Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011...

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Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 [email protected]

Transcript of Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011...

Page 1: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

Impact of the CSR etc….Welcome to the New World

Sue Harvey

February 3rd, 2011

[email protected]

Page 2: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

Welcome to the New World

• Economic & Fiscal Environment• All Change

Regulation Local Authorities Supporting People Housing Benefit & Universal Credit Rents & Tenure Investment Model

• Opportunities• Challenges

Page 3: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

Economic Environment

• Housing market wobbling

• Banks gone all responsible, less lending

• Financial crisis continues, sovereign debt, Euro

• Globally ‘co-ordinated’ fiscal consolidation

• UK deficit deemed too high by all parties

• Bonfire of the quangos

Page 4: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

Fiscal Environment

• New Government in a hurry to reduce deficit• Emergency Budget, CSR, Localism Bill• Abolish first, consult later• Eye-watering spending cuts. IFS:

Tightest squeeze on total spending since WW2

Tightest squeeze in public services since 1975-80

Tightest NHS settlement since 1951-56

Largest cuts to working age welfare benefits ever

Page 5: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change: Regulation

• TSA & AC are toast, HCA funds slashed

Stays:• Consumer regulation, setting standards• Economic regulation preserved in full

• Implicit guarantee, no loss on default, funder confidence

• Strong step-in powers in case of failure• Right to commission inspections (far fewer)• Co-regulation, accountability to tenants

Page 6: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Local Authorities

• Very significant cuts -28% over 4yrs

• Front end loaded, really really big hit 2011/12

• Most targets & ring-fencing removed

• Key partners under extreme stress

• Cut what quickly can, rather than what should

• Radical efficiency: easyCouncil, merging functions, sharing execs, outsourcing

Page 7: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Local Authorities

-30%

-25%

-20%

-15%

-10%

-5%

0%1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 3 0 3 1 3 2 3 3 3 4 3 5 3 6 3 7 3 8 3 9 4 0 4 1 4 2 4 3 4 4 4 5 4 6 4 7 4 8 4 9 5 0 5 1 5 2 5 3 5 4 5 5 5 6 5 7 5 8 5 9 6 0 6 1 6 2 6 3 6 4 6 5 6 6 6 7 6 8 6 9 7 0 7 1 7 2 7 3 7 4 7 5 7 6 7 7 7 8 7 9 8 0 8 1 8 2 8 3 8 4 8 5 8 6 8 7 8 8 8 9 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 1 0 0 1 0 11 0 2 1 0 3 1 0 41 0 5 1 0 6 1 0 71 0 8 1 0 9 1 1 01 1 1 1 1 2 1 1 31 1 4 1 1 51 1 6 1 1 7 1 1 81 1 9 1 2 0 1 2 11 2 2 1 2 3 1 2 41 2 5 1 2 6 1 2 71 2 8 1 2 9 1 3 01 3 1 1 3 2 1 3 31 3 4 1 3 5 1 3 61 3 7 1 3 81 3 9 1 4 0 1 4 11 4 2 1 4 3 1 4 41 4 5 1 4 6 1 4 71 4 8 1 4 9 1 5 01 5 1 1 5 2 1 5 31 5 4 1 5 5 1 5 61 5 7 1 5 81 5 9 1 6 0 1 6 11 6 2 1 6 3 1 6 41 6 5 1 6 6 1 6 71 6 8 1 6 9 1 7 01 7 1 1 7 2 1 7 31 7 4 1 7 5 1 7 61 7 7 1 7 81 7 9 1 8 0 1 8 11 8 2 1 8 3 1 8 41 8 5 1 8 6 1 8 71 8 8 1 8 9 1 9 01 9 1 1 9 2 1 9 31 9 4 1 9 5 1 9 61 9 7 1 9 8 1 9 92 0 0 2 0 12 0 2 2 0 3 2 0 42 0 5 2 0 6 2 0 72 0 8 2 0 9 2 1 02 1 1 2 1 2 2 1 32 1 4 2 1 5 2 1 62 1 7 2 1 8 2 1 92 2 0 2 2 12 2 2 2 2 3 2 2 42 2 5 2 2 6 2 2 72 2 8 2 2 9 2 3 02 3 1 2 3 2 2 3 32 3 4 2 3 5 2 3 62 3 7 2 3 8 2 3 92 4 0 2 4 1 2 4 22 4 3 2 4 42 4 5 2 4 6 2 4 72 4 8 2 4 9 2 5 02 5 1 2 5 2 2 5 32 5 4 2 5 5 2 5 62 5 7 2 5 8 2 5 92 6 0 2 6 1 2 6 22 6 3 2 6 42 6 5 2 6 6 2 6 72 6 8 2 6 9 2 7 02 7 1 2 7 2 2 7 32 7 4 2 7 5 2 7 62 7 7 2 7 8 2 7 92 8 0 2 8 1 2 8 22 8 3 2 8 4 2 8 52 8 6 2 8 72 8 8 2 8 9 2 9 02 9 1 2 9 2 2 9 32 9 4 2 9 5 2 9 62 9 7 2 9 8 2 9 93 0 0 3 0 1 3 0 23 0 3 3 0 4 3 0 53 0 6 3 0 73 0 8 3 0 9 3 1 03 1 1 3 1 2 3 1 33 1 4 3 1 5 3 1 63 1 7 3 1 8 3 1 93 2 0 3 2 1 3 2 23 2 3 3 2 4 3 2 53 2 6

Local Authority Revenue Funding Settlement 2011-12 vs 2010-11

Note: Transistion Funding caps cuts at -8.9% for 2011-12, but this formulae will be basis for 2013-14

Great Yarmouth -27%Burnley -26%

Richmond-upon-Thames -0.61%Isles of Scilly -0.14%

Page 8: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Supporting People

• V. competitive last 5yrs. Margins low / negative

• 1st ring fence removed in April 2009 - LAA

• CSR ‘protected’ SP, cuts of ‘only’ 12%

• BUT 2nd ring fence removed

• Part of formula grant from next year

• Different distribution mechanism

Page 9: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Supporting People

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 3 0 3 1 3 2 3 3 3 4 3 5 3 6 3 7 3 8 3 9 4 0 4 1 4 2 4 3 4 4 4 5 4 6 4 7 4 8 4 9 5 0 5 1 5 2 5 3 5 4 5 5 5 6 5 7 5 8 5 9 6 0 6 1 6 2 6 3 6 4 6 5 6 6 6 7 6 8 6 9 7 0 7 1 7 2 7 3 7 4 7 5 7 6 7 7 7 8 7 9 8 0 8 1 8 2 8 3 8 4 8 5 8 6 8 7 8 8 8 9 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 1 0 0 1 0 1 1 0 2 1 0 3 1 0 4 1 0 5 1 0 6 1 0 7 1 0 8 1 0 9 1 1 0 1 1 1 1 1 2 1 1 3 1 1 4 1 1 5 1 1 6 1 1 7 1 1 8 1 1 9 1 2 0 1 2 1 1 2 2 1 2 3 1 2 4 1 2 5 1 2 6 1 2 7 1 2 8 1 2 9 1 3 0 1 3 1 1 3 2 1 3 3 1 3 4 1 3 5 1 3 6 1 3 7 1 3 8 1 3 9 1 4 0 1 4 1 1 4 2 1 4 3 1 4 4 1 4 5 1 4 6 1 4 7 1 4 8 1 4 9 1 5 0

Supporting People Funding Settlement 2011-12 vs 2010-11

Note: Before 'dampening' effect of formula grant

Camden -60%West Berkshire -48%

Bexley 93%Stoke on Trent 80%

Page 10: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Supporting People

• Announced, intended, considering, discussing ….• Nottinghamshire -67%

• Southwark -50%

• Nottingham City -43%

• Cornwall Council -40%

• Hartlepool Council -30%

• Somerset -18%

• NatFed Survey of Has re LA intentions• 73% already indicated > 12% cuts

• 41% expecting > 20% cuts

• 18% expecting > 30% cuts

Page 11: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Supporting People

• No changes to statutory obligations• Most SP client groups seen as low priority• Prevention always suffers in hard times• Keeping people out of residential care remains a

priority but tenure neutral• As lines with social care blur, floating support

looks more & more like domiciliary care• Wages & T&Cs driven lower still

Page 12: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Supporting People

• CIH-LGA Dec 2010• Service Reconfiguration & Decommissioning

• Excess costs largely already driven out

• Personalisation & choice

• Voluntary & community groups

• Reconsider sheltered / older people

• Reducing #contracts, subsuming services

• Larger generic floating support contracts

• Short term services, moving clients on & through

Page 13: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change – Housing Benefit

• Emergency budget Caps to LHA & total benefits (some re-thinking?) LHA up-rating moves from RPI to CPI -10% if JSA>1yr Significant increases in non-dependent deductions

• CSR LHA Single room rate 25yrs -> 35yrs LHA moved from median to 30th percentile Caps to total benefit for working age, HB to ‘take the strain’

• Combined impact with ESA & CTB• Exempt accommodation review ongoing

Page 14: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change – Universal Credit

• Its on its way

• Welfare reform white paper: detail still missing

• Wherefore art thou new rent settlement?

• Central govt or local govt administration ?

• Retain rent direct to landlord. All / vulnerable ?

• Limit ability to shift back to HB+service charges?

• Where will advice come from?

Page 15: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Rents & Tenure

• New ‘affordable rent’ = up to 80% of market rent• Capped at LHA, (->30th decile)• Doesn’t work for much of country, larger homes• Proportion of re-lets – up to 25%, up to 50%? • Frequency of re-calibration - rents go down as well as up• Affordable for whom? Still LA nominees from waiting lists• Intensifies disincentives to work• Tenure drift over time, who provides for the poorest?• Geographical drift over time, mixed communities?• If HB costs begin to rise, expect an adjustment• How does it work for move-on?

Page 16: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

All Change - Investment Model

• Lot of detail still to emerge

• Something for something deal

• Short tenures, 80% market rent, relaxed on disposals

• Complex LA negotiations

• Financial capacity @ little or no grant?

• Very different risk profile – how will funders respond?

• Only few large deals, yet big HAs cautious

• Developing for Support becomes ever more difficult

Page 17: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

Opportunities

• High end care more protected, but crowded• Mental health strategy, prevention & CBT• LAs, NHS looking for efficiencies & solutions

More outsourcing of retained provision GP commissioning But competition from provider staff start-ups & FTs

• Community run, community owned, volunteerism• Social enterprise model• Anything that can evidence prevention saves money• Anything that gets people into work• Self payers & top-ups with GN residents

Page 18: Impact of the CSR etc ….Welcome to the New World Sue Harvey February 3rd, 2011 sue@campbelltickell.com.

Challenges…

• Don’t whine, play to New Localism & Big Society• Identifying hardest hit of service users & residents• Benefit reform limits HB ability to re-absorb support• Stepping in to fill LA retreat? Can’t do everything• Shrinking effectively becomes key skill, incl. Central costs• Look again at scale & geography• For Groups:

Lots of competition for use of surpluses Hard questioning of commitment to support Contribution to overheads vs subsidy Exit is an option many are considering