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

Sent:                                    30 April 2020 09:30

To:                                        Moore, Ashleigh

Subject:                                CIPFA COVID-19 Bulletin

 

Weekly update on coronavirus

CIPFA | The Chartered Institute of Public Finance & Accountancy


CIPFA COVID-19 Bulletin

CIPFA CEO Rob Whiteman gave evidence before the Housing, Communities and Local Government Select Committee this week on the impact of COVID-19 on local government finances. Here’s a summary of the key points that were raised:

  • Certainty is the most important thing - there have been many mixed messages delivered to councils since the crisis began
  • Some of the short-term cash flow worries have been alleviated, but money still hasn’t been sufficient
  • We don’t yet know what service provision will look like after COVID-19, and a fair funding review must reflect the new environment and context changes
  • The issuance of 114 notices would be disastrous and would negatively impact the virus response 
  • The budget round this autumn will be very difficult - it’s likely that medium-term strategies will not be delivered and savings will not materialise
  • There is no doubt that care workers wages will need to go up and councils will need more resources to accomplish this – a badge isn’t enough
  • Which taxes should pay for social care? Local government needs access to a plurality of sources – property taxes are not enough to cover the costs
  • After the crisis, we must focus on prevention and mental health because these are things that the UK isn’t very good at. We must take a whole system approach to measure prevention

Rob also announced that CIPFA will issue guidance over the next week or so that will advise S151 officers how to contact government for assistance. More information on the guidance will be available shortly. 

MHCLG also announced yesterday how the latest tranche of COVID-19 funding for local government would be allocated, with districts having been provided with a greater share to compensate for reduced income. 

While we welcome government’s recognition of the pressures being felt by district councils, we must also recognise the increased pressures still being borne by those authorities with social care responsibilities.

Further immediate support is needed for councils delivering social care, but moving forward, this is only further evidence that greater consideration will need to be given to the overall quantum of funding for local government as a whole.

The Government has also confirmed that the Review of Relative Needs and Resource (Fair Funding Review) and 75% business rates retention will no longer be implemented in 2021-22.

Role of the CFO 

It is no surprise to any of us that the press has started to publish articles about local authorities unable to balance budgets. Even before COVID-19, a number of authorities were vulnerable. But with the reprioritisation of budgets in light of falling income and rising costs, the discussions are now increasingly public. The CFO is at the centre of this challenge with a specific legal responsibility and no financial certainty. It is at this time that the skills and abilities demanded by this post will be tested to the limit. CFOs facing demands from council leaders to renew and rebuild local economies despite financial constraints will need skills beyond technical accounting, including risk management and political nous, if they are to thrive in the coming weeks and months.

Balancing a budget will never have been more challenging than it is at the current time and this was why, as part of our snap survey of local authority CFOs, we asked about the appetite to amend section 114. While we need to be clear that at the current time the legislation remains the same, it is important that CIPFA does not shy away from this type of discussion.

While 67% of respondents supported a temporary suspension to section 114, the results showed substantial regional variation. The North West and West Midlands demonstrated greatest support for amendment, with 88% and 86% in favour respectively, while the appetite fell to 36% in Yorkshire and the Humber.

 

Would you support a temporary suspension of the requirement to issue a s.114 notice during the coronavirus (COVID-19) crisis?

Yes

No

Total

67%

33%

North West

88%

12%

West Midlands

86%

14%

Northern Ireland

80%

20%

South East

71%

29%

South West

67%

33%

North East

67%

33%

East Midlands

65%

35%

London

63%

38%

Eastern

61%

39%

Wales

56%

44%

Scotland

43%

57%

Yorkshire and the Humber

36%

64%

*While Scotland and Northern Ireland do not have S114 legislation, respondents from authorities in these areas responded to the question.

What we see is that, although there is broad support for some form of change, this is tempered by the need for detail and the belief that government should fund councils’ additional pandemic costs rather than change the current rule book. CIPFA shares your view on this and will continue to work with the sector on this.

2020/21 Code – Update

Following CIPFA/LASAAC’s decision to defer the IFRS 16 Leases standard to 2021/22, the draft 2020/21 Code will be updated to reflect this. The updated Code will then require formal approval by CIPFA/LASAAC and FRAB. The anticipated publication date for the Code will be later than previously expected. Further updates will follow once timelines are clearer.

Update from the Networks

Finance Advisory Network

Additional Support for 2019/20 Accounts

CIPFA is keen to obtain feedback on whether any additional support would be welcomed by practitioners on preparing the 2019/20 accounts, over and above receipt of the ‘year-end’ bulletin and the materials covered in the FAN Accounts Closedown workshops from earlier in the year.

FAN have set up a one question survey on which we would very much appreciate your thoughts. Obviously if you feel you have all the information you need from CIPFA right now and just wish to ‘get on with it’ we would also appreciate that feedback via the survey. Thank you.

Procurement Network

Public contracting authorities are currently guided by PPN 02/20, together with additional sector specific notes and templates setting out information and guidance on payment to suppliers “at risk” in respect of contracts subject to the Public Contracts Regulations 2015. These contractual payments should continue until 30 June 2020 and apply to most suppliers even where the provision of goods or services is reduced or paused. Whether to risk paying suppliers headed towards insolvency is to be managed by contracting authorities on a case-by-case basis.

Better Governance Forum

Modified Audit Opinions during Covid-19 crisis: Guidance to external auditors on whether (and which type) of modification to the audit opinion might be appropriate has been published by the FRC

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.

Adapting to the new normal

To support your response to COVID-19, CIPFA will be offering a series of free webinars exploring crisis management, personal resilience and dealing with short term cash issues, amongst others. More information on dates and speakers will be available shortly, with links to register. 

Frequently Asked Questions

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


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