Not signed in

Minutes for the CLIP Finance Group Meeting held 23 July 2007

CLIP - Working group on local government financial statistics
Minutes of the meeting held on Monday 23 July at 13:30 in Eland House, Victoria, London

Present:

COMMUNITIES AND LOCAL GOVERNMENT (CLG)
Janet Dougharty    (Chair)
Runa Chatterjee    (Secretary)
Mark Chaplin
Andrew Presland
Graham Fletcher
James Caddick
John Farrar    (attended for item 5)
Milo Butterick   (attended for item 8)

OTHER GOVERNMENT DEPARTMENTS
David Vincent    Office for National Statistics

LOCAL AUTHORITY REPRESENTATIVES
Mike Heiser    LGA
Claire Jameson   Camden
Janice Maule    Watford
Martin Mitchell Westminster (attending on behalf of the LGA High Ethnicity Authorities Special Interest Group)

NON GOVERNMENT
Nicholas Campbell   IPF Ltd
Mark Burkett    Audit Commission

1 Introductions and apologies

Janet Dougharty introduced herself as Jon McGinty’s successor and introductions were made. 
Apologies for absence were received from Amy Bulcock, Jenny Cole, Malcolm Vickers and Adrian Goddon (LG), Patricia Samuel (Special Interest Group of the LGS - SIGOMA), Wayne Williams (National Assembly for Wales), Jonathan Davidson (Scottish Office), Kate Anderson (Information Centre for Health and Social Care), Nicola Morton (London Councils), Peter Mills (HM Treasury), Tracey Vincent (Home Office), Colin Stratton (CIPFA)

2 Minutes of last meeting held on Wednesday 17 January 2007 - WGLGFS(07)6

There were no changes proposed to the minutes, so these were accepted as an accurate record.

3. Action points from last meeting - WGLGFS(07)7

Action Point 1: Mark Chaplin explained that CLG is in discussion with ONS and HM Treasury regarding their requirements for Public Sector Finances and their response to the Atkinson Review.  A report would be made to WGLGFS in due course along with the issues raised in the PWC report.  David Vincent of ONS concurred.

Action Point 3: Graham Fletcher informed the group that WGA returns, including the new leasing question, were sent to local authorities on 23 April.  He said that CLG would aim to ensure that forms are sent out earlier for next year.

Action Point 9: Graham said that lessons learned from the 2005-06 WGA round were incorporated in the guidance notes for 2006-07.  No separate paper has been circulated. 

Janet informed the group that the presentation orders of the papers have been changed in order to give priority to the papers where decisions were required from the group.

4. CTB forms for September 2007 - WGLGFS(07)13

Andrew Presland presented this paper.  He explained that it was a technical paper asking for the members to comment on three issues relating to the CTB form:

  • (a) collection of information on student exemptions as at 31 May 2007
  • (b) a single reference date for the form
  • (c) relating the form to a particular financial year

He also said that it would be helpful to know whether the group was in favour of having a separate box for identifying discounts of exactly 10% on second homes in the supplementary form.

  • Mike Heiser said that the local authority side agreed with (a) and (c). 
  • On (b) he said that authorities had identified good reasons for the three-week gap between the two dates (e.g. to give time to load the VOA data and he and Janice Maule felt that numbers of discounts and exemptions were unlikely to change much in the three-week period.  No one spoke in favour of moving to a single reference date.  CLG agreed to keep to the three-week gap.
  • Mike wanted to consult with colleagues on item (d) and Claire Jameson agreed with him.

Action Point 1: The local authority side to consult their members on the issue of a separate box for second homes discounts of exactly 10% and inform CLG by 6 August 2007. 

5. Proposed changes to the NNDR return - WGLGFS(07)11

John Farrar introduced the paper and asked the group to endorse the proposals for the form and confirm that local authorities would be able to provide information on the number of businesses eligible for small business rate relief.  He said that the first collection on NNDR1 would take place in January/February 2008. 

  • Janice said that manual collection of the information would be time consuming and resource intensive and asked whether allowance under “new burdens” would be made for the cost of upgrading the system and collecting the information.
  • Mike read out comments made by local authority colleagues who have mainly queried the cost of upgrading the software.  He asked whether detailed costing has been considered for the collection of the data.
  • Mike said that one colleague had suggested that some section numbers on reliefs were incorrect, that hardship relief should not be reported on the NNDR because it could not be estimated reliably before the start of the year, and that ‘charges on property’ was not really a discretionary relief.  
  • Mark Chaplin said that although detailed costing has not been looked at, making allowance for additional costs as part of the cost of collection allowance in the calculation of the distributable amount would be considered.
  • Claire and Janice mentioned that if the form is sent out in mid-January only estimates would be available on who had applied and been eligible in a particular billing authority area, and even that could be done only if it were assumed that hereditaments belonging to the same business were recorded under the same business name.  Billing authorities could not provide any information on how many of the businesses eligible for small business rate relief were also trading in other billing authority areas.   
  • Mike said that it would be helpful for the NNDR3 form to collect details on the reasons for write offs (e.g. due to receiverships), and Graham added that details of provision for bad or doubtful debts would then also need recording to reflect differences in practice in “writing off” of debts.   David said that if such information was available it would be used in National Accounts.
  • Janet informed the group that CLG was continuing to gather the views of local authorities on whether the information can be collected and how useful the estimated information would be.  Further discussion would take place with the policy colleagues and detailed costing would be considered.

Action Point 2: CLG to discuss with the policy team the problems of estimating numbers of businesses eligible for reliefs and the cost of upgrading the system and report to the group by September.

6. Changes to the Service Expenditure Analysis part of BVACOP - WGLGFS(07) 12

Nicholas Campbell introduced the paper and outlined the proposed changes mentioned in the paper.  The deadline for comments on this consultation was 31 August 2007.   Discussion would be taking place with CLG before the end of August on how to link the changes to the RO/RA forms.

  • CLG apologised for the error made in the heading of the paper which indicated that it was a note by them.  
  • There were no comments on the process or specifics from the local authority side.   Mike said that the split between Adults and Children’s services seemed sensible.
  • Martin Mitchell asked whether anymore structural changes in policy are planned in the future.  Nicholas said that no major changes would be introduced without forewarning.
  • Mark said that CLG would be reluctant to lose any information that is currently collected on the RO and RA forms.  He also emphasized the importance of retaining the current amount of data collection on National Parks as their activities spread over a number of service blocks.
  • David said that ONS would be happy not to lose the details and would be responding formally to the consultation.
  • Subject to further discussion with CLG the paper was agreed.

Action Point 3: A follow-on paper would be produced by IPF at the next WGLGFS meeting.

7. Project on the alignment between BVACOP and National Accounts - WGLGFS(07) 14

David Vincent introduced this paper.  He said that the aim of this project was to align BVACOP more closely with classifications used in National Accounts so that ONS and HM Treasury data requirements can be met without imposing unduly onerous respondent burdens on local authorities.  The end result is expected in April 2008 when a joint paper with CLG would be produced. In discussion the following points were made:

The paper was noted by local authority side.

  • Janet asked whether Scotland, Wales and Northern Ireland would be included.  David said that he had no response from them yet.  CIPFA would be asked for guidance on how to feed into Scotland, Wales and Northern Ireland.  
  • Nick said that the timetable would help to synchronise CIPFA’s part in the project and that involvement would be led by Tim Day from the CIPFA Local Authority Accounting Panel.  He also confirmed that three separate codes are published for England/Wales, Scotland and Northern Ireland so relevant contacts would need to be approached via the CIPFA Panel. 

Action Point 4: David would report on progress at the next WGLGFS meeting.

8. 2007-08 Budget Analysis – WGLGFS(07) 10

Milo Butterick introduced this paper which gave a breakdown of net revenue expenditure by service block.  He also pointed out that the chart on p7 had been adjusted to reflect numbers and the last sentence on p11 had been deleted for clarity.

  • Mike thanked Milo for the paper and said that this analysis was useful and should be continued.
  • He also pointed out that the labels in Table A3 were wrong way round.
  • David found it a useful analysis for the purpose of National Accounts.
  • It was agreed that care needed to be taken when using the analysis by service block because specific grants allocated to one service block may not be used to finance expenditure in that service block, the Neighbourhood Renewal Fund being an example.
  • It was suggested that a detailed breakdown of the 21.1% increase in capital finance would be useful. It was agreed that this could be done in time for the next WGLGFS meeting.
  • Janice noted the increasing tendency for certain grants to be spread across a broader range of services than EPCS.  This was due largely to the introduction of local area agreements.
  • It was agreed that any further questions would be e-mailed to Milo.

Action Point 5: CLG to provide further disaggregation on capital finance at the next WGLGFS meeting.

9. Reserves analysis – WGLGFS(07) 9

This paper, introduced by Andrew Presland, provided further analysis and trends on the levels of and changes in local authority reserves.  The following points were made in discussion.

  • Mike said that the paper was good on analysis but could have given more information on the reasons for the trends shown, such as the need for authorities to build up reserves to help meet equal pay liabilities.
  • Janice and Martin felt that the pressure was great on local authorities to maintain the levels of reserves.  As well as equal pay liabilities, the need for the treasurer to sign off the level of reserves, the need to build up reserves for major projects in the context of tight capping rules all led to upwards pressures on reserves tending to be greater than downward ones.  It was difficult to forecast up to 15 months in advance and therefore the local authorities usually took the cautious approach between budget and outturn.  
  • The group felt that the GLA data often dominated the trend and it would be useful to have an analysis without the GLA figures. 
  • In response to a question from Graham, Mike said that it was not possible for local authorities to take a view on the expected extent of appropriations to or from schools reserves when they set their budget.  The reported figures on BR and RA returns were therefore likely to reflect a ‘nil return’ rather than a definite view that schools reserves would undergo little change during the year.  DCSF was consulting on charging a 5% levy for schools balances which would then go to a separate pool to pay for other expenditure on schools.
  • It was agreed that any further questions would be e-mailed to Andrew. 

10. Any other business

  • Mike asked CLG to consider the document on Councils perception of Pay on Local Government and provide a report on the issues raised for further consideration.  These included the extent to which RA and RO returns provided accurate information.
  • Graham mentioned the announcement made in the budget on the adoption of International Financial Reporting Standards (IFRS).
  • He said that central government’s intention was to publish WGA for the first time in 2008-09.  CIPFA are lobbying on behalf of local government finance that the adoption of IFRS would not be possible from 2008-09.  Consultation is on-going with both HM Treasury and local authorities.
  • Date for the next meeting has not been confirmed but would be sometime in late October/early November.

Action Point 6: CLG to report on the issues raised in the document on Pay. 

Conseq