30/11/2021
LA Spotlight
Rising costs in a time of uncertainty
November has been another busy month for local government and the push through to the end of 2021 looks no different. Overall uncertainty remains about the future, whether the Levelling Up agenda, the financial settlement, the real implications of COP 26 or the fact that the devil is in the detail of central Government policy announcements (e.g. the latest changes to the care costs cap).
That uncertainty has big implications for local authorities in setting their agenda and strategies for the forthcoming budgets and for the long term. This can make procuring and securing cost certainty for the future difficult but it is also having a major impact upon how councils manage their existing contracts and suppliers.
Continued Covid-19 pressures, rising costs, job vacancies and supply chain issues/shortages are leading to suppliers seeking changes to the pricing of their contracts with inflation a significant factor. Where suppliers are in a strong position due to fragile supplier markets and soaring demand (often at short notice), they may simply refuse to do the work at the contracted rate.
Authorities are left contemplating possible disputes, sourcing alternative provision (that may also cost more) or trying to make the best deal possible with the incumbent. For current or future procurements business cases may need revising due to rising costs. The urgency of the service provision is going to be a major factor in determining the response but we suggest that the following are key considerations when faced with requests for price increases:
- Do you have budget provision?
- What is driving the request? Is there a genuine issue?
- What evidence (if any) has been provided to support the request?
- What does the contract say and what levers (that you may or may not use) are at your disposal?
- Do you have an alternative provider? How do they compare on price?
- If you agree/reject the request, are you acting consistently with all suppliers in a similar situation?
- If you have to agree to a short term/urgent change, do you have a plan to limit its impact and reduce the likelihood of future requests (from this supplier and others)?
- Will you be complying with the law – in particular public procurement and subsidy control?
Net Zero
Pumping up the ‘district heating’
The long awaited Heat and Buildings Strategy was released on 18 October 2021 just in time for COP26.
Amongst the strategy and vision for a greener future, the Government identified heat pumps and district heating (also known as heat networks) as the proven scalable options for decarbonising heat.
Heat pump stimulus
As part of the Government’s stimulus for the heat pump market, it announced:
- The introduction of the Boiler Upgrade Scheme – £450m towards £5,000 grants claimable per household to switch to low-carbon heat pumps
- Further consultation on ending new connections to the gas grid on homes constructed from 2025
- Ambition to end new and replacement installations of natural gas boilers from 2035
- Support deployment of at least 600,000 heat pumps per year by 2028
- Investment of £60m in heat pump innovation to make heat systems smaller, easier to install and cheaper to run
Given that the £450m announced via the Boiler Upgrade Scheme will only provide scope for a maximum of 90,000 heat pump installations, it is not unreasonable to conclude that further support, incentives and regulatory intervention will be important to achieve the Government’s target of 600,000 heat pumps per year by 2028.
The Government does recognise that reducing costs will be key to the success of heat pump roll-out and has set an ambition for industry to reduce the costs of installing heat pumps by at least 20-25% by 2025. This will ensure that heat pumps are no more expensive to buy and run than gas boilers by 2030.
What about district heating?
District heating has been supported by the Government for some time and the Committee on Climate Change showed (as part of its Net Zero modelling) that 18% of the UK’s heat supply will need to come from heat networks by 2050, an increase from the current figure of 3%.
The Heat and Buildings Strategy explains that in the future we will require a mix of low-carbon technologies where there will be a role for individual heat pumps and heat networks depending on the most suitable solution for the individual project or region.
Heat networks are particularly effective in large, densely populated areas and (whilst the upfront installation costs can be expensive), they benefit from a number of key advantages:
- they are compatible with a range of heat sources including heat pumps and can utilise waste heat from industrial processes, canals, sewers, mine water, London underground, etc.;
- using sources of heat that are not generated primarily through the use of electricity can be necessary where there is insufficient electrical capacity or prohibitive costs to enable this increased electrical capacity;
- utilising a large, centralised heat pump to supply numerous properties means increased performance and efficiencies compared to individual heat solutions;
- once the heat pipes are installed, these can be maintained for many decades and seek to utilise future advancement in technology in heat generation such as hydrogen.
For these reasons, the Government is continuing to commit to accelerate the deployment of low-carbon heat networks and is investing £338m (over 2022/23 to 2024/25) in the Network Transformation Programme.
If you would like to discuss any issues regarding heat pumps or district heating, please get in touch with Nathan Bradberry (energy and infrastructure specialist).
Legislation
World-leading Environment Act becomes law
Department for Environment, Food & Rural Affairs | 10 November 2021
Legislation that will protect and enhance our environment for future generations has now passed into UK law. Through the Act, we will clean up the country’s air, restore natural habitats, increase biodiversity, reduce waste and make better use of our resources. It will halt the decline in species by 2030, require new developments to improve or create habitats for nature, and tackle deforestation overseas. It will help us transition to a more circular economy, incentivising people to recycle more, encouraging businesses to create sustainable packaging, making household recycling easier and stopping the export of polluting plastic waste to developing countries. These changes will be driven by new legally binding environmental targets, and enforced by a new, independent Office for Environmental Protection (OEP) which will hold government and public bodies to account on their environmental obligations. See the Environment Act 2021 in full here.
Publications & Guidance
Housing, Communities and Local Government Committee | 29 October 2021
The UK will struggle to reach the net zero target by 2050 unless Government steps up efforts to work together with local councils on climate action in areas such as housing and planning, low-carbon heating and energy efficiency, says the cross-party Housing, Communities and Local Government Committee in its report on local government and the path to net zero. Read the full report here.
Local Government Association | 29 October 2021
"It is absolutely crucial that councils are at the forefront of the national response to climate change and we need the Government to work in partnership with local authorities to continue shaping local areas and help to achieve net zero carbon emissions by 2050 or sooner."
edie | 26 October 2021
The CCC, which advised the Government on setting the net-zero target for 2050, has welcomed the publication of the strategy through a new independent assessment of the Net Zero Strategy. The CCC claims that the Strategy is an “achievable, affordable plan that will bring jobs, investment and wider benefits to the UK” and is broadly in alignment with reaching net-zero by 2050 and delivering a 78% reduction in emissions by 2035 as part of the Sixth Carbon Budget.
Government not sufficiently grappling skills gap needed for net zero
Environmental Audit Committee | 25 October 2021
In its latest report, Green Jobs, the Committee expresses disappointment that despite announcements committing millions of pounds to green jobs initiatives, the Government is yet to define what a ‘green job’ is, and how it will evaluate the perceived demand. Read the full report here.
Localis | 21 October 2021
This report, entitled ‘Lagging Behind: energy efficiency in low-viability properties’, urges the government to give serious consideration to the impact of regional variability in house prices and dwelling stock when installing heat pumps to hit decarbonisation targets.
Communities vs Climate Change: the power of local action
New Local | 20 October 2021
Climate change and devolution should no longer be seen as separate policy issues. This report sets out how a new devolved framework should be a route to reach net zero. This would hand power and resource to communities to manage the transition to a green economy and society in ways which ensure equity across a country of highly unequal starting points. The report addresses the role of councils and makes recommendations for local government.
Net Zero Strategy: Build Back Greener
Department of Business, Energy and Industrial Strategy | 19 October 2021
This strategy sets out policies and proposals for decarbonising all sectors of the UK economy to meet our net zero target by 2050.
Department for Business, Energy and Industrial Strategy | 19 October 2021
The heat and buildings strategy sets out the government’s plan to significantly cut carbon emissions from the UK’s 30 million homes and workplaces in a simple, low-cost and green way whilst ensuring this remains affordable and fair for households across the country.
Department for Business, Energy & Industrial Strategy | 19 October 2021
The programme will support the development and demonstration of heat pump technologies and tools, and solutions for optimised deployment of heat pumps.
Mayor prioritises walking, cycling and urban greening
Mayor of London and the London Assembly | 18 October 2021
The Mayor of London, Sadiq Khan has set out new plans to ensure future developments in London are greener, more energy efficient and prioritise space for walkers, cyclists and public transport. The three new pieces of guidance (Be Seen Energy Monitoring, Urban Greening Factor and Sustainable Transport, Walking and Cycling) will help shape a greener future for London, building on his vision for Good Growth set out in London Plan 2021.
Delivering local net zero: how councils could go further and faster
Local Government Association | 17 October 2021
Councils can unlock significant economic, social and environmental value by delivering low carbon infrastructure. Unlocking this value requires national government and local government to be partners in meeting the net zero challenge. This partnership can support the Government’s ambition to be at the forefront of the Green Industrial Revolution, to Level Up and to Build Back Better. This report sets out a business case for why councils are best-placed to locally deliver projects in three categories of low carbon infrastructure: buildings, transport and energy.
Supply chain demonstrator project: final evaluation report - GOV.UK
Department for Business, Energy & Industrial Strategy | 11 October 2021
Findings from the evaluation of 6 domestic energy efficiency retrofit supply chain demonstrator pilots.
Social housing decarbonisation study: views from social housing providers - GOV.UK
Department for Business, Energy & Industrial Strategy | 11 October 2021
Findings from a study to explore providers’ attitudes to improved energy performance, barriers to implementing new measures, and funding.
News
COP26: Local leaders call for ‘coherent’ climate policies
LGC | 15 November 2021
Councillors representing local government appeared at COP26 last week to spell out the powers they still require to combat climate change locally if the government is to meet the commitment to "multilevel action" it signed in Glasgow. The final agreement struck between almost 200 leaders on Saturday at the summit included an amendment made following intense lobbying by the Local Government Association and other sector bodies recognising “the need for multilevel action and collaboration”.
COP26: Green economy could see nearly 700,000 green jobs created by 2030
Local Government Association | 12 November 2021
Nearly 700,000 new green jobs could be created by 2030 if councils are given a greater role in local job creation, the Local Government Association sets out today. As local government leaders across the world meet in Glasgow for COP26, the LGA said councils are key to facilitating a boom in the green economy, predicting up to 1.18 million new jobs being created in low carbon sectors by 2050 in England. Some of the largest increases in green and low carbon jobs are projected to be in the North East, Devon and Cornwall and Yorkshire and the Humber.
Leicester’s Clean Air Zone plans have been scrapped
Air Quality News | 12 November 2021
‘Major improvements’ to air quality mean there is no need for Leicester’s proposed Clean Air Zone (CAZ), says the council. In a letter to Leicester City Council, the Department for Environment Food and Rural Affairs (Defra) has confirmed that the proposed CAZ for buses and taxis is no longer needed. In 2018, along with several other local authorities, Leicester City Council was directed by the government to develop a plan that would make the city compliant with EU nitrogen dioxide levels in the shortest possible time. At the time, the Government favoured a Clean Air Zone as the most effective way of doing this. However, the latest annual figures – collected from a network of air quality monitoring stations in 2020 show that Leicester is meeting all current EU air quality objectives.
Council commits £12.8m to decarbonise its buildings
Local Gov | 11 November 2021
Suffolk County Council will invest £12.8m to reduce the carbon produced by hundreds of its buildings. The money will target measures to reduce the energy consumption of buildings such as fire stations and libraries. Through its Energy Management Strategy, the council will also review the heating and cooling of its buildings, continue its LED lighting rollout, replace older fossil fuel boilers and generate its own energy.
COP26 – Councils trusted most to lead the fight against climate change – new survey finds
Local Government Association | 11 November 2021
The LGA’s survey found 40 per cent of residents trusted their council most to address the climate emergency, followed by the Government (28 per cent) and world leaders (15 per cent). Councils know their villages, towns and cities best, and are working with local communities to improve lives on a daily basis. The LGA says this is where councils can play a fundamental role in tackling climate change.
Exclusive: leaders fear COP26 deal will ‘weaken’ local net zero role
LGC | 11 November 2021
Senior local government leaders are calling for the agreement at COP26 in Glasgow to put the role of sub-national governments “front and centre”, amid concerns that governments will water down statements in the previous Paris climate agreement. Council representatives believe it is crucial for the agreement to acknowledge the importance of “multi-level collaboration” – involving national, regional and local governments – in reaching net zero. But the recently published draft agreement does not do this, and there are concerns that agreeing this globally will be challenging.
Councils warn investment in bus services is vital to meet climate targets
Local Gov | 10 November 2021
The Government must fully fund the concessionary bus fares scheme if councils are to decarbonise fleets, the Local Government Association (LGA) has warned. The LGA said investment in bus services is vital if the UK is to meet its net zero goal by 2050 and reduce car journeys.
Greater Manchester plans carbon neutral transport network
Local Gov | 9 November 2021
Greater Manchester has set out its ambition to become the first city-region with a carbon neutral transport network. Under the plans, the region’s bus fleet will be 50% electric by 2027 and 100% electric within a decade, which the Greater Manchester Combined Authority (GMCA) said would reduce carbon emissions by 1.1 million tonnes. The Greater Manchester Ring and Ride fleet will also transition to zero emission technology by 2027.
Counties warn of a 'chasm' in electric vehicle chargers
Local Gov | 8 November 2021
There are more publicly available charging points in London than in England's counties combined, new analysis has shown. The County Councils Network (CCN) said the findings reveal a 'chasm' between cities and rural areas in the availability of electric vehicle charging points.
Local government needs £68bn to become net zero, report finds
Local Gov | 8 November 2021
The report, published by UNISON, warns that without a significant capital injection of funds, public services would only be able to move slowly towards net zero. Overall, it calculated that getting the UK's public services to net zero will require £140bn of government funding by 2035. Local government would need the most funding to make buildings energy efficient, green waste collection and processing, and introduce increased cycling infrastructure.
Leaders lay out plans for 'just transition' to net-zero
Local Gov | 8 November 2021
Council and combined authority leaders have detailed plans for a ‘just transition’ to net-zero as new research revealed nine million people could be hit economically. The Centre for Progressive Policy’s (CPP) inclusive growth network (IGN), which includes the mayors of Greater Manchester and the West Midlands, Andy Burnham and Andy Street, has pledged to ensure the transition bolsters rather than damages local economies.
Council plans nearly 10,000 on-street EV chargers by 2030
Local Gov | 8 November 2021
West Sussex Council has unveiled plans to deliver nearly 10,000 on-street electric vehicle chargers, thought to be the largest deployment by a local authority.
Support for air quality enforcement
Local Gov | 5 November 2021
Under The Air Quality (Domestic Solid Fuels Standards) (England) Regulations 2020, new rules came into force from May this year to outlaw the sale and use of wet wood and house coal for burning at home. This new legislation also gave greater powers to local authorities to issue fines to those who break the rules, yet recent reports in the national media claim that just seven councils out of 19 in the UK have issued fines for household wood smoke emissions in the last six years. As the non-profit industry organisation committed to helping people make cleaner and safer choices in the use of biomass and other solid fuels and associated technologies, HETAS is responsible for approving and certifying appliances and fuels for their safe, efficient and environmentally-responsible use in the home. It also runs the UK’s largest competent person scheme for registered professional installers, service and maintenance engineers and chimney sweeps.
Local Government Lawyer | 4 November 2021
The Environmental Law Foundation (ELF) has said that local authorities must show greater urgency to deliver the ambitions of their climate emergency declarations. It said in a report Local Urgency on the Climate Emergency?, produced by its network of university-based policy clinics, that 376 local authorities were reviewed, with around 79% having declared a climate emergency.
Hampshire councils' pension fund criticised for fossil fuel investments
BBC News | 2 November 2021
A pension fund for Hampshire councils has invested more than £100m in fossil fuels, despite local authorities declaring a climate emergency, campaigners have revealed. Freedom of Information requests showed the Hampshire Pension Fund invested £45.5m in coal and £90.5m into oil and gas as of April 2020.
E-bikes have potential to replace 100 million car and taxi trips, says report
Local Gov | 2 November 2021
Over 100 million car and taxi trips made in city regions could be replaced by e-bikes if the Government meets its targets on getting more people to cycle, a new report said. The report, by consultants Steer for the Urban Transport Group (UTG) looks at how the use of e-bikes can be increased to shift mode use from the car, deliver substantial carbon savings, and reduce congestion.
City-level carbon cutting powers backed by 80%
Local Gov | 1 November 2021
A study has found backing for more mayoral powers to curb carbon emissions in some of the UK’s biggest cities.
Councils urged to bid for new £6m woodland fund
Local Gov | 1 November 2021
Local authorities are being urged to bid for a new £6m fund to create new woodland and improve access to nature. Forestry minister Lord Goldsmith said: 'This new fund will help fund regional and national partnerships of charities, local authorities and others to turn ambitions into actions, to engage communities and landowners in tree planting, and to develop skills to help deliver our England Trees Action Plan.'
Over 50% of councils spent nothing on EV chargers in 2021
Local Gov | 29 October 2021
DevicePilot, a service monitoring and management platform for EV charge point operators, yesterday released the results of an FOI campaign sent to 374 local councils in the UK. It revealed that 52% of councils spent nothing on EV charge points in 2021, and nearly two thirds (60%) received complaints about the availability, reliability or number of charging points.
District heating network governance ‘not as standard expected’
Public Finance | 29 October 2021
A critical report from CIPFA has found governance failures over a district heating network project run by the London Borough of Sutton. The business case for the Sutton Decentralised Energy Network, agreed by the council in 2015, was just 11 pages in length, including appendices and a brief description of the financial modelling, CIPFA said in a review of project.
Karen Sanderson: Why local government reporting is key to achieving net zero
LGC | 25 October 2021
The public sector is lagging the private sector on global environment reporting, writes the director of public financial management at the Chartered Institute of Public Finance and Accountancy.
Government ‘must step in’ to deliver on 4,000 zero-emission buses promise
Local Gov | 25 October 2021
A transport charity is calling for more to be done to deliver a zero-emission bus fleet as figures reveal only a tiny proportion of buses on the road are currently electric. Of the 38,000 buses nationally, only 12% of the fleet are hybrid and only 2% (4% in London and 1% in the rest of England) zero emission, according to the Campaign for Better Transport. The transport charity is warning that without further Government support, its ambition to deliver 4,000 zero-emission buses by 2025, as well as plans to clean up the rest of the 38,000 strong bus fleet, are likely to be missed.
West Midlands secures funding for green transport
West Midlands Combined Authority | 23 October 2021
The West Midlands Combined Authority (WMCA) secured the money from the government’s City Region Sustainable Transport Settlement (CRSTS) fund announced today. Hundreds of millions of pounds will now be used to kickstart a wide range of projects from new Metro tram extensions to more electric vehicle charging points in a move to decarbonise the region’s transport system, create new jobs and opportunities for local people and bolster the fight against climate change.
UK government raises £6bn through second green bond
Public Finance | 21 October 2021
The UK Treasury completed its first dale of green gilts in September towards investment in environmental projects. And now, they have announced the completion of a follow-up sale, which was 12 times oversubscribed, according to a statement. The latest bond has a maturity of 32-years, making it the sovereign green bond with the longest maturity in the world, which the Treasury said reflects the UK’s long-term commitment to reach net zero by 2050.
Councils commit to net zero half a decade before Government
Local Gov | 20 October 2021
Eighty-eight cross-party local leaders, representing over half of the population, have now signed up to the NGO UK100’s ‘Net Zero Pledge’. In the weeks ahead of COP26, the annual UN climate conference hosted in 2021 by the UK, 23 more council leaders from across the country signed up to the ‘Net Zero Pledge’. The pledge commits the local leaders to neutralising council emissions by 2030 and those of their residents and businesses by 2045 – five years ahead of the Government’s 2050 target.
Pension funds urgued to help achieve green economy switch
Local Gov | 19 October 2021
Parliamentarians have urged local government pension funds to play an active role in achieving a ‘just transition’ to a green economy. The All Party Parliamentary Group for Local Authority Pension Funds made 23 recommendations after its inquiry into responsible investment for a just transition. Although some recommendations call on the Government to act, a whole series emphasise the need for funds to engage with firms and other stakeholders. The report said that, where firms fail to respond adequately, funds should be ready to escalate their concerns by filing shareholder resolutions, voting at annual meetings and pushing for employee directors.
Lord Deben: green energy surcharges applied in ‘unfair’ way
LGC | 18 October 2021
The chair of the government’s Climate Change Commission has said he was “upset” that in recent discussions over soaring gas prices, there has not been recognition of the way the government has applied green surcharges to electricity and not gas bills. This has meant “some of the poorest have paid more than they should” because the 20% of the population without gas are also some of society’s poorest. “They have for some time been paying an unfair amount towards the essential changes that we make,” said Lord Deben, speaking at the Society of Local Authority Chief Executives and Senior Managers (Solace) annual conference.
London Councils reveals £98bn plan to retrofit 3.8 million homes
Inside Housing | 15 October 2021
London Councils has announced a £98bn London-wide plan to retrofit more than three million homes to achieve net zero carbon in properties across the capital. It is hoped that by upgrading all housing stock to an average Energy Performance Certificate rating of B – the second most efficient rating – by 2030, boroughs will drive a “dramatic decarbonisation of London property and make vital progress on the capital’s path towards net zero”.
Prime Minister's Ten Point Plan kickstarts green investment boom
Prime Minister’s Office | 15 October 2021
More than £5.8bn of foreign investment in green projects has been secured since the launch of the Prime Minister’s Ten Point Plan.
Norwich: Water-powered heat pump for 85 homes approved
BBC News | 15 October 2021
A £1.8m water-powered heat pump will provide heat and hot water for 85 homes after a council approved plan.
Mayor of London announces new Electric Vehicle Infrastructure Strategy
Mayor of London and the London Assembly | 15 October 2021
The Mayor is committed to working with the Government, boroughs, charge point operators, energy providers and other key stakeholders to make sure London gets the charge points it needs to support the transition to zero emission transport. Which is why his visit today also marks the start of his 2030 Electric Vehicle (EV) Infrastructure Strategy, due to be published in full later this year, that includes a key commitment to unlocking land owned by the Greater London Authority Group and the boroughs for EV charging.
New site for UK fusion energy plant whittled down to five
Local Gov | 14 October 2021
Five sites have been shortlisted to be the new location for the UK’s prototype fusion energy plant – the sites are Ardeer, Goole, Moorside, Ratcliffe-On-Soar and Severn Edge. The plant will create thousands of highly skilled jobs and attract other high-tech industries to its host region.
Joint Statement: Planning for the climate crisis
Town and Country Planning Association | 14 October 2021
A group of planning and environmental organisations have issued an urgent call to the Government to put the climate crisis at the heart of all planning decisions. Their statement highlights the power of planning to promote renewable energy, restrict fossil fuels and design places to reduce energy use and promote walking and cycling. It also highlights the lack of priority given to climate change in existing planning policy.
London borough eyes issue of climate bonds to fund green projects
Local Government Lawyer | 14 October 2021
Camden Council has become the latest authority to announce that it is looking to issue climate bonds as a way of financing a range of environmental projects across the borough. The move was discussed at a meeting this week (11 October) of full council, which considered ways to tackle the climate crisis ahead of this year’s UN Climate Change Conference (COP26).The projects to be funded through the bonds are expected to include a new generation of solar power in Camden.
Major gas company unveils hydrogen-focused decarbonisation plan
Inside Housing | 11 October 2021
The largest distributor of natural gas in the UK has launched a 10-point decarbonisation plan that places a strong emphasis on hydrogen as a low-carbon solution to heating homes and businesses.
Delivering Value
PA Guidance on the Transition from LIBOR to SONIA: the consent process for Local Authority PFI Projects
The Infrastructure and Projects Authority (IPA) has now published further guidance in relation to the move from LIBOR (The London Inter-Bank Offered Rate) to SONIA (The Sterling Overnight Index Average) for public authorities engaged in PFI Projects (IPA Guidance).
The aim of this note is to summarise what it means for local authorities. Our full article can be found at: IPA Guidance on the Transition from LIBOR to SONIA: the consent process for Local Authority PFI Projects.
Recap
In PFI schemes, LIBOR is used to calculate the cost of debt finance borrowed by a Project Co to fund the development of a PFI project. This flows through to the payment made by an Authority to its PFI partner over the life of a PFI project.
This transition means that several changes will need to be made to Project Co’s funding documents (Transition). It is widely expected that public sector counterparties to PFI contracts will be asked to consent to the changes.
LIBOR is not used in most PFI projects that are financed by bonds, so Transition may not be relevant for those projects unless, for example, LIBOR is used as a fall-back rate.
Timing adjustment
The initial guidance published by IPA in February 2021 anticipated that LIBOR would cease to exist after the end of 2021. This would have meant that Transition would need to have been complete by this deadline.
The absence of clarity as to what the replacement (i.e. SONIA) will look like means that it is likely that a short-term alternative to LIBOR (Synthetic LIBOR) will be available beyond the end of 2021 and throughout 2022. The Financial Conduct Authority has issued a consultation on this proposal and a decision will be made before the end of 2021.
In our view, the timings of the IPA Guidance and the length of time that the consent process is likely to take make the use of Synthetic LIBOR in the context of Local Authority PFI transactions almost unavoidable. However, it is only a temporary measure which postpones but does not avoid the need for a consent process in relation to the adoption of SONIA and lenders will be keen to finalise the Transition as quickly as possible (sometimes with consent being a retrospective requirement).
IPA Guidance
Key points are as follows:
- Authorities should not prompt any changes necessitated by Transition but should wait for Project Co to take the lead.
- The unitary payment should not be affected by any changes Project Co makes in respect of Transition.
- Although the move will fall within the scope of the definition of a “Refinancing”, there should be no refinancing gain resulting from the move to SONIA (and consequently unlikely to constitute a “Qualifying Refinancing”).
- If Project Co seeks consent from the Authority, the Authority should provide that consent on the basis of the exchange of template letters which have been included in the IPA Guidance. The templates take the form of a letter from Project Co explaining the changes it seeks to make and a response from the Authority, consenting to those changes on the basis of the information contained in the letter from Project Co.
- Consent should be provided promptly and should not be held up as commercial leverage against Project Co in relation to any other commercial issues or disputes.
- Consent should be limited to the question of Refinancing and not to any other issue.
- External adviser costs should be minimal but should be paid for by Project Co if consent is required.
What it means for local authorities
SoPC4 (see Clauses 16.4.3 and 22.3) provides Project Co with flexibility to generally deal with its funding agreements as it sees fit, including agreeing amendments with its funders. This is subject to a number of provisos:
- Any amendment which constitutes a Qualifying Refinancing must have advance Authority consent.
- The changes made should not materially and adversely affect the ability of Project Co to perform its obligations.
- They should not have the effect of increasing the Authority's liabilities on an early termination.
The IPA Guidance is helpful on the issue of whether Transition amounts to a Qualifying Refinancing in that it states:
“…for the vast majority of PFI projects subject to the Transition there should not be a Refinancing Gain within the SPV as a result of the Transition.”
The template letter from Project Co to the Authority seeking consent is clear in that, if it is subsequently discovered that a Qualifying Refinancing has arisen as a result of the Transition, the Refinancing provisions of the Project Agreement will apply.
The second two bullet points are referred to in the template letter from Project Co to the Authority seeking consent to the Transition (see paragraph 2.2):
“We do not expect the LIBOR Transition Amendments (i) to have a material adverse effect on the ability of the Contractor to perform its obligations under the Project Documents including the Project Agreement; or (ii) to have the effect of increasing the Authority's liabilities on early termination of the Project Agreement.”
Although Project Co’s letter to the Authority expresses the view that Transition is not expected to increase the Authority’s compensation liabilities on an early termination (CoT), it does not amount to confirmation that this will be the case. As the IPA Guidance points out, the reason for this is that:
“A major difficulty in determining whether the CoT liabilities have relatively increased or decreased is that, in future, LIBOR will not exist in the same way (either at all or potentially only for a limited period as synthetic LIBOR for tough legacy finance contracts). It will therefore be very difficult to accurately calculate whether any CoT liability change was created by the Transition or not.”
The Authority’s consent letter does not waive the Authority’s ability to challenge increased CoT - this would be an issue which would be postponed for resolution until any subsequent early termination.
Although the IPA Guidance envisages that Authorities could be asked to consent to an increase in the Authority’s future CoT liabilities, the Authority should seek specific guidance from their sponsoring department before providing this consent. The underlying message is that such a request should only be agreed where there is a demonstrable, project-specific reason for doing so.
Next steps
Authorities are likely to be engaged by their Project Co over the next few weeks for consent to transition.
If you require support, please speak to your usual Bevan Brittan point of contact or call a member of the Bevan Brittan Local Government team: David Moore, Colin McConaghy or David Hutton.
Legislation
General Power of Competence (Commercial Purpose) (Conditions) (Wales) Regulations 2021
This statutory instrument makes provisions to prescribe additional conditions whereby a principal council must meet prior to exercising the general power of competence to do things for a commercial purpose. Coming into force on 1 November 2021.
Publications & Guidance
Children’s social care market study – Interim report
Competition & Markets Authority | 22 October 2021
The CMA have released a report which provides an update on the interim findings from their children’s social care market study. It finds that there is a shortage of appropriate places for local authorities seeking to place children and that the largest private providers could be earning higher profits than the CMA would expect in a well-functioning market. The report also highlights risk of private equity owned providers going into financial distress and ultimately having to exit the sector due to the high and increasing levels of debt. The statutory deadline of the final report is 11 March 2022.
Also see LGA responds to CMA report on children’s social care.
Local Government Association | 22 October 2021
“The CMA has confirmed our [LGA] recent findings that private equity providers are making extremely high profits and carrying concerning levels of debt that risks the stability of homes for children in care, which is paramount if they are to thrive.”
£65m support package for vulnerable renters
Department for Levelling Up, Housing and Communities and Eddie Hughes MP | 23 October 2021
Vulnerable renters struggling due to the impact of the pandemic will be helped by a £65m support package. The funding will be given to councils in England to support low-income earners in rent arrears – helping to prevent homelessness and support families get back on their feet.
Adult Social Care Activity and Finance Report, England – 2020-2021
NHS Digital | 21 October 2021
This report contains aggregate information submitted by 151 Councils with Adult Social Services Responsibilities (CASSRs) in England, to provide insight into adult social care activity and expenditure for the period of 1 April 2020 to 31 March 2021. It finds that gross current expenditure on adult social care by local authorities was £21.2bn, an 8.1% increase in cash terms and a 1.3% increase in real terms.
Ministers urged to make more use of outcomes-based approaches
Local Gov | 21 October 2021
A report produced for Centre for Policy Studies think tank argues the use of Social Impact Bonds could help deliver better public services for less money. The report makes 10 key recommendations to improve the performance of Social Impact Bonds and that of government spending.
Health and Social Care Winter Plan 2021 to 2022
Welsh Government | 21 October 2021
This plan has been developed in consultation with health and care partners, following months of planning, in order to improve resilience of our health and social care services in anticipation of what can be expected to be an extremely challenging winter.
Sector hit by significant service backlogs
Public Finance | 19 October 2021
More than half of public services examined in CIPFA’s 2021 Performance Tracker, published today, are suffering backlogs due to Covid-19.
Colin McConaghy| 2 November 2021
The Infrastructure and Projects Authority has published further guidance in relation to the move from LIBOR to SONIA for public authorities engaged in PFI Projects.
Local Government Association | 27 October 2021
The Chair of the LGA’s Culture, Tourism and Sport Board responds to the Government’s announcement in the Spending Review of funding for the UK’s culture, tourism and sport sectors.
News
Council-backed energy firm delays energy payments to regulator
Public Finance | 3 November 2021
An energy company owned by Warrington Borough Council has delayed complying with an order to pay £12.4m to regulator Ofgem, running the risk of losing its licence to supply energy. The firm owes the money because it failed to supply the required amount of energy from renewable sources required under legislation.
Council firm loses millions of pounds
The MJ | 2 November 2021
A property development firm established by Cambridgeshire City Council to provide a new revenue stream lost £3.4m last year. Ahead of the expected publication of a review into the operation of This Land, which was established in 2016 to secure planning permission and build homes on land bought off the council, company accounts revealed net losses fell from £11.8m in 2019 but net liabilities increased by £1.5m to £14.1m.
Six local authorities in single month migrate to Local Land Charges Register run by Land Registry
Local Government Lawyer | 1 November 2021
Six more local authorities migrated onto HM Land Registry’s Local Land Charges Register in October, the highest number of councils to have joined in one month. The Land Registry said this was a product of acceleration in local authority migrations. “These latest migrations also mark the one millionth local land charge added to the register and brings the total number of migrated local authorities to 24.”
Council to close ethical debt collection firm
The MJ | 28 October 2021
Hammersmith and Fulham LBC is to close its ethical debt collection company after failing to garner sector interest in the concept. The council partnered with private firm Intrum to form LBHF Joint Ventures in 2017, to provide debt collection services to Hammersmith and Fulham with an emphasis on ‘ethical’ methods.
CIPFA raises concern over council company
The MJ | 27 October 2021
An independent review by the Chartered Institute of Public Finance and Accountancy (CIPFA) has found officers were ‘overly optimistic’ about the financial case for the Sutton Decentralised Energy Network (SDEN) when it was given the go-ahead in 2015.
LGA: Children’s social care costs will rise by £600m a year
Local Government Association | 26 October 2021
Soaring demand to help safeguard children will see future cost pressures in children’s social care increase by an estimated £600m each year until 2024/25, the Local Government Association warns. The LGA says projected costs in children’s social care in England will rise from £10.9bn in 2021/22 to £11.4bn in 2022/23; £12.1bn in 2023/24; and £12.6bn in 2024/25 – an average of £600m each year and a 16% rise over the three-year period.
Council-owned energy companies lose £114m
Public Finance | 26 October 2021
Local authority owned energy companies reported cumulative losses of £114m in the last four years, according to new analysis. Of the eight firms wholly owned by councils, only one, Barking and Dagenham Energy, reported profits between 2016-17 and 2019-20, according to figures compiled by advocacy group the Taxpayers’ Alliance.
£30m skills deal approved for South West Wales
Local Gov | 26 October 2021
Approved by the UK Government and Welsh Government, the Swansea Bay City Deal Skills and Talent programme will help 14,000 people upskill and create at least 3,000 new apprenticeships. It will focus on industries with high demand for workers, and align to areas of growth such as the digital, construction, energy, health and wellbeing and smart manufacturing sectors. The Regional Learning and Skills Partnership will identify skill gaps in relation to local industry needs, and education and training solutions will put in place to meet these demands.
Call to write off ‘two to £3bn’ Send deficit
LGC | 26 October 2021
Councils are calling for government to write off growing deficits on spending for children with special educational needs and disabilities (Send), which are expected to total up to £3bn by 2023. Local authorities fund Send provision – whether through places at specialist schools or additional support in mainstream schools – through the high needs funding block of the dedicated schools grant (DSG). But for many, the cost of this is outstripping the amounts provided by tens of millions of pounds, leading to a total deficit currently estimated at more than £2bn. The deficits do not currently appear on councils’ balance sheets, but the statutory override that permits this is set to end in 2023.
North of Tyne mayor calls for ‘regional wealth funds’
LGC | 25 October 2021
The government could unlock £500m of extra investment and 14,000 jobs in the North of Tyne by supporting a regional wealth fund, the North of Tyne mayor Jamie Driscoll argues in a new report. The paper - Regional Wealth Generation - argues that devolving further powers to the North of Tyne and other areas will boost productivity and economic growth, and address inequalities.
LGA: £875m investment needed in public sports and leisure facilities to tackle health inequalities
Local Government Association | 24 October 2021
The Local Government Association (LGA) is calling for the Government to invest £875m in leisure facilities, pitches, and parks to help councils reduce obesity, improve public health outcomes, and cut carbon emissions. The LGA said that this investment would help build or refurbish 25 new facilities each year over a three-year period. Councils are currently the biggest investor in sport, leisure, parks and green spaces, spending £1.1bn per year in England. However, nearly two thirds of the leisure estate is ageing and many facilities are at risk of closure.
Family’s care bill soars without warning because of poor council information
Local Government and Social Care Ombudsman | 21 October 2021
North Yorkshire County Council has been criticised by the Local Government and Social Care Ombudsman after a family’s care bill leapt from hundreds to thousands of pounds a month without notice. The way the council communicated the change to the woman and her daughter came under the Ombudsman’s scrutiny after they complained the council had suddenly decided to take into account the woman’s home, when assessing how much she needed to pay for her care.
Age UK | 15 October 2021
Amid consistent media reports that a rise in Council Tax is the Chancellor’s chosen mechanism for increasing funding for social care, Age UK warns that this approach will lead to hugely inflated Council Tax bills in some areas and yet will still not give care services the assurance of enough money to function properly.
Place & Growth
Arbitration scheme for pandemic rent arrears
The government has introduced to Parliament the draft Commercial Rent (Coronavirus) Bill five months following an announcement that support was needed for commercial tenants.
A binding arbitration process will be accompanied by a new Code of Practice which will provide a clear process for settling outstanding debts before the new arbitration process comes into force. It is the intention of the government for landlords and tenants to resolve rent arrear disputes before the Bill takes effect and the Code of Practice will encourage tenants who are unable to pay in full to negotiate with landlords with the expectation that, where able, the landlord will waive some or all rent arrears.
The government will also be offering immediate protection to commercial tenants from debt proceedings which eliminates a common remedy which was previously available to landlords.
For further help and guidance on this subject area, please contact Mark Robertson.
Legislation
Building Safety Bill (as amended in Committee)
Bill to make provision about the safety of people in or about buildings and the standard of buildings, to amend the Architects Act 1997, and to amend provision about complaints made to a housing ombudsman. See here for the most recently submitted written evidence: Competence Steering Group, Association of Consultant Approved Inspectors (ACAI), Fire Sector Federation and Chartered Institute of Building (CIOB).
These Regulations make amendments to the Allocation of Housing and Homelessness (Eligibility) (Wales) Regulations 2014, SI 2014/2603. It makes provision, in relation to immigration control, for eligibility for allocation of housing accommodation and for housing assistance. As such, it also makes provision, in relation to immigration control, for ineligibility for allocation of housing accommodation and homelessness assistance. Comes into force on 15 October 2021.
Publications & Guidance
Paper one: Levelling up and the housing challenge
Building Back Britain Commission | 5 November 2021
The first paper explores the role of the housing industry in delivering the Government’s ‘levelling up’ agenda, through analysing projected housing need across the country. It argues that to meet this challenge, the Government must develop a new housing strategy that is representative of future demands, not historical need.
Also see LGA responds to Building Back Britain Commission report on housing shortage
Local Government Association | 5 November 2021
"This latest report on the severe shortage of homes in some areas of the country underlines the chronic need to build more social housing where it is most needed and the role councils need to be able to play to tackle this crisis."
New levelling up and community investments
Department for Levelling Up, Housing and Committees, HM Treasury and Ministry of Housing, Communities and Local Government | 3 November 2021
The UK government is committed to levelling up across the whole of the United Kingdom to ensure that no community is left behind, particularly as we recover from the COVID-19 pandemic. This will involve the UK government decentralising power and working more directly with local partners and communities across England, Wales, Scotland and Northern Ireland, who are best placed to understand the needs of their local areas and more closely aligned to the local economic geographies to deliver quickly on the ground. To support these objectives, the UK government has launched three new investment programmes to support communities right across the country. All share common challenges and opportunities, which the UK government is determined to address in collaboration with local partners. These new investment programmes are:
- The UK Community Renewal Fund
- The Levelling Up Fund
- The Community Ownership Fund
Rapid rehousing transition plans: guidance for local authorities and partners
Welsh Government | 27 October 2021
Rapid Rehousing is about taking a housing led approach to rehousing people that are experiencing homelessness, making sure they reach settled housing as quickly as possible rather than staying in temporary accommodation for too long. Over the next five years the Government expect to see removal of prolonged and potentially damaging spells in temporary accommodation. They expect to see the development of a systematic and strategic process that links housing development, support and supply to housing need. Doing so will enable allocation processes and PRS access points that focus on getting households experiencing homelessness into appropriate settled homes and target support to meet their needs.
Homelessness Prevention Grant: 2021 to 2022
Department for Levelling Up, Housing and Communities and Ministry of Housing, Communities and Local Government | 23 October 2021
Added exceptional winter top-up allocations and technical notes.
Clampdown on landlords with funding boost for councils
Department for Business, Energy & Industrial Strategy, The RT Hon Greg Hands MP and Lord Callanan | 22 October 2021
Over 40,000 families living in cold and draughty rented properties across 59 local authorities in England and Wales can expect warmer homes thanks to a new campaign to help councils clamp down on errant landlords.
Department for Levelling Up, Housing and Communities and the RT Hon Christopher Pincher MP | 22 October 2021
Over £1m of government funding has been allocated to 13 planning authorities under the PropTech Engagement Fund, which was launched in August 2021, to test new digital initiatives to make the planning process more open and accessible and boost public engagement. The pilots, which will run until March 2022, will inform the Government’s work to modernise the planning system.
CQC | 22 October 2021
The Care Quality Commission’s (CQC’s) annual assessment of the state of health and social care in England looks at the quality of care over the past year – the first of these reports to cover a full year of the pandemic.
UK Housing Review 2021 Briefing Paper
Chartered Institute of Housing | 21 October 2021
This year’s Briefing Paper again focuses partly on the effects of the Covid-19 pandemic but also covers a range of other pressing issues, addressing some of the main areas of change and policy development since the full UK Housing Review 2021 was published in March. Not only the state of the economy, but developments in the housing market, approaches to public investment in housing, reform of the planning system in England and post- pandemic policy on benefits across the UK are all in flux.
Regulator of Social Housing | 19 October 2021
It sets out the main risks facing the social housing sector and some of the actions registered providers should be taking to manage those risks.
Levelling-Up Digital Connectivity in Counties
County All Party Parliamentary Group (APPG) | October 2021
This report explores why digital connectivity needs to be levelled-up in our county and rural areas and some of the challenges faced by our communities from poor connectivity. It outlines how the Government’s investment in infrastructure and gigabit broadband provides opportunities for this to be addressed.
Housing for people on low incomes – how do we make the best use of government subsidies in England?
Centre for Homelessness Impact and Chartered Institute of Housing | 18 October
This report by the Chartered institute of Housing (CIH) and the Centre for Homelessness Impact found that building 10,000 homes a year in the social rented sector would cost the Government around £40m a year but could save £44m annually in housing subsidies if the homes were used to house tenants currently in private rented housing or temporary accommodation.
Department for Levelling Up, Housing and Communities and Ministry of Housing, Communities and Local Government | 14 October 2021
This summary explains the new £30m fund to pay for the costs of installing an alarm system in buildings with unsafe cladding.
News
Business rates income halved during pandemic
LGC | 17 November 2021
Local authorities’ business rates income dropped by almost 50% in the last financial year, according to government statistics published today. According to data released annually by the Department for Levelling Up, Housing and Communities, local authorities reported that non-domestic rates income for 2020-21 was £12.8bn, compared to £25.3bn in 2019-2020. These are the total amounts collected following all reliefs, accounting adjustments and sums retained outside the rates retention schemes.
Council launches new placemaking company
Local Gov | 10 November 2021
Bournemouth, Christchurch and Poole Council has launched a new placemaking company to drive forward stewardship-led regeneration. FuturePlaces will aim to transform stalled sites across the city region and put placemaking at the heart of the regeneration process through long-term investment. It will have an initial portfolio of 14 regeneration sites with a combined gross development value exceeding £2.8bn.
Gove calls time on 75% business rates retention
Public Finance | 8 November 2021
The government has abandoned plans to allow councils to retain 75% of their business rates, the new communities secretary Michael Gove has announced. Speaking to the House of Commons Housing, Communities and Local Government Committee, Gove reversed six years of policy by telling MPs that it would conflict with the government’s ‘levelling up agenda’ and that the government would now “proceed with caution” on the issue.
Mayor delivers big increase in low-cost homes
Mayor of London and London Assembly | 4 November 2021
Since 2016 the proportion of affordable homes in schemes approved by City Hall has nearly doubled. The number of planning applications where at least 35 per cent of the homes are affordable has increased by 45 per cent since 2018. These increases translate to thousands of new affordable homes for Londoners, which would not have been built had Sadiq not made them a fundamental part of his vision for London’s future development.
‘Levelling up’ decisions should be made locally, commission says
Local Gov | 28 October 2021
Two-thirds of people living in areas prioritised for levelling up funding want decisions on spending in their communities made locally and not by Whitehall, according to a new study. A YouGov survey commissioned by the Commission shows that 65% of people in levelling up priority areas want decisions on how to spend levelling up funding taken by local government or community groups and charities. Just 10% want decisions taken by national Government.
£1.7bn allocated in first levelling up fund round
LGC | 27 October 2021
The government has allocated the first tranche of funding, worth £1.7bn, for projects from its £4.8bn levelling up fund. The chancellor revealed in his Budget speech that the first round of the fund has been earmarked for 105 areas across the UK. Bids were submitted by local authorities across the UK for local infrastructure improvements, such as regenerating town centre and high streets, local transport upgrades, and investment in culture and heritage. The biggest single grant, worth £49.6m, has been awarded to Derbyshire County Council for the South Derby growth zone and infinity garden village.
Cladding tax rate confirmed at 4% in Budget
Inside Housing | 27 October 2021
The government will impose a 4% cladding tax on developers with profits higher than £25m, chancellor Rishi Sunak has confirmed. See also, Cladding tax table: top house builders could pay £200m a year into cladding levy.
Inside Housing | 21 October 2021
In this article we consider perhaps the most significant set of draft regulations, which have the technical name the Building (Appointment of Persons, Industry Competence and Dutyholders) (England) Regulation (2021), but can be referred to more simply as the dutyholder regulations.
Governance & Reorganisation
Cementing a place for Respect in Leadership
On 1 November 2021, the Committee for Standards in Public Life issued ‘Upholding Standards in Public Life’, its final report of the ‘Standards Matter 2 Review’, which considers how the regulation of ethical standards is meeting the challenges of today, including issues relating to social media, scrutiny of those holding public office and increased polarisation of political views. Part of the 103 page report reflects on the fact that, in recent years, a significant number of codes of conduct have sought to highlight their opposition to bullying and harassment and bring to the fore the importance of showing respect to one another.
This is, sadly, rather prescient, not only in relation to the recognised public opinion regarding the manner in which politics is played out both locally and on a national scale, but also in relation to the recent tragic death of Sir David Amess MP, which appears to have had its roots in intolerance and a failure to respect an individual’s right to hold a view that differs from one’s own. The Committee concludes that the Nolan Principles remain correct and relevant, but make an important change to the descriptor in relation to the principle of ‘Leadership’ from:
‘Holders of Public Office should exhibit these principles in their own behaviour. They should actively promote and robustly support the principles and be willing to challenge poor behaviour wherever it occurs’.
To now read:
‘Holders of public office should exhibit these principles in their own behaviour and treat others with respect. They should actively promote and robustly support the principles and challenge poor behaviour when it occurs’.
[Highlight added]
This represents the Committee emphasising the importance of showing respect to one another and notably removing the notion of willingness from challenging poor behaviour. In applying this obligation to treat others with respect through the Nolan Principles, the Committee has ensured that it applies to all who hold public office, from grass-roots to Parliament. More importantly, the Committee has sent out a strong message that the Nolan Principles remain a central tenet in relation to member conduct and reflective of the standards that the public expect of those who serve them.
For further help and guidance please contact: David Kitson or Mark Robinson.
Legislation
The County of Pembrokeshire (Electoral Arrangements) Order 2021
Provisions are made to implement the recommendations of the Local Democracy and Boundary Commission for Wales (the Commission), which reported in July 2019 on its review of the electoral arrangements for the County of Pembrokeshire. This Order comes into force partly on 27 October 2021, and fully on the ordinary day of election of councillors in 2022.
Publications & Guidance
The local government finance system in England: overview and challenges
National Audit Office | 10 November 2021
This NAO overview looks at what local government in England spends, how this spending is funded and the effect of changes in recent years. The overview covers England only as local government is devolved in Scotland and Wales. We focus on five types of English local authority – London boroughs (including City of London), metropolitan boroughs, unitary authorities, county councils and district councils. This does not include town and parish councils, combined authorities, or stand-alone police and fire authorities.
Councils to pilot innovative ways of working with £5m funding boost
Department for Levelling Up, Housing and Communities and Kemi Badenoch MP | 8 November 2021
Councils are being empowered to better tackle issues affecting their communities, including youth unemployment, health disparities and crime, through an innovative programme backed by £5m of government funding. The Department for Levelling Up, Housing and Communities has today (8 November 2021) announced 13 councils in England that have been selected for its Partnerships for People and Place initiative. The programme will trial new ways of working across local and central government and deliver innovative, locally-led solutions to key challenges that communities face.
London Borough of Croydon Improvement and Assurance Panel: third report
Department for Levelling Up, Housing and Committees | 2 November 2021
The Improvement and Assurance Panel was appointed by the Secretary of State to provide support and challenge to the London Borough of Croydon as they seek to make the changes needed to turn the council round. In its third report updating on progress, the Panel sets out significant progress in embedding improvements in financial management and budgetary control at the council. But also notes continuing risks to recovery.
Nottingham City Council Improvement and Assurance Board: third report
Department for Levelling Up, Housing and Committees | 2 November 2021
The third report of the Nottingham City Council Improvement and Assurance Board setting out the Board’s assessment of progress made by Nottingham City Council regarding implementation of the council’s recovery plan, how the council have addressed the issues raised by the Board in their second report published on 17 June 2021 and the key pressures that should be addressed over the next quarter.
Wirral Metropolitan Borough Council: external assurance review
Department for Levelling Up, Housing and Communities | 2 November 2021
External assurance review of Wirral Metropolitan Borough Council – financial review by CIPFA and governance review by Ada Burns.
Peterborough City Council: external assurance review
Department for Levelling Up, Housing and Communities | 2 November 2021
External assurance review of Peterborough City Council – financial review by CIPFA and governance review by Andrew Flockhart.
Upholding Standards in Public Life – Published Report
Committee on Standards in Public Life | 1 November 2021
The Committee on Standards in Public Life has published 'Upholding Standards in Public Life', the final report and recommendations of the Standards Matter 2 review. The report makes the case for high standards and calls for stronger rules, more independent regulation, and a better system of compliance in central government. This report also updates the descriptor to the Nolan Principle of Leadership, to cover better the issue of respect.
Slough Borough Council: external assurance review
Department for Levelling Up, Housing and Communities | 25 October 2021
External assurance review of Slough Borough Council – financial review by CIPFA and governance review by Jim Taylor.
Devolution vision for Nottingham and Nottinghamshire
Mansfield District Council | 21 October 2021
Nottingham and Nottinghamshire are aiming to be one of the government’s pathfinder sites for devolution deals, the details of which will be outlined in the much anticipated ‘levelling-up’ white paper expected this autumn. In a paper to the joint City of Nottingham and Nottinghamshire Economic Prosperity Committee, councils have outlined how they would work in partnership to help boost economic investment, improve the environment, and tackle health and educational inequalities across the city and county.
Department for Levelling Up, Housing and Communities and Ministry of Housing, Communities and Local Government | 21 October 2021
In this publication, the Government respond to the recommendations made in the Housing, Communities and Local Government Select Committee’s report on local authority financial sustainability and the section 114 regime.
News
Concerns over proposals to devolve power to town and parish councils
LGC | 17 November 2021
Senior councillors have expressed reservations over the government’s perceived enthusiasm to devolve more powers and resources to the lowest council level, amid concerns over the quality of their performance and governance. Members of the Local Government Association’s people and places board yesterday told the most senior representative of town and parish councils of their concerns over the “organisation, planning and training” of parish and town councillors, as well as a lack of diversity in their makeup and a democratic deficit in that one third of their members are co-opted rather than elected onto councils. The discussion was prompted by the continued interest that senior figures within and around government have expressed in 'double devolution' to town and parish councils as part of 'levelling up'.
Slough ready to table capitalisation request as deficit exceeds £200m
The MJ | 16 November 2021
Slough Council is to formally request another capitalisation direction later this month as it faces a deficit of more than £200m. Talks have been ongoing with the Department for Levelling Up, Housing and Communities, but a formal request with the figure needed to recover Slough’s finances will be tabled by the end of this month.
Leeds to halve office space over next five years
Public Finance | 16 November 2021
Leeds City Council is set to sell up to half of its operational office property space following the impact of Covid-19. In a new Estate Management Strategy, the council said that the pandemic has accelerated the need for a new plan on its portfolio.
Council forecasts future budget gap despite redundancies
Public Finance | 12 November 2021
Thurrock Council is forecasting a £4m overspend in its medium-term budget, even though it plans to cut up to 25% of its workforce. The authority is set to sell assets, alongside delivering staff savings of £20m, equating to a reduction of 500 employees, in a bid to fund a £34.3m funding gap by 2023-24, a council report said. Although the council has identified further savings and efficiencies of £10.4m, Thurrock is still forecasting pressures of £3.9m by 2024. The gap was partially attributed to the unwinding of its investment programme.
District to sell off council office to aid finances
Public Finance | 10 November 2021
A Leicestershire district council is set to sell off its offices to reduce spending, after Covid-19 led to a change in working conditions. Oadby and Wigston Borough Council’s offices at Grade II listed Bushloe House are expensive to maintain and costly to heat, the authority said, adding that it will look to offload the building and locate to a smaller base. Funds raised from the sale will be used to renovate a council-owned visitor centre to include office use, reducing maintenance costs of a standalone office, the authority said.
Exclusive: North Yorkshire unitary blueprint released amid concerns of ‘headlong rush’
LGC | 10 November 2021
The government has shared with North Yorkshire's councils its proposed plans for their reorganisation, in an order which is expected to be laid before Parliament by early 2022. North Yorkshire’s seven district councils and county council are set to be scrapped in April 2023 and be replaced for a single county-wide unitary authority. The draft version of the structural change order, which echoes the blueprint for unitarisation put forward to the government by the county council, will drastically cut the number of councillors representing the country, with the future North Yorkshire Council to be made up of 90 councillors in 89 wards for at least its first five years.
Nottingham sets out plans to tackle £28m budget gap
LGC | 10 November 2021
Nottingham City Council has announced its plans to make £28m of savings in order to balance its 2022-23 budget, although more than half of these have yet to be specified. A report for an executive board meeting next week says the council currently faces a £28m budget gap for 2022-23, which is set to rise to £38.1m in 2025-26. It says this has been largely driven by demand pressures and a reduction in Covid funding. The council says it has made around £303m of savings since 2010, and claims it has been left “£19.4m out of pocket through not being fully compensated from income lost as a result of tackling Covid".
Sheffield finances could ‘spiral out of control’ amid £44m overspend
LGC | 9 November 2021
Sheffield City Council has resolved to lobby central government for additional financial support to help it tackle a forecast £44m overspend this financial year. A medium term financial analysis by the council’s director of finance Ryan Keyworth states that this is “the largest forecast overspend that anyone [on the council] can remember at this stage in the year” and “if [left] unchecked will use most of the council’s available reserves in 2021-22”. The report, which was approved by the council's executive last month, warns that without "firm action" to deliver savings and limiting new spending to a few key priorities, "the council’s financial position will soon spiral out of control".
Liverpool proposes savings to close £34m budget gap
Public Finance | 9 November 2021
Liverpool City Council will need to make at least £18.7m from savings and additional income to help close a forecast £34m gap in next year’s budget. The council said the majority of the forecast savings for next year will come from adult social care (£11.7m), with a further £1.6m of efficiencies in children’s care. It has also proposed a review of parking zones in a bid to generate a further £1.6m, and a £40 charge for green bin collections to raise £1.7m, a council report said.
Government to reduce competitive funding pots
Public Finance | 9 November 2021
The government is set to reduce the amount of grant funding pots available to local government, to help simplify the bidding process, a senior minister has told MPs. The current arrangement of more than 100 different competitive pots, which have overlapping criteria, has become too complicated, according to communities minister Michael Gove.
13 councils chosen to pilot new ways of working
Local Gov | 9 November 2021
The Partnerships for People and Place programme aims to empower local leaders to better solve issues such as unemployment, health disparities, poverty and crime. It will test if new ways of working between local and central government and a more flexible funding model can bring measurable benefits to local communities.
Four Welsh councils to pilot flexible voting schemes
Local Gov | 9 November 2021
Blaenau Gwent, Bridgend, Caerphilly and Torfaen council areas will trial flexible voting pilot schemes including allowing students to vote at their college and early polling centres offering flexibility over location as well as timing.
Minister tells council price of devolution
The MJ | 8 November 2021
Levelling up minister Neil O’Brien has told councils they will have to improve their ‘governance, efficiency and service delivery’ in return for more devolution, The MJ understands. Mr O’Brien, who was chancellor George Osborne’s special adviser when he proposed devolution to city regions governed by directly-elected mayors in 2014, also indicated his support for devolving to ‘functional economic areas’ in a letter to the District Councils’ Network.
Gove ‘genuinely interested’ in double devolution proposals
LGC | 8 November 2021
One of the MPs behind an influential report into levelling up through ‘double devolution’ has told LGC he believes councils are “pushing at an open door” because the government has “an appetite” for passing powers to councils and communities.
Names of two new Cumbria unitaries confirmed
LGC | 8 November 2021
The names and sizes of the two new unitary councils to be formed in Cumbria have been officially named. A draft sent to the county’s seven councils has confirmed that they will be replaced by Cumberland Council, spanning the east and comprising of Allerdale, Carlisle and Copeland. Westmorland and Furness Council will be created in the West of the county, covering South Lakeland, Barrow and Eden. The name change was first exclusively revealed by LGC in September, and the draft government document confirming the changes was reported by the BBC on Saturday.
Government’s attitude on standards slammed as ‘hugely frustrating’
LGC | 5 November 2021
Senior local government figures have criticised Downing Street’s attitude to standards in public life, amid growing disappointment that the government is still yet to act to strengthen the standards regime for local government. It is almost three years since the Committee on Standards in Public Life published its review of local government ethical standards, and the government still has not responded by strengthening the current standards regime, despite saying at the time it would respond within three months.
Liverpool agrees ‘eye watering’ savings to set budget
LGC | 5 November 2021
Liverpool City Council has agreed to make almost £19m of savings next financial year, and currently has a spending freeze in place to bring down a current forecast budget overspend of nearly £9m.Jane Corbett (Lab), deputy mayor and cabinet member for finance and resources, said there will “inevitably be a lot pain to go through” in the budget plans, which were passed by cabinet this morning and will now go out to consultation for six weeks.
Report calls for new deal to help East London level up
Local Gov | 3 November 2021
The report - Local London and Levelling Up – the role of East and North East London in local, regional and national growth - argues the subregion has more in common with ‘left behind’ parts of the country than the rest of the capital. As such, the subregion should be eligible for the same money from the US Shared Prosperity Fund as was earmarked under previous EU funding support. It said a growth deal would give the subregion’s leaders the power to ‘masterplan’ an ambitious vision for the area.
Improvement board raises concerns over Nottingham financial plan timetable
Public Finance | 2 November 2021
A government-appointed improvement board has voiced worries about the Nottingham City Council's timetable for adopting a medium term financial strategy, which is seen as key to delivering financial resilience. As part of a recovery plan, Nottingham intends to publish a its MTFP plan by the end of this month, followed by an eight-week public consultation, a report from an improvement and assurance board said. However, the board, appointed in January to oversee financial recovery at the council, said the financial plan must be approved by full council in March 2022, leaving little room for error.
Minister orders Peterborough and Wirral to address financial challenges
LGC | 2 November 2021
The minister for levelling up and communities has asked Wirral MBC and Peterborough City Council to set out the steps they will take to address their financial situations, after the publication of external assurance reviews on the councils today that underlined the challenges they face.
Nottinghamshire councils agree county deal ambitions
LGC | 2 November 2021
All nine councils in Nottinghamshire have agreed on a county deal to pursue for the region at a meeting of council leaders yesterday. The county’s leaders have outlined their asks for further powers for Nottingham and Nottinghamshire in a joint paper to the City of Nottingham and Nottinghamshire Economic Prosperity Committee.
Bournemouth, Christchurch and Poole must find £25m transformation savings
LGC | 2 November 2021
Bournemouth, Christchurch, and Poole Council are currently undergoing transformation work to streamline services, including improving the broadband network used by the council. They have not yet specified how it will find £25m in savings over the next financial year from its ongoing transformation project, with total planned savings rising to £42.4m by 2023-2024.
Cumbria chief resigns amid tension over judicial review plan
LGC | 2 November 2021
Cumbria CC’s chief executive has resigned amid tension related to the planned reorganisation of the county into two unitaries. A spokesperson for the council said: “Gill Steward has decided to step down from her position of chief executive for Cumbria CC. From 1 December, John Readman will assume the responsibilities of the chief executive in his capacity as deputy chief executive whilst the council considers options going forward.”
Unitary leaders reject claims Lancashire has ‘no appetite’ for mayor
LGC | 1 November 2021
The leaders of two Lancashire unitary councils have rejected claims that there is no appetite in the county for a directly elected mayor. Their comments come in response to remarks made by Philippa Williamson (Con), the leader of Lancashire CC, who told LGC that there was no appetite in Lancashire for a mayor.
LGA seeks urgent clarity on Community Renewal Fund
Local Gov | 1 November 2021
The Local Government Association (LGA) said urgent clarity is needed on the future of the fund, which requires councils to spend the money by March 2022.It is calling for the Government to extend the deadline, warning the delay means the successful delivery of projects will now be very difficult. Mayor Marvin Rees, chair of the LGA’s City Regions Board said: 'We are very concerned that the delay in the announcement of the successful programmes has reduced the timescales for the fund and will now have an impact on the ability of councils to successfully deliver schemes on the ground.
County to review council tax systems following errors
Public Finance | 1 November 2021
North Northamptonshire County Council has promised to review its systems, after sending out court summons and taking early council tax payments in error.
Peterborough mulls further bailout request to plug £17 budget gap
LGC | 29 October 2021
Even after planned savings of £10m next year are taken into account, Peterborough is still facing an £17m shortfall and is considering asking the government for another capitalisation direction loan for 2022-23. The council is also eyeing the possibility of requesting permission to lift its council tax referendum cap to allow it to raise more revenue from its residents.
Spending power to increase only 1.8% a year without social care levy cash
LGC | 29 October 2021
The headline increase in councils’ core spending power announced by government for the next three years includes cash ringfenced for social care reform costs, it has emerged. The spending review document says that the £4.8bn increase in grant funding over three years would give an “estimated average real-terms increase of 3% a year in core spending power”. But as well as assuming councils raise council tax by the maximum possible amount each year, this also includes money ringfenced for social care reform. Alongside £4.8bn in new grant funding over the next three years, councils will also receive £3.6bn from the new health and care levy to support social care reform – including implementing a planned cap on care costs and changes to the means test, as well as “moving towards a fairer cost of care”. The amounts provided for this will be £200m in 2022-23, and then £1.4bn and £2.0bn in the subsequent years. An analysis by the Institute for Fiscal Studies found that when this money is excluded, the average real terms rise in core spending power is 1.8% a year rather than the 3% announced.
South Ayrshire Council’s slow transformation ‘frustrating’, auditors say
The MJ | 28 October 2021
A report by Audit Scotland has praised the local authority for responding effectively to COVID-19. It concluded that the council had worked well with partners to provide support to vulnerable individuals and communities while continuing to deliver other vital services. Audit Scotland also found that many of the local authority’s services were performing well. According to the auditor’s report, South Ayrshire residents benefit in particular from the good relationships between local communities and partner organisations and between councillors and council officers. Despite performing well in some areas, the report also found that the council has been ‘slow and inconsistent’ in making necessary changes to how it delivers services.
Councils respond to 2021 Spending Review and Autumn Budget | Local Government Association
Local Government Association | 27 October 2021
“We are pleased that today’s Spending Review has provided new government grant funding for councils over the next three years to support vital local services. This will help meet some – but not all - of the extra cost and demand pressures they face just to provide services at today’s levels."
More councils urged to exit ‘toxic’ LOBO debt
Local Gov | 27 October 2021
Research for Action has published a national database of council LOBO loans, tracking the number and cost of these debts. Most recently, it has shown Councils have successfully exited at least £1.6 bn from 'expensive and risky' LOBO loans. The LOBO loan scandal was first highlighted back in 2015, when Dispatches found that around 240 local authorities have tad up to £15bn in LOBO loans from private banks, which charge interest rates of more than 7% in some cases.The database shows that since then, councils have exited at least £1.6bn and transformed £3.9bn into fixed-rate loans. See the database here.
MPs’ influence was ‘key’ to reorganisation decisions, say districts
LGC | 26 October 2021
Speaking at panel discussion workshop during the District Councils' Network's conference last week, Selby DC leader Mark Crane (Lab) and Lawrence Conway, chief executive of South Lakeland DC, offered their personal reflections on the current restructuring underway in North Yorkshire and Cumbria. They suggested that MPs were more influential than council representatives in securing reorganisation decisions for their area.
Authority slammed for ‘limited progress’ on scrutiny issues
Public Finance | 26 October 2021
In a progress report published recently , Audit Wales said that three years after it produced a critical report, there is still limited understanding of scrutiny’s role and potential within the council’s wider governance arrangements. A continued lack of clarity over the responsibilities of officers and members at Powys County Council is “hindering effective scrutiny”, according to the Welsh spending watchdog.
Cumbria launches judicial review over local government reorganisation
Local Government Lawyer | 26 October 2021
Cumbria Council has voted to issue a claim against the Government over the decision to approve a plan to split the county into two unitary authorities. The local authority is advancing four main grounds in its challenge - illegality, irrationality and procedural impropriety alongside a claim of a breach of legitimate expectation.
Commissioners proposed at Slough
Public Finance | 25 October 2021
The government is set to appoint commissioners to take over governance and financial security at Slough Borough Council following two critical independent reviews: Chartered Institute of Public Finance Accountant’s (CIPFA’s) financial review and Jim Taylor’s review. The intervention, proposed in a letter to the council today, would see council governance and scrutiny of financial reports transferred to commissioners, alongside oversight of income collection.
Gove wants to ‘keep capacity for hybrid meetings’
LGC | 22 October 2021
The communities’ secretary Michael Gove has raised suspicions he does not have a firm grasp of the current rules dictating councils’ capacity to hold online and hybrid meetings, with comments made yesterday during a meeting with councillors.
Marble Arch Mound’s finances ‘mismanaged and misrepresented’
Local Gov | 21 October 2021
An internal review of Westminster City Council’s Marble Arch Mound project has revealed that ‘errors in judgement’ and a ‘lack of sufficient oversight’ led to the project’s costs spiralling out of control. As part of the council’s wider £150m investment in the Oxford Street District, the Mound was designed to encourage more visitors to the area. However, the £3.3m initiative ended up costing the taxpayer £6m.
Councils’ net spend up 11% during pandemic
LGC | 21 October 2021
Councils’ net revenue spending rose by 11.4% in real terms in 2020-21, according to government figures – with net spend on adult social care rising by £2bn (12%). See here for the full statistical release of Local Authority Revenue Expenditure and Financing: 2020-21 Provisional Outturn, England.
West of England leaders ‘in dialogue’ with mayor after veto dispute
LGC | 19 October 2021
Council leaders in the West of England and the area's metro mayor Dan Norris will be invited to an informal meeting to discuss concerns that have emerged over Mr Norris' use of a veto at committee meetings. The four council leaders on West of England joint committee – which also includes West of England mayor, Dan Norris (Lab) and chair of the West of England Local Enterprise Partnership Richard Bonner – asked that a meeting of the body be postponed until 5 November due to unresolved legal concerns.
Welsh Government makes final decision on boundary changes
LocalGov | 18 October 2021
The Welsh Government has announced its final decision on the Electoral Review of Flintshire, bringing an end to the 10-year review programme – it is some of the biggest ever changes to electoral boundaries in Welsh local government.
Authority dips into COV-19 reserves to reduce capitalisation requirement
Public Finance | 18 October 2021
A council is to use £10.5m of reserves earmarked for tackling Covid-19 to slash the amount of capital borrowing needed to fund services under special arrangements approved earlier this year by Whitehall.
London leader ‘doesn’t know’ how to close £10m funding gap
LGC | 18 October 2021
The leader of Enfield LBC has told LGC she does not know where her council will be able to make efficiency savings in order to plug a £10m hole in its finances.
North Yorks councils to review devo asks
LGC | 13 October 2021
Councils in York and North Yorkshire are to review their ‘asks’ from government on devolution to ensure they align with national policy.
COVID-19 leads to large drop in council’s audit performance
Public Finance | 12 October 2021
More than 90% of local authority audit opinions for 2020-21 missed the extended September deadline, according to oversight body Public Sector Audit Appointments. This is a sharp contraction on the 45% filed on time for 2019-20, and is the third successive year where the number of accounts produced on schedule has reduced.
Contract Management
Electric Vehicle Charging Infrastructure: Future Proof Procurement
The recent fuel supply shock now seems to have abated however it has thrown into sharp relief the pressures of delivering the shift from petrol and diesel vehicles to electric vehicles (EV). A core part of the drive to net zero is that the sale of new petrol and diesel cars and vans will cease from 2030 with all new cars being wholly zero emission from 2035 (the Ten Point Plan for a Green Industrial Revolution, November 2020), but as recent headlines have demonstrated many people, businesses and public services are still heavily reliant on their existing (and typically high carbon fuelled) vehicles.
In this article we examine some of the ways that contracting authorities can support the shift to electric vehicles via their procurement strategies. This promises to be a dynamic area of investment over coming years, something highlighted by the Governments’ very recent announcement of an additional £620 million in grant funding to support charging infrastructure roll-out.
Public procurement intersects with the switch to electric vehicles in a number of ways. Firstly, and crucially, contracting authority support is likely to be required to drive the infrastructure needed to enable the mass delivery of EV in the short timeframe available. This may not require local authorities to commit significant funds however. We are seeing local authorities advertise concession opportunities for the installation and operation of electric vehicle charging infrastructure in the public realm. This type of model can have significant benefits. It opens up charging infrastructure to residents/vehicle owners who do not have an off-street location in which to house a dedicated chargepoint. Opting for a concession model requires the transfer of risk to the concessionaire and can be revenue neutral or revenue positive for the contracting authority. Providing electric vehicle charging infrastructure may also help local authorities deliver their own climate and environment commitments and contribute towards the national push to net zero. The award of concession contracts valued at above the relevant threshold (currently £4,733,252 but see updated thresholds below with effect from January 2022) is currently governed by the Concessions Contracts Regulations 2016. However, general procurement reform is on the horizon (see our article on the Procurement Green Paper) and it appears that the direction of travel will be that the concession-specific regime will be scrapped and rules governing concessions included within a single set of rules for all contract awards.
Whilst EV concession opportunities can offer a number of benefits, we have also seen straight procurement opportunities including long-term contracts for the installation and maintenance of EV charging infrastructure. There are also frameworks and dynamic purchasing systems in existence that allow contracting authorities to call-off supplies or services related to electric vehicles or electric vehicle infrastructure. Fleet management and the transition to electric is a key consideration for contracting authorities delivering blue light services in particular. Again frameworks or dynamic purchasing systems might offer one solution to assist with managing the transition but contracting authorities operating fleets who may wish to set up more bespoke arrangements will need to start planning now to ensure that their ability to transition to electric is supported by their procurement strategies.
On the EV supplier side opportunities are available now and suppliers will wish to ensure that they are competing in procurements and winning contracts so as to develop their business and be able to meet technical and professional experience requirements in future competitions. Where contracts are being called off via a dynamic purchasing system EV suppliers should be able to apply and join during the life of the system however frameworks that have already been established continue to be closed shops under the current regulatory framework (though limited in term to 4 years save in exceptional cases where justified by the subject matter of the framework). Competing for EV concession contracts requires a clear-eyed view of the value of the commercial opportunity on offer. In all regulated procurement it is essential to understand the architecture that the Courts have put in place through judgments about the interpretation of the various sets of regulations, the over-arching duties contracting authorities must adhere to and the scope of discretion afforded to evaluators in marking bids.
The Government has announced that an EV Infrastructure strategy will be published later this year setting out roles for the public and private sector in meeting the challenge of scaling up infrastructure in a short space of time. There has also very recently been additional public grant funding of £620 million announced to support charging infrastructure installation with a focus on on-street residential charging (Net Zero Strategy, published 19 October 2021).
Bevan Brittan has a dedicated Energy and Resource Management team who are advising clients on EV projects across the UK. This includes a market leading team of procurement lawyers who have extensive experience in supporting clients on procurement design and the conduct of complex procedures, as well as assisting suppliers to challenge procuring authorities which may not have conducted their procurement in a fair and transparent way. For further help and guidance please contact Nadeem Arshad and Kyle Duggan.
Legislation
These Regulations update the financial thresholds under the Public Contracts Regulations 2015 (PCR 2015) SI 2015/102, Concession Contracts Regulations 2016 (CCR 2016) SI 2016/273 and Utilities Contracts Regulations 2016 (UCR 2016) SI 2016/274, agreed to ensure continued correlation with the World Trade Organisation’s Agreement on Government Procurement. They make amendments to these three pieces of UK secondary legislation in relation to public procurement, most notably that the thresholds are now inclusive of VAT, which in practical terms means the thresholds have been reduced. As a result, more contract will fall within the statutory regime. The revised thresholds come into force on 1 January 2022.
Publications & Guidance
COVID-19: CLC publishes updated guidance on contractual best practice
Construction Leadership Council | 27 October 2021
As COVID-19 continues to have a significant impact across the construction sector, the CLC remains concerned that businesses and their clients will become embroiled in expensive and lengthy disputes about the impact of COVID-19 on projects. The updated guidance suggests collaborative and constructive approaches that the parties may adopt to help resolve contractual issues on construction projects arising as a result of COVID-19, and updates the guidance the CLC issued last year covering contractual best practice and record-keeping, and future-proofing JCT and NEC contracts.
Local Government Association | 4 November 2021
Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the local economy, whilst minimising damage to the environment. Embedding sustainability into procurement can support the objectives of an organisation as set out in relevant policies and strategies and can be adapted to reflect the nature of the contract. Many sustainability benefits can be achieved through supplier engagement before the procurement process begins which is essential to allow the market to understand and prepare their response to tender requirements. Also key is the approach to selection of suppliers, the inclusion of relevant and proportionate requirements in the specification, the evaluation of relevant and proportionate award criteria, and an effective contract management process.
Cabinet Office | 21 October 2021
Being paid promptly for work done ensures businesses have a healthy cash flow. This Procurement Policy Note (PPN) sets out how payment approaches can be taken into account in the procurement of major Government contracts. The PPN applies to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies (although will be good practice for all Contracting Authorities) in relation to any contract with an anticipated average annual contract value of £5m. This PPN updates and replaces PPN 07/20 from 1 April 2022.
Cases
Income-sharing provisions in PFI contract include income generated by affiliate companies
Buckinghamshire Council v FCC Buckinghamshire Ltd; FCC Buckinghamshire Ltd v Buckinghamshire Council [2021] EWHC 2867 (TCC)
26 October 2021
This case relates to a Private Finance Initiative (PFI) project agreement between a local authority and a special purpose company for waste treatment services. The local authority obtained a declaration that the income sharing provisions in the agreement captured fees that had been paid to affiliate entities of the contracting party, however the court decided that the thresholds for activation of the income-sharing provisions were index-linked rather than being subject to fixed yearly uplifts. Although not establishing any new principle of law, this judgment will be of interest to those engaged in management contracts with income sharing provisions.
Applications to lift the automatic suspension and for an expedited trial of a preliminary issue
Vodafone Ltd v Secretary of State for Foreign, Commonwealth and Development Affairs and another [2021] EWHC 2793 (TCC)
20 October 2021
This case concerns a challenge brought by Vodafone to a procurement carried out by the Secretary of State for Foreign, Commonwealth and Development Affairs (FCDO) for provision of a system of secure electronic communications. The judgment relates to a hearing of two applications before the court, first an application by the FCDO to lift the automatic suspension under regulation 95 of the PCR 2015 and, second, an application by Vodafone for a direction that there should, instead, be an expedited trial in January 2022 of the preliminary issue, being whether the FCDO’s decision to award the framework contract to Fujitsu following the initial stage was lawful. The court found that damages would not be an adequate remedy for Vodafone, and, having particular regard to the nature of the services being procured, held that an expedited trial of the preliminary issue represented the fairest outcome and the application to lift the automatic suspension was therefore dismissed.
CitySprint UK v Barts Health NHS Trust [2021] EWHC 2618 (TCC)
The Defendant is an NHS trust and wished to award a contract for the provision of pathology transport and logistics services to the East South East London Pathology Network, which is formed of three NHS Trusts: the Defendant, Homerton University Hospital NHS Foundation Trust (HUH), and Lewisham and Greenwich NHS Trust. The Claimant is the incumbent provider of pathology transport and logistics services to the Defendant under a contract which was due to expire on 30 September 2021. The Claimant wished to challenge the procedure and timing for issue and service of the claim form under Public Contracts Regulations (PCR) 2015. The case saw Mr Justice Fraser taking a practical approach to the failures of compliance. However, he emphasised that his departure from the letter of the PCR was a result of the unusual nature of the case, as opposed to the court being ‘indulgent’ of such failures.
News
Local Government Lawyer | 17 November 2021
Bidders can no longer sue in England and Wales for breach of general principles of European Union law governing the award of below-threshold contracts, the High Court has ruled. The case of Adferiad Recovery Ltd v Aneurin Bevan University Health Board [2021] EWHC 3049 (TCC) involved a claim by Adferiad Recovery against Aneurin Bevan University Health Board after it was unsuccessful in a tender process for a mental health sanctuary service.
Council to procure £4m barristers’ services framework
Local Government Lawyer | 29 October 2021
Bedford Borough Council is to procure a barristers’ services framework worth an estimated £4m. In a contract notice the local authority said: “This framework will provide a route to market for the purchase of barristers’ services, where there is demand for capacity or specialist expertise that cannot be met within the council’s in-house Legal Services Unit.”
Government publishes written statement following damning review on Slough Borough Council
LNB News | 26 October 2021
The Minister of State for Equalities and Levelling Up Communities has published a written statement outlining the government’s decision to intervene following a review undertaken by the Chartered Institute of Public Finances and Accountancy (CIPFA). The report indicated that the Council suffered from mismanagement, a breakdown of scrutiny and accountability, and overall dysfunction. The Secretary of State proposes exercising his powers under the Local Government Act 1999 to appoint Commissioners to take over the executive functions of the Council, with oversight of revenue collection and power to dismiss statutory officers. The statement can be read in full here, and the letter to the Council with proposed intervention package can be read here.
Procurement challenges, the automatic suspension and expedited trials
Local Government Lawyer | 22 October 2021
Madeleine Nankervis examines a recent procurement case (Draeger Safety UK Ltd v London Fire Commissioner [2021] EWHC 2221) where the High Court had to consider the defendant's application for the automatic suspension to be lifted and the claimant's application for an expedited trial.
Liverpool terminates contract following developer administration
Public Finance | 15 October 2021
Liverpool City Council has formally terminated a highways development contract after the construction firm carrying out the works went into administration.
Disputes & Regulatory Support
Local authority successful in the High Court in landmark Community Infrastructure Levy case
In Stonewater (2) Ltd v Wealden DC [2021], Wealden District Council’s approach to Community Infrastructure Levy (CIL) social housing relief was endorsed by the High Court.
The Council rejected Stonewater’s applications for social housing relief on multiple occasions. A claim for social housing relief must be accompanied by evidence that the development qualifies for that relief as affordable housing. The relevant planning permission and section 106 agreement required the provision of 35% of the proposed dwellings as affordable housing, and Stonewater sought social housing relief for 100% of the proposed dwellings.
The Council determined that not all of the dwellings would qualify for relief, due to the fixed provision of 35% affordable housing required by the planning permission and section 106 agreement. Stonewater challenged that conclusion, arguing that it erred in law, and that challenge was unsuccessful.
The Court ultimately concluded that the Council’s conclusion was “entirely rational and unsurprising”, in the context of the fixed level of affordable housing provision required. The practical position was that a scheme delivering 100% affordable housing could not lawfully commence; in order to proceed with a development of this type, a further exercise of the local planning authority’s planning judgment would be required. In the absence of that approval, it was lawful for the Council to conclude that it was not satisfied that all of the dwellings would qualify.
The case highlights that the content of the planning permission and section 106 agreement are relevant considerations for local authorities to consider when determining an application for CIL relief. Where there is a specific and binding obligation to provide a fixed number of affordable housing units, the authority is entitled to have regard to this.
Going forward, planning applicants are likely to seek clarification that the affordable housing requirements imposed by local planning authorities are not “fixed”, and are instead a minimum which would not restrict a future application for relief as per Stonewater. The conclusions of the Court are likely to lead to a more cautious approach by developers and housing providers, who will be seeking early and clear engagement from local planning authorities in order to avoid issues with CIL relief at a later stage.
For further help and guidance, please contact Kathryn Lawrance or Matthew Tucker.
Publications & Guidance
Local Government Lawyer | 20 October 2021
A Government proposal for the adoption of a less-codified, common law approach to regulation would add burdens to local authority regulators to provide advice and expose them to a greater risk of legal challenge, the Chartered Trading Standards Institute (CTSI) has warned. The comments came in response to a Department for Business, Energy and Industrial Strategy consultation, Reforming the framework for better regulation, that closed on 1 October. CTSI’s full response to the consultation.
News
Council launches judicial review bid over routeing of lorries to HS2 construction sites
Local Government Lawyer | 15 November 2021
Buckinghamshire Council has issued judicial review proceedings against decisions made by the Planning Inspector relating to lorry routes through the county used in the construction of HS2. Councillors at the local authority had voiced concerns over how lorries assisting the construction of the railway could cause disruption on certain roads in the area.
Birmingham could face new equal pay claims
LGC | 11 November 2021
Birmingham City Council could face new equal pay claims, a union has warned. GMB is encouraging its 7000 members at Birmingham not to sign any equal payment settlement offered to them by the council, saying "significant new information" has arisen regarding problems with the council’s job evaluation scheme. In 2012, the supreme court upheld a ruling in favour of 174 former council employees – mainly women working in traditionally-female roles – who said they had missed out on payments and benefits awarded to men doing comparable work. It has been reported that the council has paid out £1.25bn in settlements over the last decade. But according to GMB, at a recent employment tribunal held for claims made by private no-win, no-fee lawyers working on behalf of staff at Birmingham the council admitted that key roles had been evaluated wrongly. The union is also claiming that the council acknowledged its interpretation of the National Joint Council pay scheme - which sets rates for local government employees - "could not be relied upon".
Local Government Lawyer | 11 November 2021
In TIMEC 1209 LLP v Salford City Council (COMPULSORY PURCHASE - COMPENSATION) [2021] UKUT 269 (LC) the Upper Tribunal (Lands Chamber) ruled Salford City Council must pay a landowner £5.6m after compulsorily purchasing its site, well below the £11.2m claimed but more than the council’s £3m valuation.
Social housing fraud prosecution sees council secure £113k unlawful profit order
Local Government Lawyer | 5 November 2021
The London Borough of Southwark has secured a forthwith possession order alongside an unlawful profit order in the sum of £113,000, following a social housing fraud investigation. Cornerstone Barristers said that Southwark’s investigation found that from around December 2003, the secure tenants had not occupied the property, and since that date, not only had the tenants ceased to reside at the property but they had sublet and parted with possession of the whole.
Local authority ordered to pay more than £800,000 to waste business in contract dispute
Local Government Lawyer | 3 November 2021
Buckinghamshire Council must pay waste contractor FCC £812,633, the Technology and Construction Court has ruled. Mrs Justice O’Farrell said in Buckinghamshire Council v FCC Buckinghamshire Ltd [2021] EWHC 2867 (TCC) that FCC was entitled to the money for overpaid third party income with interest, under a contract that runs until 2046 for an energy-to-waste plant at Lower Greatmoor Farm. Buckinghamshire sends some 100,000 tonnes a year of waste there, with the remainder of the plant’s 300,000 tonnes capacity made up from material sent by other waste authorities or companies.The dispute centred on how income derived from such ‘third party’ waste was treated.
Landowner jailed after breach of injunction prohibiting development in woodland
Local Government Lawyer | 1 November 2021
A landowner who breached a High Court injunction preventing illegal development on woodland has been sentenced to 12 months imprisonment. Gareth Daniel Sullivan was sentenced at the High Court on 18 October after he accepted he was in breach of an injunction obtained by Gravesham Borough Council preventing the felling of protected trees and the development of land at Fowlers Stone Wood, Vigo.
Landlords ordered to pay £350k+ for ‘beds in sheds’ after council prosecution
Local Government Lawyer | 1 November 2021
Three landlords have been ordered to pay more than £350,000 in fines, confiscation order and costs after being prosecuted by Hounslow Council for having so-called ‘beds in sheds’.
Local Government Lawyer | 28 October 2021
A private landlord has succeeded in an appeal to the Upper Tribunal (Lands Chamber) in a dispute with Salford City Council over whether a property he rented out needed a licence. HHJ David Hodge QC rejected other grounds of appeal put by Aftab Raja but accepted that the First Tier Tribunal had been wrong to confirm the £22,500 financial penalty imposed by Salford. In Raja v Salford City Council (HOUSING ACT 2004 - CIVIL PENALTY ORDER - burden and standard of proof) [[2021] UKUT 261 (LC) Judge Hodge said: “On this single ground of appeal, concerning the level of the penalty imposed, the appeal must be allowed to the extent only of setting aside the FTT’s decision to confirm the level of the financial penalty imposed by the council but not to revisit its decision that the relevant offence had been committed. I would remit the decision as to the appropriate level of penalty to the FTT to be determined following a re-hearing.”
Claimant ordered to pay council £17k in costs over “hopeless” arguments in planning case
Local Government Lawyer | 28 October 2021
The High Court has awarded the London Borough of Barnet costs of £16,969.90 against a resident. In Harrison, R (On the Application Of) v London Borough of Barnet [2021] EWHC 2789 (Admin) the judge said there were exceptional reasons for the costs awards because: “Most if not all of the claimant's arguments were not just devoid of merit, but can properly be labelled hopeless.
Developer ordered to pay £50+ over demolition of pub
Local Government Lawyer | 28 October 2021
A property developer has been fined £32,000 for demolishing a pub in a prosecution brought by East Riding of Yorkshire Council, it has been reported. Wayne Low must also pay the council £21,968 in costs, according to Hull Live. Mr Low admitted at Hull Crown Court to failing to obtain planning permission to demolish the 200-year old Travellers Rest pub in a conservation area in Long Riston.
Local Government Lawyer | 26 October 2021
The London Borough of Brent breached its section 20 duties under the Children Act 1989 when it chose not to provide proper accommodation to unaccompanied asylum seekers while awaiting an assessment of their age, a High Court judge has ruled. In AB & Ors, R (On the Application Of) v London Borough of Brent [2021] EWHC 2843, Mr Justice Poole said that the council’s explanations did not constitute "exceptional circumstances" which would justify a departure from the “usual expectation that, treated as children in need as they were, these claimants should become looked after children”.
Council chooses to halt 4000-home development rather than fight judicial review
Local Government Lawyer | 25 October 2021
Canterbury City Council has chosen to concede in a case concerning a controversial 4,000-home estate rather than fight a judicial review challenge that recently won approval to be heard. The scheme, which would have seen thousands of new homes, two new schools, and a number of other community facilities built in Mountfield Park to the south of Canterbury was granted planning permission in 2016.
High Court jails defendant for breach of planning injunction and terms of suspended sentence
Local Government Lawyer | 22 October 2021
Basildon Borough Council has convinced the High Court to jail a man for contempt and breach of the conditions of a suspended sentence in connection with a lengthy planning dispute. Charlie Anderson - one of 12 defendants affected by injunction orders - must serve seven months in a young offenders’ institution, Mr Justice Ritchie has ruled. In Basildon Borough Council v Charlie Anderson (D3) And Ors [2021] EWHC 2734 (QB) Ritchie J said Basildon had applied to commit Mr Anderson for contempt for breaching various sections of the injunctive orders and for having breached the terms of a four months suspended sentence imposed for a year when he earlier admitted breaching injunction orders.
Local Government Lawyer | 21 October 2021
Social landlord Stonewater has lost a High Court dispute with Wealden District Council over a £3m bill for the Community Infrastructure Levy (CIL).In Stonewater (2) Ltd v Wealden District Council [2021] EWHC 2750 (Admin) Mrs Justice Thornton said that Stonewater’s interpretation was incorrect on the workings of the CIL regulations’ relief for social housing.
London borough secures nearly half a million in confiscation orders against private sector landlords
Local Government Lawyer | 20 October 2021
Ealing Council has this month obtained confiscations orders worth nearly £500,000 from private sector landlords who failed to comply with planning enforcement notices. Cllr Manro said: “Once again, this is a huge win for Ealing Council and shows that we will take action if landlords fail to comply with our planning enforcement notices.”
Local Government Lawyer | 20 October 2021
The High Court has rejected two applications from organisations seeking permission to bring a judicial review challenge over Eastleigh Borough Council’s decision to approve a runway expansion at Southampton International Airport. The applications were made by Bournemouth International Airport Ltd and Group Opposed to the Expansion of Southampton Airport Ltd (GOESA).
Local Government Lawyer | 18 October 2021
The Court of Appeal has refused Hillingdon Council permission to appeal in a dispute about the arrangements for the routeing of lorries to and from HS2 construction sites in the borough. In The London Borough of Hillingdon Council, R (On the Application Of) v The Secretary of State for Transport & Anor (Rev1) [2021] EWCA Civ 1501 the local authority was seeking permission to appeal against the order of Sir Duncan Ouseley, dated 13 April 2021, dismissing its claim for judicial review of the decision of an inspector appointed by the Secretary of State for Transport and the Secretary of State for Housing, Communities and Local Government, on an appeal under paragraph 22 in Schedule 17, "Conditions of Deemed Planning Permission", to the High Speed Rail (London-West Midlands) Act 2017.
Resource Library
All Bevan Brittan articles and news
Bevan Brittan COVID-19 Insight Information Hub
Events
8 December, 10am – 11am
As well as looking back at key cases and issues from 2021, our panel of speakers will look at what’s on the horizon for 2022. This includes:
- collective bargaining
- gig economy
- the Employment Bill 2021
- new Flexible working and maternity regulations
- mandatory vaccinations
- menopause
On Demand
Introduction to Inquests: Housing Providers
If you missed this webinar, you can now watch the recording which provides:
- An overview of legal processes which can arise from an adverse incident
- How to engage effectively with other organisations and regulators involved in these processes
- An introduction to the inquest process
- Role of staff during the inquest process, including tips on providing documentary, written and oral evidence.
Procurement Bootcamp
Our popular Autumn Procurement Bootcamp has been taking place each week for the past three weeks. Join Emily Heard and the Procurement team as they provide you procurement insights and guidance:
Autumn Public Procurement Bootcamp – Week 1
How do you ensure transparency whilst also preserving confidentiality?
Autumn Public Procurement Bootcamp – Week 2
Evaluation Decisions: What discretion and flexibility do you have on evaluation and compliance issues in evaluating tenders?
Autumn Public Procurement Bootcamp – Week 3
Ironing out glitches in the procurement process
