Asked by: Lord Lucas (Conservative - Excepted Hereditary)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government what steps they will take to ensure that the (1) capacity, and (2) capability, of Local Enterprise Partnerships are not undermined before a view has been formed on their future role; and what plans they have to ensure that their accumulated (a) expertise, and (b) relationships, contribute to the levelling up agenda.
Answered by Lord Greenhalgh
The Government is hugely grateful for the work of Local Enterprise Partnerships (LEPs) over the last ten years to support their local economies and is determined to ensure businesses continue to have clear representation and support as we drive the post-COVID-19 recovery.
The Government is also grateful to LEPs for their patience on the matter of core funding. Since initiating the review into their role, LEPs have been provided with six months of core funding for the first half of 2021-22. A decision will be made shortly on releasing the second tranche of core funding for 2021/22.
The Government has been engaging extensively with LEPs and local partners, including business organisations, HE/FE representatives, and senior officials from local authorities across England and MCA Chief Executives.
The future role of LEPs is being considered within the context of the Government’s landmark Levelling Up White Paper, alongside the commitment to extending devolution and strong local leadership in County areas.
The outcome of the review will be set out shortly.
Asked by: Lord Lucas (Conservative - Excepted Hereditary)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government when they expect the pilot projects funded through the UK Shared Prosperity Fund will begin; what criteria will be used to select these pilots; and which (1) priority groups, and (2) geographic areas, the Fund will target.
Answered by Lord Greenhalgh
The UK Shared Prosperity Fund (UKSPF) will help to level up and create opportunity across the UK?for people and?places
Funding for the UKSPF will ramp up so that total domestic UK-wide funding will?at least match receipts from EU structural funds, on average reaching around £1.5 billion per?year.?Its funding profile will be set out at the next Spending Review
To help local areas prepare over 2021-22 for the introduction of the UKSPF, the Government will provide?£220 million?additional funding to support our communities to pilot programmes and new approaches. This funding will be delivered UK-wide. Further details will be published in the New Year.
Asked by: Lord Lucas (Conservative - Excepted Hereditary)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government when a local authority borrows via the Public Works Loan Board to invest in commercial property principally in order to make a margin to help finance expenditure, what rules set out how this should be disclosed in their accounts; and what permissions they require from central government to borrow such money for such an investment.
Answered by Lord Bourne of Aberystwyth
The Prudential Framework allows local authorities to borrow without Government consent, subject to being satisfied they can afford to service the costs of borrowing through available resources.The decision making process for capital investment and borrowing decisions is devolved to the local authority. Central Government’s responsibility in this area is to set the framework which local authorities operate within.
Whilst local authorities determine their own capital programmes, legislation states that local authorities have to have regard to The Prudential Code which is issued and updated by the Chartered Institute of Public Finance and Accountancy (CIPFA). The prudential framework is designed to ensure that the capital expenditure plans of a local authority, including commercial property investments, are affordable, prudent and sustainable. This will include the setting of a number of prudential indicators relating to affordable borrowing levels which have to be approved by full council every year.
To further support the Prudential Framework, last year we updated The Statutory Guidance on Local Authority Investments. It was updated with the intention of ensuring that local authorities take investment decisions after careful consideration of risk and proportionality, including the potential benefits. The Guidance can be viewed using the link (attached) below:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/678866/Guidance_on_local_government_investments.pdf
When accounting for investments in commercial property, local authorities are required to comply with proper accounting practices, which are updated annually by CIPFA through their Code of Practice on Local Authority Accounting. The Code interprets international financial reporting standards for application by local authorities in a way that is consistent with the specific legislative requirements of the sector.
Asked by: Lord Lucas (Conservative - Excepted Hereditary)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government whether, when a local authority acts, for a fee, as a guarantor for a property transaction in which it has no other interest in a distant local authority the details of this transaction should be (1) available to the public, (2) reported in that authority's accounts, and (3) subject to permission from central government; and if so, how.
Answered by Lord Bourne of Aberystwyth
The general power of competence is provided for in section 1 of the Localism Act 2011. It gives councils confidence in their legal capacity to act for communities and is designed to allow local authorities to innovate. Prior to the 2011 Act, local authorities could only do what Parliament had provided they could do – local authorities were given discrete, often narrowly defined powers. The general power of competence was provided on the basis that local authorities would be able to do anything that an individual with full capacity might do, other than that which is specifically prohibited, with some limitations. Section 1 of the Localism Act 2011 also builds on existing powers to charge and to trade. If a local authority wishes to trade for a commercial purpose, this must be carried out through a company. Anyone has a right to request information from a public authority, including a company that is wholly owned by a public authority.
If a local authority receives a fee for services that it provides it will need to ensure that those transactions are accurately reflected in the annual financial accounts, which it is required to complete. The annual accounts should reflect requirements of the relevant accounting and reporting framework. Proper accounting practices for local authorities are set by the Chartered Institute of Public Finance and Accountancy (CIPFA). Local authorities also need to comply with legislative requirements set out in statute. One specific requirement that local authorities are required to include in their accounts concerns related party transactions. These items should be shown as a disclosure note which supplements the core financial statements. However, it will only be disclosed where the transactions are material. In addition, local authorities complete annual statistical returns of their expenditure which are submitted to MHCLG. These returns should include all income that a local authority receives throughout the year including fees and charges. The RO forms for 2017/18 can be found at the following link: https://www.gov.uk/government/statistics/local-authority-revenue-expenditure-and-financing-england-2017-to-2018-individual-local-authority-data-outturn.
If a local authority provides a service using their general power of competence, they are not required to seek permission from central Government. The Secretary of State has powers to limit local authorities use of the general power of competence, subject to Parliamentary approval of an Order.
Asked by: Lord Lucas (Conservative - Excepted Hereditary)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government what rules apply to the setting of a level of materiality in local authority audits; who enforces those rules; and whether a level of materiality in excess of ten per cent of a council’s annual turnover is unusual.
Answered by Lord Bourne of Aberystwyth
Local authority auditors are required to comply with International Auditing Standards (IAS) when they set materiality thresholds for local authority audits. IAS 320 states that the auditor's determination of materiality is a matter of professional judgement and it explains that misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements
It is not our role to make a judgement on whether the materiality level set by an auditor is unusual or not. However, when setting the materiality level, the auditor should ensure their judgement is justified transparently including a demonstration of how they have designed their audit work to suit the structure and operations of local authorities
If a person wants to make a complaint about the work of an auditor, in the first instance they should complain directly to the senior audit partner using the firm's complaint processes. Auditors are obligated to consider all complaints. Following that, if the complaint is not resolved, further escalation can be made to the auditor's Responsible Supervisory Body (RSB).