In the aftermath of Grenfell, councils must prepare for new costs
This December will see the launch of a new phase of the UK government's One Public Sector Estate (OPSE) scheme. The plans could have big implications for many parties, but how will the finer details affect local authorities?
The OPSE efficiency scheme was established two years ago, and was intended to encourage efficient asset management in the public sector. A further £37 million investment from the government will accompany the launch of the scheme's third phase this month, marking its expansion to over 100 local councils working across 24 partnerships.
The rationalisation at the heart of the scheme is intended to reduce running costs and raise cash through the release of under-utilised land. This process should, in theory, stimulate economic growth via the creation of new jobs and housing.
Local authorities are expected to sell around £13.3 billion worth of land before the end of 2018, and some within the Local Government Association (LGA) agree that council-held land could be of "more productive economic use in the private sector."
Pros and cons
Official estimates suggest that the first two stages of the scheme have already led to initiatives that will create 20,000 jobs and deliver 9,000 homes over the next five years. The same period is expected to produce £129 million in property sales, and should see a £77 million reduction in running costs.
While some observers close to councils have welcomed the scheme, other commentators are rightfully wary of relying on land sales to generate income. The LGA's Richard Kemp, for instance, recently stated that: "Town halls need to treat their assets as investments...there may be better value for residents in holding onto the property."
Only time will tell if the OPSE can ease the strain on council budgets, but it’s clear that local authorities can hedge their bets and minimise assets sell-off by maximising council tax arrears recovery rates.
In the face of a large outcry from the UK electorate, David Cameron recently announced that Britain will accept “thousands” of Syrian refugees. Although exact numbers and time-scales remain uncertain, it is clear that the UK's councils will have to house a huge number of new arrivals in coming years.
Local government support
In response to Mr. Cameron’s comments, the Local Government Association (LGA) stated that while councils were willing to assist refugees, the costs of providing help must be covered by central government.
Many of Britain's Local Authorities have already shown willingness to help. Ruth Dombey of Sutton Council told the LGA that her colleagues are doing "preparatory work in the hope that the government...increases the number of refugees accepted by the UK”. In light of statements such as these, questions remain as to how central government will help the helpers.
The only indication of financial assistance from Whitehall has come from chancellor George Osborne, who recently suggested that the UK’s £12bn overseas aid budget could be used to help struggling Local Authorities.
Official Development Assistance (ODA) rules allow governments to spend aid budgets on assistance for refugees during the first 12 months after their arrival, but funds must be found elsewhere after this point. Where will local councils turn after the first year?
Some future costs might be met by seeking support from charities, many of which have reportedly been ‘inundated’ with donations from activists and concerned citizens. Engaging with charities and grass roots organisations could help to ease the potential financial cost of providing shelter to refugees, and could also help individuals from war-torn countries settle into their new society.
However, relying on charities is not a viable long-term solution to the crisis. The British government must construct a multi-year plan to fund and support councils faced with helping large numbers of asylum seekers. Council budgets are already stretched to breaking point, and if Local Authorities don’t know the specifics of the support they’ll receive, it will soon be impossible to produce balanced budgets that safeguard needy refugees and the interests of existing stakeholders.
For more information on how Local Authorities can maintain healthy cash flows, contact Dukes Bailiffs today.