practice. They underpin our Inspection Focus product.

To quote their Chief Executive Eugene Sullivan, 'The independence of audit, its disinterested pursuit of good value in public spending, its custodianship of best practice in financial management: these are not to be lightly cast aside.'

The press is responding even as I write. As you can imagine, this is big news for the social housing sector! Some quick links (the Independent is the best one):

http://www.independent.co.uk/travel/news-and-advice/audit-commission-to-be-scrapped-2052069.html

http://www.telegraph.co.uk/news/newstopics/politics/7944639/Audit-Commission-scrapped-as-austerity-drive-intensifies.html

Coalition's views on satisfaction surveys

Grant Shapps wrote to all local authorities on 10 August (see below for text). Vicki points out that, although it is mainly about Place Survey, it also gives Shapps's views on STATUS.

It contains the familiar rhetoric :

"reducing centrally imposed burdens and freeing up resources for front line services."

but notice they haven't offered the £700 per month for STATUS back to LAs to spend on the front line!)

And leaving it up to you:

"As a good landlord I know that you will do whatever is necessary to ensure that your tenants are satisfied through your own local measures."

Cameron signals crackdown on welfare fraud

A crackdown on welfare and tax credit fraud is high on the coalition's 'things to do' list, and David Cameron made this clear during a recent PM Direct session in Manchester saying, "The system pays money inappropriately to people who are not entitled to it so we have got to make the system work better as well. Both things, fraud and error, go together and I want to cut them both."

Before the event, the Prime Minister wrote to the Manchester Evening News. He said, 'Welfare and tax credit fraud and error costs the taxpayer £5.2 billion a year. That’s the cost of more than 200 secondary schools or over 150,000 nurses. It’s absolutely outrageous and we can not stand for it.'

With costs of that order welfare reform is likely to feature heavily in this autumn's spending review. The PM wrote further, 'I have asked Iain Duncan Smith to draw up an uncompromising strategy for tackling fraud and error which we will publish in the autumn.' Mr Cameron is looking at a wide range of options including:

• introducing tougher penalties
• pursuing more prosecutions
• encouraging people 'in the know' to come forwards
• making more effort to reclaim money that is wrongly paid

Chris Grayling, the welfare minister, was recently interviewed on BBC Radio 4's Today programme where he discussed using private credit referencing companies, such as Experian, to track down benefit cheats. He quickly side-stepped media claims that these organisations would act as 'bounty hunters'. Mr Grayling said:

"Why should the government not use the same tools available to independent organisations?"

"This is data that is publicly available, that is publicly on sale, that is available to set out spending patterns – what loans you have taken out, what your overall patterns of spending in your life are."

All this seems faintly reminiscent of the USA's approach to tackling welfare fraud: a controversial blend of hi-tech and law enforcement which we have yet to see in the UK.

If you are interested in where the US's 'profile building' model ended up, it may be worth reading 'The criminalization of poverty' by Kaaryn Gustafson, who is an Associate Professor at the University of Connecticut School of Law.

More generally (and not really about fraud) the National Housing Federation is ill at ease with the coalition's welfare reforms, and is lobbying and campaigning against them. On 10 August it published a new briefing called 'Housing Benefit and Local Housing Allowance reforms'.

Finally, the TUC has published an article suggesting that, 'Benefit fraud accounts for only a small part of the benefits bill – less than 1%'. It's good to know that most people are honest!

Other sources

1. The BBC has published a news article about welfare reforms, containing some key facts.
2. 24dash news has written an informative piece on this subject.

Shapps announces new builds bonus

Grant Shapps has announced an incentive scheme for councils, encouraging them to build more homes. His New Homes Bonus would match the council tax raised on each development over a 6 year period.

We now know at least one item which will definitely appear in this autumn's Spending Review, as Mr Shapps said:

"With housebuilding at its lowest peacetime levels for over 80 years action is needed now to build the homes the country needs. That's why these new powerful incentives to build will be introduced early in the Spending Review period."

The scheme would not be prescriptive in terms of how local councils should spend extra funds. According to the CLG, 'Communities will be able to use their reward for going for growth on whatever they wish locally, such as council tax discounts for residents or facilities like playgrounds.'

During a recent BBC interview (you will need to scroll down a bit!) the NHF's David Orr said, "This incentive might help to persuade some local authorities, whether it will be enough to persuade the local communities - I think that's a much broader question."

Apparently this scheme has been in the pipeline for a while, as a Times article dated 12 June carries comments from Mr Shapps. He said, "An authority that ensured 10,000 new homes are put up could be in line for £100 million over six years. The incentives will be available for housing schemes that receive planning permission today."

David Orr's response begs the question, 'Are we a nation of Nimbys?'

According to a report published by the National Housing and Planning Advice Unit (NHPAU) in June this year, over 76 per cent of English adults, 'would support more houses being built in their area provided services such as GP surgeries, hospitals and schools do not suffer. Further, 73 per cent would support more homes if well designed and in keeping with their local area.'

Sadly, NHPAU was culled at the end of June to cut costs, so we may never know if those figures hold water.

Cameron kicks off tenure debate

During a 'PM Direct' question and answer session in Birmingham, David Cameron triggered controversy by suggesting that council tenancies should not be granted for life.

In the run-up to the last General Election Mr Cameron refuted claims from the previous Housing Minister John Healey that security of tenure would be under threat.

Back then Mr Cameron said, 'The truth is that in the past few years, it’s been Labour ministers who have thrown social tenants’ right of tenure into question, and it’s been this Labour Government which has forced up social rents for councils so that they’re in line with housing association rents.' This was reported by Inside Housing at the end of April 2010.

Housing Minister Grant Shapps claimed Mr Cameron was only trying to 'spark a debate' on the issue, which could end the right of tenants to pass homes on to their children.

The Deputy Lib Dem leader Simon Hughes was quick to comment on Mr Cameron's ideas, telling the BBC that the Coalition has had no formal discussions on this subject. Mr Hughes made it clear that David Cameron would need to go through 'the proper channels' if he wants to push ahead with his plans.

An article in the Guardian says, 'The communities department estimates that it costs each taxpayer £35 a week to keep people in affordable homes, and it is argued the tenancy for life is an inefficient use of scarce resources.'

A consultation paper on this subject is expected very soon, so please expect Coalition Watch to summarise the key points as and when they appear. It is perhaps curious that a consultation should be mooted so soon after an apparently throw-away remark...

In the meantime, why not read this blog entry from Peter King at the Institute of Economic Affairs (IEA)? It will help to provide a different perspective.

Granting tenants more mobility

Housing Minister Grant Shapps has pledged to introduce a new National Affordable Home Swap Scheme to help tenants move. Mr Shapps argues that current schemes are too limited, leaving tenants trapped in unsuitable housing.

The new scheme would be open to all social housing tenants, providing them with what Mr Shapps calls a 'freedom pass' to move home for work, or for any other reason. A Right to Move initiative will also be trialled in two London boroughs: Kensington and Chelsea, and Hammersmith and Fulham.

Grant Shapps said, "It is quite clear that the real losers from the current system are the 1.8m people on council house waiting lists who the current arrangements do not help."

"It is time to consider whether our affordable housing system can be better used and whether one of the benefits would be greater social mobility. This will have no impact on existing council or housing association tenants."

When Grant Shapps was no more than a humble Shadow Housing Minister, he called for a Mobility Taskforce to shape proposals for the new scheme. The Taskforce includes representatives from a variety of backgrounds, including:

• TAROE
• the National Housing Federation
• National Federation of ALMOs

The group recently published a detailed report, making a wide range of recommendations. However it says, 'We conclude that action to increase mobility through swap services, alongside a concerted effort to increase mobility through giving existing tenants more opportunities to move via transfers, could make a significant difference to the lives of existing tenants and their children.'

There are detractors. For example Evelyn Tehrani, a research fellow at ippr north, is concerned that high-demand areas might not have the capacity to deal with an influx of tenants. She asks, '...who will want to move to the less desirable areas?'

Evelyn suggests that the 'Right-to-move' could quickly mutate into, 'You-must-move' if the scheme suffers a low take-up rate.

On a lighter note, London Councils offer a 'Freedom Pass' for older and disabled people, giving them free travel on public transport. Could this be where Grant Shapps got his 'freedom pass' idea from?