From:                                   Rob Whiteman, CIPFA <cipfa@email.cipfa.org.uk>

Sent:                                    10 June 2020 14:49

To:                                        Moore, Ashleigh

Subject:                                CIPFA COVID-19 Bulletin

 

Weekly update on coronavirus

CIPFA | The Chartered Institute of Public Finance & Accountancy


CIPFA COVID-19 Bulletin

Key financial challenges

The need for additional funding is still dominating the meetings we are attending with MHCLG and HMT. In addition to our conversations with government, CIPFA’s Research & Analytics team is also looking at our funding model to see how we can provide further support to the sector. Audit is also featuring heavily in our discussions. It will be no surprise to many of you that we are expecting an increased focus on financial resilience and cash flow from auditors. 

A recent article in the Local Government Chronicle explored the requirement on local authorities to reach a balanced budget on an annual basis. At a time of crisis, it is understandable that these challenges arise. We will be supporting treasurers across the country to make sure the reasons behind this are understood and, to quote Gary Fielding (Society of County Treasurers President), we do not “kick the can of problems down the road.” Our publication - Balancing Local Authority Budgets - might provide a good starting point. 

Inter-authority loans 

As a CFO, the subject of inter-authority loans is something you’ll be highly familiar with. However in recent weeks, we have seen an increase in press scrutiny around this topic. Back in March, our Associate Director Andy Burns wrote an article for the Municipal Journal about the rising trend, basing this on data compiled by our Research & Analytics team.

Following the 1% increase in interest rates for PWLB loans, there was a significant change to borrowing. In the quarter covering the period from September to December 2019 (Q3), PWLB borrowing increased by just £258m (compared to £3.5bn in Q2) a reduction of 93%. Conversely, inter-authority lending increased by over £1bn over the same period, the biggest quarterly increase since 2017.

Inter-authority lending can appeal as a low-risk strategy because it can be mutually beneficial for both the lending and borrowing council. The priority for treasury management is to protect capital rather than to maximise return. Councils should have formal and comprehensive objectives, strategies and reporting arrangements for the effective management and control of their treasury management.

Support for social care

There has been a lot of controversy this week around the £600m Infection Control Fund – with concerns around both the restrictions on its use and the associated bureaucracy. Social care providers are reporting huge increased costs related to infection control, mainly around PPE and enhanced cleaning, neither of which can be covered by the fund. 

New guidance has now been issued in response to questions received from local government and care providers.  It sets out the infection control measures that the fund can be used to support, as well as information on the distribution of funds and reporting requirements. 

The conditions of the fund put the onus on local authorities to distribute and report on how the fund is being used, to ensure it is not clawed back at the year end. This is creating an administrative burden for councils for a fund from which they do not benefit. It is also pushing the onus onto local authorities to support the whole social care provider market – not just those they contract with – rather than the government directly supporting this sector as they have provided support for other areas of business.

For the duration of the crisis, government has provided direct support to private sector businesses across all industries and sectors. This should be reflected in how support is provided to the private sector social care provider market.

Scrutiny of spending

The NAO is rapidly producing a new programme of reports to support both Parliament and the Public Accounts Committee (PAC) in their scrutiny of government’s response to COVID-19. On 4 June, a PAC enquiry was launched into the whole of government response to COVID-19, with a deadline of 11 June and a formal evidence session on Monday 15 June. As your institute, we will respond as we have done previously, making sure funding concerns are at the top of the agenda. Read the whole of government response here.

Local government procurement: fraud and corruption risk review

This week, MHCLG published a review into the risks of fraud and corruption in local government procurement. A member of the CIPFA team has been on secondment with MHCLG supporting this research.

The review sets out practical examples and case studies showcasing how councils can strengthen their processes and implement prevention measures at a time when the risk of fraud is higher than ever. 

The research can be found in full here.

Networks Update 

Police Network 

AFEP finance leaders now have complimentary access to Policing Insight for the duration of your AFEP licence. An individual free subscription will provide you with access to an online media monitor for the latest police sector news and articles. 

Recent webinars

We are running a series of topical webinars exploring various consequences of the COVID-19 pandemic for local government and other public service professionals.

  • The fraud implications of COVID-19. Watch here.

Upcoming webinars

Understanding the economic impacts of COVID-19: Macro and local government perspectives – 18 June 2020, 11.00 – 12.00

As the UK economy emerges from the depths of an acute recession, the landscape is lined with fragile expectations and great uncertainty. What will the recovery mean for local government spending and its ability to provide a swathe of public services that are needed now more than ever? How will this increased demand be funded given the economic realities of the lockdown? And what does this all mean for the government’s levelling up agenda?

Register for this webinar here.

COVID-19 advice portal for local authorities 

Essential guidance for local authorities on all aspects of coronavirus support can be found on the GOV.UK website. It is being regularly updated and should act as the definitive reference point for councils: COVID-19 guidance for local government.

Further advice and guidance can also be found on CIPFA’s COVID-19 hub.

Please share any questions or issues you’re experiencing to Joanne Pitt,
CIPFA Local Government Policy Manager: joanne.pitt@cipfa.org

Rob Whiteman
Chief Executive, CIPFA


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