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Tuesday, 23 October 2018

Councils in England are putting public funds at “unnecessary or unquantified risk” when borrowing to invest in commercial property

Councils have been gambling with our money:
Futures Forum: UK public finance: councils building a credit bubble >>> >>> In October 2008, UK councils lost heavily from speculative investments. Could this happen again?

Including nearer at home:
Futures Forum: District Council local housing company >>> "the ‘huge risk’ in speculating on the property market"

The Chartered Insititute of Public Finance and Accounting is worried: 
Statement from Rob Whiteman and Richard Paver | CIPFA

As reported widely:
Cipfa issues warning over commercial property investment | News | Local Government Chronicle
CIPFA to tighten prudential code as council commercial property investment accelerates | Room 151
CIPFA warns councils against exposing public money to risk in commercial property investment 

CIPFA warns councils over serious commercial activity concerns


18 Oct 18
CIPFA is to work on fresh guidance over concerns councils in England are putting public funds at “unnecessary or unquantified risk” when borrowing to invest in commercial property.

In a statement released today, the insitute suggested local authorities were investing in commercial properties disproportionately to their resources.
This would be against the requirements of the CIPFA’s Prudential Code and Treasury Management code, the joint statement from CIPFA chief executive Rob Whiteman and chair of CIPFA’s treasury and capital management panel Richard Paver, said.
Whiteman and Paver said that “in some cases these investments have been financed by borrowing” and CIPFA shared concerns there had been an “acceleration of the practice of borrowing to invest in commercial property”.
They warned councils the “prime policy objective of a local authority’s treasury management investment activities is the security of funds, and that a local authority should avoid exposing public funds to unnecessary or unquantified risks”.
CIPFA’s code and the government’s Statutory Guidance on Local Government Investments were “very clear that local authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of the extra sums borrowed”.
The institute will “issue more guidance and will make it clear that these investment approaches are not consistent with the requirements of fiscal sustainability, prudence and affordability,” the statement said.
Government figures released last week showed an increase in local authorities’ commercial activities.
English councils’ acquisition of land and buildings rose by £1.2bn (43.1%) to £4bn in 2017-18 from £2.8bn in 2016-17, the Ministry of Housing, Communities and Local Government data revealed.
Total borrowing by councils in England had risen from £4.4bn in 2013-14 to £10bn in 2017-18.
The guidance is expected to be published before the end of the year.
Until it is released, CIPFA advised local authorities to refer to the government guidance, which cautions local authorities against:
- Becoming dependent on commercial income;
- Taking out too much debt relative to net service expenditure; and
- Taking on debt to finance commercial investments.
The MHCLG figures out last week showed the largest investors in commercial property were Spelthorne Borough Council at £270m and Warrington Borough Council with £220m. Eastleigh Borough Council also spent £194m.
In 2016, Spelthorne took out 50 separate Public Works Loan Board loans to fund the purchase of a £360m business park in Sunbury-on-Thames.
PF understands that MHCLG and the Treasury have expressed concern about the scale of commercial property investment. 
MHCLG has been contacted for comment.
  • Dominic Brady
    PF reporter 

CIPFA warns councils over serious commercial activity concerns | Public Finance
“CIPFA warns councils over serious commercial activity concerns” | East Devon Watch
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Apple pressing > The Knapp, Sidmouth > Wednesday 24th October

It's that time of year:
Futures Forum: Apple pressing > Salcombe Regis > Sunday 14th October


The District Council's Countryside team will be down at the Knapp tomorrow for more fun:


Apple pressing



Apple pressing

Enjoy your own delicious apple juice!

Enjoy delicious apple juice picked and pressed at The Knapp - as fresh as it gets!
Bring a flask and join the Wild East Devon rangers at Knapp Local Nature Reserve for a morning of harvesting in the orchard.

How much

Free.
No booking necessary.

When

 - 

Where

The Knapp Local Nature Reserve 
Station Road
Sidmouth
NEAREST POSTCODE EX10 8NZ

Directions

Get directions to this event with Google Maps.

Parking

Roadside parking on Station Road.

Who

Event aimed at everyone.
Limited access for wheelchairs. Please contact the team to discuss.
Well behaved dogs on leads welcomed.

Further info

Call Countryside on 01395 517557 or email countryside@eastdevon.gov.uk


Apple pressing - East Devon
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Climate change: and banks looking at the risks

What are the risks which banks have to deal with when it comes to climate change?
City scrambles to act on climate change as window to limit risks is 'finite and closing'

Well, they're not saying:
Banks will not be forced to reveal climate change risks they face | Environment | The Guardian

The New Economics Foundation asks a few questions:

RESHAPING FINANCE FOR A 1.5C WORLD

WHAT THE BANK OF ENGLAND NEEDS TO DO FOR A GREEN TRANSITION



Climate change is here, and it’s not just the price of beer that is going to be affected. According to the latest IPCC report, we have just over a decade to limit climate change catastrophe. The transition to a just, sustainable economy will affect all aspects of society – including the financial sector. The implications of this report are clear: we urgently need bold solutions that reshape finance and harness its benefits to catalyse a sustainable low carbon transition.
First, the good news: in certain parts of the financial world at least, the tide may be turning. In fact, last Friday 19 of the world’s leading central banks and regulators warned that the financial risks of climate change were system-wide and potentially irreversible if not addressed”.
This potentially game-changing report states that it is within the mandate of central banks to ensure the financial system is resilient to climate change and, as we recommended over the summer, the report calls on central banks to lead by example in the fight against climate change. It is difficult to overestimate how significant this step – no, leap – really is!
The question now is: will the Bank of England follow suit? In the absence of reform, finance risks​‘locking-in’ and exacerbating the worst effects of climate change.
A recent survey by the Bank shows that only one in 10 banks are taking a long enough view of climate-related risks. We have an overly concentrated financial system that lacks diversity and prioritises short-term profits and shareholder interests over the environment. For too long the financial industry has regarded the economy’ and finance’ as detached from people and the planet we live on, following some immutable laws we have no control over.
CLIMATE CHANGE IS THE GREATEST MARKET FAILURE WE’VE EVER SEEN, IT’S ESSENTIAL THAT THE BANK OF ENGLAND TAKE RESPONSIBILITY FOR ADDRESSING IT.
As we mentioned in the Guardian and Telegraph on Monday, the Bank has made some modest steps in ensuring the financial sector begins addressing climate change but the findings of the recent IPCC report imply that we need to do much more than simply tinker around the edges.
The approach taken by the Bank places too much faith in the efficiency of markets and shareholder capitalism. Excessive faith in market efficiency is what led to the last financial crisis. Climate change is the greatest market failure we’ve ever seen, it’s essential that the Bank of England take responsibility for addressing it.
The real irony is that while the Bank is pushing banks and insurers to be more transparent and prepare for climate change, the Bank’s own monetary policy framework fails to reflect climate risks and is skewed towards carbon intensive sectors. The Bank is now in serious danger of not practicing what it preaches.
Incremental adjustments to finance are not enough to tackle the monumental challenge of a rapid, sustainable and fair transition to a clean economy. We will need innovative and disruptive reforms that help reshape finance, so that it can help sustain our planet and enable us to thrive.
In light of this, the New Economics Foundation has released a new briefing with the following recommendations:
  • Walking the talk on TCFD: The Bank of England should make the Task Force on Climate related Financial Disclosures recommendations mandatory, but first needs to lead by example on transparency and disclose the climate related financial risks it faces.
  • Reflecting climate risks in collateral frameworks: The Bank has urged financial institutions to proactively manage climate risks, but it needs to practice what it preaches and integrate climate risk into its own monetary policy operations.
  • Green macroprudential policy: Changes to policy reflect too much faith in efficient markets and shareholder capitalism. The Bank should begin stress testing the climate resilience of banks and consider raising capital requirement for brown loans.
  • Green credit guidance: To guide finance towards low-carbon sectors new tools should be introduced, such as: green targeted refinancing lines, ceilings and green credit quotas, and a minimal ratio of green lending to the real economy.
  • Repurposing the £125bn Term Funding Scheme: The Bank should redirect the £125 billion TFS scheme into a public investment bank or regional community banks with a green mandate.
Read the full paper below.

DOWNLOAD THE REPORT



Reshaping finance for a 1.5C world | New Economics Foundation
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Monday, 22 October 2018

Land Value Capture > "measures which could radically increase housebuilding"

The idea of 'capturing' rises in land value is gaining ground considerably:
Futures Forum: A solution to our housing problems: share the increases in the value of land with local communities
Futures Forum: Land value tax > A growing number of thinktanks and politicians support imposing a tax that would take a slice of rising land values.
Futures Forum: A solution to our housing problems: tax land values and give councils powers to benefit from planning approval windfalls
Futures Forum: A solution to our housing problems: land value capture
Futures Forum: Council tax should be replaced by a land value tax
Futures Forum: Land Value Uplift Tax >>> "Public investment on or near a piece of land significantly increases its value wherever you are."

Over the weekend, the Telegraph highlighted goings on at the Treasury:
Landowners to be forced to sacrifice profits for more affordable houses, under plans expected to be unveiled in budget - Telegraph

It might happen:
Land Value Capture - parliament.uk
Letwin review 'to recommend land value capture measures' | Planning Resource

Or not:

Final Letwin Review to Recommend Increased Land Value Capture – But May Resists

OCTOBER 21, 2018 / ANDREW LAINTON

So why have MHCLG [Ministry of Housing, Communities and Local Govt] officials been playing this down (i.e. reform of the Land Compensation Act 1961 to extend the no scheme world principle to all development land?) as the article says Downing Street and Treasury ‘locked in the discussion’ the pull back can't be Gavin Barwell – who put LVC  in Manifesto – it must be the Prime Minister as ever [be] putting the brake on measures which could radically increase housebuilding.

Telegraph

Landowners to be forced to sacrifice profits for more affordable houses, under plans expected to be unveiled in budget

Councils would be able to strip landowners of large portions of profits from the sale of their land, under proposals expected to be unveiled in the Budget, The Sunday Telegraph can disclose.

An official review commissioned by Philip Hammond, the Chancellor, is to endorse controversial calls for the state to “capture” more of the increase in value of sites when they are granted planning permission.

Sir Oliver Letwin, the former minister carrying out the review, is expected to recommend that local authorities should be able to seize greater amounts of landowners’ profits in order to fund the construction of local infrastructure such as roads and affordable homes.

Downing Street and the Treasury are now believed to be locked in discussions over how radical an approach the government could endorse. Sir Oliver’s final report could go as far as recommending the compulsory purchase of land at discounted prices that exclude the “uplift” in value from planning permission.
But some are pushing for less radical measures, amid fears the use of compulsory purchase laws would be toxic among many traditional Conservative supporters.

Mr Hammond is planning to set out Sir Oliver’s proposals in the Budget on October 29, although the Chancellor is likely to fall short of formally adopting any ideas until they have been further scrutinised by the government.

Separately, sixty councils across England have pledged to build council homes on a scale not seen since the 1970s, in an open letter following Theresa May’s decision to lift a borrowing cap currently imposed on local authorities.

Sir Oliver’s report comes amid growing calls from MPs, charities and think tanks, for the state to claw back more of the increase in value that landowners gain from planning permission granted by local authorities, including with a radical overhaul of compulsory purchase laws.

Developers warn the campaign advocates a “wholesale erosion of private property rights” and insist that existing mechanisms already allow councils to extract money for local infrastructure.

Sir Oliver’s focus on further capture of land value came in the final months of his review of the “gap” between the number of planning permissions granted to developers and the number of homes actually being built.
“In carrying out the review he has alighted in the fact land owners are making more money than they should,” said a source familiar with Sir Oliver’s discussions.

Addressing current slow “build out” rates of homes due to be constructed, Sir Oliver is expected to set out recommendations designed to ensure a greater mix of homes on large sites, including by handing over portions of the biggest sites to smaller developers in order to help increase the rate of construction.

He told The Sunday Telegraph in March that the main reason for the slow rates of construction was that homes on the largest sites were too alike, both in terms of the buildings themselves and their surroundings, and the “tenure” of the properties – whether, for example, they were ultimately aimed at private purchasers or renters, or those who would be renting through local authorities or housing associations.


Final Letwin Review to Recommend Increased Land Value Capture – But May Resists | Decisions, Decisions, Decisions 

See also:
Futures Forum: Transition Exeter >>> Thursday 18th January >>> Monetary reform and land reform - comfortable bedfellows?
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Towns need to be run completely differently

Our high streets are in trouble:
Futures Forum: Is it the end of the road for the High Street?

Central government could help:
Futures Forum: How to revive the health of Sidmouth's high street >>> East Devon MP's on-line survey


And the council could perhaps be doing something:
Futures Forum: Save our high streets: "Isn’t it time our council did an audit and come up with a strategy for their future?"
Futures Forum: Councils and business rates: "their short-term focus on raking in money could end up destroying town centres weighed down by huge tax burdens"

As could the wider community and businesses:
Futures Forum: The shift in economic importance away from the high street "represents an opportunity for policymakers, businesses and communities to proactively choose a new direction"
Futures Forum: The 'Amazon tax' won't save the High Street > 'The nature of the offer on the high street is going to change over time. There's going to be less retail, more leisure, bars, community facilities.'
Futures Forum: How to revive the health of high streets > "We want vibrant centres in our cities and towns. But not streets lined with identical collections of outlets of the same chain retailers. Think of high streets as community hubs rather than shopping malls."

One place where things are happening is Frome:
Futures Forum: "Time for a change! What’s happening in local politics" >  
Futures Forum: Frome becomes Best Place to Live in the Southwest - again
Futures Forum: FLATPACK DEMOCRACY >>> sharing a vision of how we can change the status quo > 

The Guardian's John Harris has been looking:

Towns need to be run completely differently




Pinterest
 Flatpack democracy: the new English political revolt

The Somerset town of Frome is 14 miles from Bath and has a population of around 25,000, split between relatively recent incomers attracted to its newly fashionable reputation and people whose backgrounds reach back into the town’s industrial past and its recent experience of neglect and hardship.
Frome has pioneered a new idea known as “flatpack democracy”, centred on the town and parish councils that form the English system of government’s lowest tier. We explored it two years ago.
The idea has two key elements. First, it aims at running as many local amenities and services as possible from the absolute grassroots. Second, and equally important, it is about opening up decision-making to the maximum level of local participation. As the idea’s inventor, Frome councillor Peter Macfadyen, puts it: “There are other town councils where the clerk walks in first, and the members stand, the mayor comes in behind, and they then say a prayer. The public have to write in beforehand, saying they want to speak. And it’s all just lost in some sort of Victorian past. It’s just insane.”
The idea of flatpack democracy, or something very like it, has been adopted in towns and villages in Bedfordshire, Devon and Cheshire. In the small northern city of Preston, an energetic Labour council is blazing a trail for something comparable but even more ambitious: the so-called Preston model of local government, whereby as much council spending as possible is aimed at boosting the local economy. Since the Brexit referendum, we have regularly wondered whether these ideas could be tried in the kind of towns whose experiences of deindustrialisation, political neglect and latter-day austerity have all highlighted the extent to which one their biggest issues is power, and the lack of it.
Wherever we go, with good reason, most people we meet have no sense of which bit of government is responsible for this or that aspect of their lives – only that the forces making the decisions are remote, seemingly unaccountable and rarely interested in where they live. Many urban areas have been recently boosted by the creation of “city regions” governed by “metro mayors”; in Scotland and Wales, devolution has brought power closer to people’s lives. In most English towns, by contrast, systems of power and accountability are pretty much as they were 40 years ago.
What this does to people’s connection with politics is clear. To quote a report by the recently founded thinktank the Centre for Towns, “on average, people living in cities are much less likely to believe that politicians don’t care about their area. Those living in towns are, in contrast, more likely to think politicians don’t care about their area – and won’t in the future.”
There lies the biggest issue of all. The future of our towns will only partly be decided by the high-octane rituals of Westminster debate, and general elections. What really matters is whether they might finally run a much greater share of their own affairs – and, to coin a memorable slogan, take back control.

“Politicians may finally be catching on: towns now hold the key to Britain’s future” | East Devon Watch
Politicians may finally be catching on: towns now hold the key to Britain's future | Cities | The Guardian
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Sunday, 21 October 2018

Review of National Parks and AONBs > call for evidence

The government’s review of designated areas, led by Julian Glover, will consider whether more national parks are needed - and that includes the possibility of a Dorset-East Devon/Jurassic Coast National Park:
Futures Forum: Support growing for a Jurassic National Park
Futures Forum: Support growing for a Jurassic National Park > press release from Dorset
Futures Forum: Support growing for a Jurassic National Park > the government's review of national parks has "cross-county and cross-party support for conserving and enhancing a landscape that includes the World Heritage Jurassic Coast, inland Ridgeways and the area of Thomas Hardy’s novels"

The government is taking the process further by opening up things to the public:
National Parks 'could be expanded' as part of Government review, Michael Gove announces - Yorkshire Post

Here is Defra's dedicated website:

Landscapes Review: Call for Evidence




Closes 18 Dec 2018
Opened 20 Oct 2018

Overview

The Government has asked for an independent review of England's National Parks and Areas of Outstanding Natural Beauty (AONBs). You can find more about the work of the review and our Terms of Reference. Already the review team, led by Julian Glover and a panel with a range of experiences and interests, has carried out visits and meetings in many parts of England.

We will do more in the months ahead - but we want everyone to have a chance to contribute, whether you live in a National Park or AONB, run a business in them, enjoy visiting, care about landscapes and biodiversity, or represent an organisation with views that might shape and improve our findings. 


The questions (available as a list in the related documents section below) are a guide: please do not feel you must answer them all – or have to write at great length. We have not set a word length on answers, as we know some people and organisations will want to reply in detail on specific points. However, we ask that where possible you keep each individual answer to no more than 500 words. It is not necessary to reply to every question so please ignore those which you do not think relevant to you. You may find it easier to write your answers elsewhere before pasting them into the text boxes which follow.

Thank you for your interest.

Give Us Your Views:
Online Survey

Plastic waste > County Council's workshop ‘Making plastic pollution a thing of the past’ > but "the fact that plastic recycling is dubious and not the answer... got very heated"

Things are looking really difficult for councils trying to deal with their plastic waste:
Futures Forum: Councils face mounting costs of dealing with plastic waste: "manufacturers should take up more of the responsibility for dealing with these unrecyclable materials"
Futures Forum: Councils cut plastic recycling
Futures Forum: Plastic and councils: there is no one-size-fits-all solution OR a “barmy” mass of different local approaches to recycling

Denise Bickley of Sidmouth Plastic Warriors has just posted this report from a session held last month - which is very revealing as to how tetchy officers are about what exactly is happening to our plastic waste:



Monday 3rd September – Plastic Free Devon Meeting


I was invited along to a Community Workshop run by the Environment Agency on 3rd Sept
and have been admonished for not making this a public blog, so apologies for the delay but let me summarise the day (at least what I remember of it after a month and a half).
It was held at the County Council offices in Exeter – and that in itself is an eye opener: a massive building, high ceilinged, huge grounds – surely it would never be built like this if it was built today!).
The title of it, ambitiously, was ‘Making plastic pollution a thing of the past’ and the idea was to bring together representatives from groups a bit like ours all over Devon, Cornwall and a few from Somerset (I believe), with the aim to uniting us all and enabling us to share resources and ideas.
Councillor Roger Croad was in attendance, from Devon County Council and gave us a brief welcome, then we had a speaker –  Jackie Young: PF Plymouth Waterfront – talking about the issues and complications with the Surfers Against Sewage Plastics Free Coastline ideas when rolled out for a big city such as Plymouth – they are basically writing the programme as they go along, and it is an immense job needing a large team of volunteers and a budget to get the message across.
After Jackie we broke out into focus groups, to discuss challenges and successes, in the areas of:
Galvanising community support; using social media effectively; working with businesses; and Fundraising. We were a very broad ranging group, from highly organised, ‘businesslike’ groups down to single people trying to get things changed in small villages, with no social media presence at all, so it was pretty interesting to see how everyone was doing.
The next step, we all felt, was uniting to get a Plastic Free Devon, or Plastic Free South West. This will be a huge undertaking and really will mean that SAS will need to almost write a whole new programme.
Since then we have had a Facebook account set up for all of us, plus an online storage area where we can share resources.
I felt the day was useful but needs more follow up, more dynamism, more energy thrown at it. As always I am anxious that we change faster, unite more, share wider…but it’s a start.
My highlight of the day was having quite a heated debate with Annette Dentith who was there from DCC Waste, who, when I mentioned our Freedom of Information request and the fact that plastic recycling is dubious and not the answer, got very heated and told me that we shouldn’t really submit requests like that but just ask them, they’re very transparent. The news recently would dispute that. https://www.telegraph.co.uk/news/2018/10/19/plastic-becoming-expensive-recycle-councils-say-giant-waste/  We knew it Jeremy!
A for effort for organising the day, D+ to the DCC Waste representative I’m afraid.
Dx

Monday 3rd September – Plastic Free Devon Meeting – Sidmouth Plastic Warriors

Ant the Plastic Warriors know what they're talking about:



Beach Clean Sept 15th 2018 – Sidmouth Plastic Warriors
Futures Forum: Great British Beach Clean > Sidmouth Plastic Warriors > Saturday 15th September

See also:
“Sending plastic to the correct reprocessor” - a Freedom of Information request to Devon County Council - WhatDoTheyKnow
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