Public Finance Nov/Dec 2024

THE JOURNAL FOR THE CHARTERED INSTITUTE OF PUBLIC FINANCE & ACCOUNTANCY NOVEMBER/DECEMBER 2024 PUBLICFINANCE.CO.UK

PRIDE OF PLACE How understanding an area can play an important role in public policy

BACK FROM THE BRINK Section 114 notices can offer a chance to change course

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GLOBAL INTENT How a UN tax agreement could change the world

TOURIST TRAP Balancing profit with social and environmental wellbeing

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The UK’s leading provider of local authority partnerships, for a new way of insourcing Justin Galliford, Chief Executive Officer

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EDITORIAL

WELCOME Redactive Publishing Ltd, 9 Dallington Street, London EC1V 0LN publicfinance.co.uk

CALUM RUTTER

@public_finance_

Power of local pride

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theme that I think runs throughout this edition of PF is local pride. We are, all of us, local to somewhere – to places as large as a city, county or country, or to places as small as a street.

Our cover feature explores the importance of knowing the places that your work affects. On one level it’s a simple enough concept, but it’s the simple concepts that sometimes take the most reflection to ensure we’re getting them right. I hope there’s something in there for readers at all stages of their careers to take away from the article.

Our other features cover international tax reform – efforts by developing countries, particularly in Africa, to increase the say they have over the global system and how much they can tax multinational businesses that do business on their soil – and the tricky issue of overtourism – how do cities whose economies have come to rely on visitors harness the benefits without destroying their existing community?

We also sat down with Brendan Arnold, who was Section 151 officer at Woking when the full scale of the borough council’s financial

challenge was revealed. Food for thought for everyone in local government and beyond.

People and places are at the heart of even the grandestseeming global issues. Big problems, after all, are just little problems stacked together.

But far from justifying atomisation or retrenchment, I think it means we should all feel empowered to solve problems together, even if that sometimes means a person or place working on their own portion of the problem, but being supported and empowered by the rest of the world to do so.

Across our other pages, we touch on preventative spending, net zero, the (now delayed) Procurement Act, chancellors’ first Budgets and the pressures facing local government.

As the financial road ahead becomes clearer – in the UK at least – now is a good time to take stock.

Please enjoy the last issue of 2024. See you in the New Year.

People and places are at the heart of even the grandestseeming global issues.

Big problems, after all, are just little problems stacked together

CALUM RUTTER Deputy editor calum.rutter@publicfinance.co.uk PUBLICFINANCE.CO.UK 3

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.BYJNJTF UIF WBMVF PG ZPVS QSPQFSUZ BOE MBOE BTTFUT XJUI $*1'" The public sector holds large property and land assets with high net worth. Amid ČĺîŕŕĚŠijĿŠij ǛŠîŠČĿîŕ ƎƑĚƙƙƭƑĚƙ IJîČĿŠij ƥĺĚ public sector, it is more important than ever that property and land assets work ĚIJIJĚČƥĿDŽĚŕNj ƥū ƙƭƎƎūƑƥ ČūƑƎūƑîƥĚ îŠē ǛŠîŠČĿîŕ objectives and strategies. CIPFA Property can help organisations to maximise the opportunities of their land and property assets through robust challenges to asset investment, rationalisation, and decarbonisation.

CIPFA offers a wide range of Property, Assets and advisory services, from developing asset management strategies and plans, providing asset challenge and rationalisation, to delivering surveys, writing business cases and benchmarking reports.

Over the years, these services have supported a number of public sector organisations to not only understand their property assets but also how to maximise the performance of these assets.

Learn more: visit www.cipfa.org/services/property email hello@cipfa.org call +44 (0) 20 7543 5600

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CONTENTS

NOVEMBER / DECEMBER 2024

20

NEED TO KNOW 7

Catch up

Prevention key to NHS savings; global government spending up; Scottish governance crippling councils 10 News analysis

Great British Railways; preparedness for mpox 12 Country focus

Georgian tug of war 13 Net zero

UK approach ‘flawed’ 14 Big picture

Indonesia’s new capital 16 CIPFA standpoints 17 World in numbers

34

OPINION

60 of Section 151 officers, and on the opportunity in a Section 114 notice.

34 For richer and poorer

Assessing the progress of the UN convention to end tax abuse and give developing countries a say 40 Holiday blues

How different hotspots are tackling the overtourism that has led to street protests across Europe while retaining the economic benefits

18 On trend?

40

40

How similar are chancellors’ first Budgets?

IN PRACTICE

25 Place-makers

IED conference speakers: building a sense of ‘place’

IN DEPTH

55 Setting a standard

Government Efficiency Framework promises productivity boost 57 Procurement Act

Are you ready?

59 Workplace loneliness

20 Home ground

28

The UK is increasingly recognising that government interventions need to be tailored to local circumstances and communities 28 Interview

Brendan Arnold reflects on his career, on the role

Why leaders must act 60 Hidden assets

Capturing the community value of co-operatives 63 Jobs and careers

CIPFA issues finance team capacity warning 64 Events 65 On account

CEF-CIPFA conference 66 Where next?

PUBLICFINANCE.CO.UK 5

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"VEJU GVOEBNFOUBMT %P ZPV IBWF BO JOUFSFTU PS B SFRVJSFNFOU UP JODSFBTF ZPVS LOPXMFEHF JO QVCMJD TFDUPS BVEJU BOE HPWFSOBODF T¡G ĺîƙ ēĚDŽĚŕūƎĚē ƥĺĚ ĚƑƥĿǛČîƥĚ ĿŠ Performance Audit Fundamentals, covering the key requirements of performance audits.

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ȟ ¹ĺĿƙ ČĚƑƥĿǛČîƥĚ Ŀƙ îƎƎŕĿČîċŕĚ ĿŠ ƥĺĚ Àe and internationally.

¤ĚijĿƙƥĚƑ ƥū îƥƥîĿŠ NjūƭƑ ČĚƑƥĿǛČîƥĚ ŠūDžȠ visit bit.ly/auditfundamentals email hello@cipfa.org call +44 (0) 20 7543 5600

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N E W S / A N A LY S I S / O P I N I O N / D E B AT E

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SET IN TRAIN The long-awaited overhaul of rail services is now under way

COMING, READY OR NOT… Sluggish global response to Africa’s deadly mpox outbreak

PAYING THE PRICE Georgia’s controversial ‘foreign agent’ law scuppers EU support

H E A LT H F U N D I N G

Focus on prevention could save NHS ‘billions’

By Adela Whittingham

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nvesting more into preventing illness could save the NHS up to £22bn a year, research has suggested.

A report from the NHS Confederation and Carnall Farrar found that measures such as

Photography: Shutterstock

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adapting housing to prevent falls, programmes to help people stop smoking and physical activity initiatives had the highest value.

Researchers found that the top 20 interventions, ordered by return on investment, were all community-

based and in areas such as housing improvements, smoking prevention and exercise initiatives.

The highest-value intervention was the adaptation of 100,000 homes, where a serious fall was likely to occur. This

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NEED TO KNOW

CATCH UP

had an ROI of £34.80 per £1 spent.

Training healthcare professionals to provide physical activity advice had an ROI of £23.70 per £1 spent.

The research also found that a scheme by Birmingham City Council to provide free leisure services to its residents was in the top three highest-value interventions, saving £20.70 per £1 spent.

The areas with the highest median ROI were education at £6.60, followed by reducing worklessness, substance abuse schemes and vaccination programmes, which all had an ROI of £4 per pound.

The report comes as the government pledged to move more care from hospitals into the community, and to initiate a shift from tackling sickness to improving prevention.

Many preventative services in England are funded through the public health grant to local authorities, but this has effectively been cut by 28% per person in real terms since 2015-16.

The report authors say the research highlights the need for health service and local authority leaders to invest more in prevention, and to focus on the highest-impact interventions.

Matthew Taylor, chief executive of the NHS Confederation, said: “It is clear that an initial investment in preventative schemes can pay back dividends for people’s health and the economy.

“Supporting people to stay healthy and preventing illness is a vital part of boosting the economy, with economic inactivity in the UK having risen by 900,000 since 2020 – much of this due to those who are long-term sick.”

WATCHDOG FINDS ERRORS IN EU SPENDING The European Court of Auditors warned of “high levels of irregular spending” in the EU budget, with the error rate reaching 5.6% – covering more than €10bn – in 2023. The watchdog’s annual report expressed an adverse opinion as a result.

FISCAL RESTRAINT

Governments of all parties push for higher spending

By Calum Rutter

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hile some might associate conservative politics with fiscal prudence and a small state, the International Monetary Fund has found that parties of all stripes are pushing for higher government spending these days.

Analysis of 65 countries over 60 years has shown that discourse on government spending has become increasingly friendly towards high spending.

Fiscal restraint peaked in popularity in the 1980s, the IMF found.

Discourse still changes in response to economic conditions, according to the researchers, but only to a limited extent – tighter spending becomes more popular after public debt surges, major fiscal events or fiscal rules being adopted, but not sufficiently to counteract the overall trend.

This has been a record year in terms of elections – more than half of the world’s population will have voted for national politicians by the end of 2024.

Election years tend to mean higher spending and lower taxes (with deficits exceeding forecasts by 0.4 percentage points on average compared with nonelection years), as incumbent and new governments alike seek support.

Fiscal policy has been expansive in the run-up to these polls, even after the expense of Covid-19. Just half of countries tightened tax and spending in 2023, down from about 70% in 2022.

By the end of the 2020s, global government debt is expected to reach 100% of GDP, says the IMF. Deputy managing director and former chief economist Gita Gopinath called on the world to act: “Political and structural trends are increasingly pressuring governments to spend more and borrow more,” she said in a speech in Dublin.

“If history is any guide, the trajectory of debt will be worse than any of us project today, and considerably so. This is not sustainable, and we need to IMF deputy managing director Gita Gopinath: act now as the trajectory of debt is not sustainable strategically pivot.”

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IN BRIEF Costs set to soar for temporary housing

SCOTTISH GOVERNANCE

Agreement, which was intended to create a “partnership of equals” between government tiers.

Alison Payne, research director at Reform Scotland, said that local fiscal devolution was “going backwards”.

“It’s not a great statement about 25 years of devolution that we’ve got a council tax freeze that nobody seems to like, that is wildly discredited, that’s seen as regressive, but we’ve been completely unable to reform it,” she said.

She called for far greater fiscal powers for local authorities, instead of the “drip-drip” approach of devolving small levers such as a tourist tax.

David Heald, emeritus professor at Adam Smith Business School, University of Glasgow, said the electoral cycle meant he was pessimistic that the “mess” of council tax could be resolved: “The practicalities of electoral politics make it very difficult to do anything.

Members are pretty clear what has to be done… but no one dares move.”

Heald said income tax divergence from the rest of the UK had “probably reached its limit”, so property taxation would be the only option for resources.

MSPs urged to fix Holyrood’s relationship with councils

By Kerry Lorimer

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root-and-branch review of Scotland’s governance arrangements is needed to address the increasing unsustainability of local authority finances since devolution, a panel of experts has told the Scottish Parliament.

Paralysis over council tax was making reform of the local government funding system even more difficult and was likely to weaken the autonomy and accountability of Scottish local authorities still further, members of the local government, housing and planning committee were warned.

Bill Howat, former chief executive of Western Isles Council, said the decision last year to extend the council tax freeze had damaged the financial sustainability of local government and amounted to a “complete breach” of the Verity House

Photography: Getty

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A survey by the District Councils’ Network found that councils are expecting their temporary accommodation bill to reach an average £400,000 this year – a 33% rise.

This came ahead of official figures that show unprecedented use of temporary housing and rising homelessness.

DCN surveyed 169 member councils and found that some members expect to spend in excess of £1m more than they had budgeted to tackle homelessness.

Audit arrangements need urgent overhaul Urgent action is needed to repair external audit that has “fundamentally failed” and overhaul the “wasteful, unfair and ineffective” local government funding system, leading academics have said.

A report from the Institute of Local Government Studies at the University of Birmingham also called for Oflog to be freed from Whitehall control and given an expanded remit as part of a major shake-up in the relationship between local and central government.

The report said local authority audit, improvement and regulation had been “operating in a vacuum”, with three-fifths of audits conducted by two providers.

Truss still backs her mini-Budget Former prime minister Liz Truss has defended her economic plan, which included £45bn of unfunded tax cuts, and precipitated crashes in the value of the pound, the stock market and the gilts market. Things would be “different now” if the plan had not been “undermined by the economic establishment”, she said in a video posted on social media.

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NEED TO KNOW

NEWS ANALYSIS

RAIL SERVICES

Full steam ahead A new public body is set to ‘end the fragmentation and waste that make our railways among the least efficient’

By Kerry Lorimer

G

reat British Railways is finally picking up steam as the first step in a long-awaited overhaul of rail services.

Proposals to establish a new public body in charge of rail infrastructure, networks, fares and timetables were brought onto the legislative agenda in this year’s King’s Speech.

The notion of an arm’slength body was first mooted by the previous government three years ago but quickly became bogged down in disputes between the Department for Transport and the Treasury over its remit and level of independence.

Momentum has returned under the Labour government with the introduction of the Passenger Railway Services (Public Ownership) Bill, which will require existing contracts to be awarded to publicly owned companies when they expire.

The legislation is expected to pave the way for setting up Great British Railways as part of a wider programme of reform later in the parliamentary term.

During the bill’s second reading debate, transport secretary Louise Haigh said the new body, which is to

be headquartered in Derby, would be established as a “new directing mind”.

“Running the network, both track and train, as one integrated system will finally put an end to the fragmentation and waste that make our railways among the least efficient because of their spiralling costs and falling revenues, competing interests and industry inertia,” she said.

Among its priorities will be reform of the “overly complex” ticketing system and the introduction of measures to protect the interests of customers, with an eye to the eventual establishment of a new passenger watchdog to monitor standards and champion improvement.

The body will also take on a statutory duty to promote the use of rail freight.

Meanwhile, Haigh has set up Shadow Great British Railways to drive immediate improvements and lay the groundwork for the fully fledged body. Laura Shoaf, chief executive of the West Midlands Combined Authority and a transport veteran, was appointed chair of the shadow body in October.

Shoaf, who formerly served as managing director of Transport for

One of the biggest challenges GBR may face is in driving cultural change

West Midlands and chair of the Urban Transport Group, said her focus would be on ensuring that people were at the heart of the railway network.

“I recognise the great power [of] our transport network in our day-to-day lives, but, in order for it to work and… keep opening up these opportunities, it has to be built around our passengers and freight users,” she said.

The shadow body will see the chief executive of Network Rail, the directorgeneral for rail services at the DfT and the chief executive of the holding company set up by DfT to act as an operator of last resort for nationalised rail franchises given key roles in the design of Great British Railways.

But experts have warned that, in the longer term, bringing a private sector operation under public control could give rise to a multitude of practical and legal difficulties.

Bradley Martin, a partner at law firm Browne Jacobson, says that as well as taking on responsibility for various contractual obligations with third parties, ranging from train manufacturers to caterers, the government will also have to ensure the successful transfer of tens of thousands of staff from train operators to Great British Railways.

“This will present a host of complexities with pensions, salaries, benefits and working arrangements that will have fluctuated between different employers but [that] must now be standardised,” he says.

“One of the biggest challenges Great British Railways may then face is in driving cultural change once those train operating companies are effectively insourced back into the public sector, with the same people working under a new, joint organisational banner.”

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500,000

NEED TO KNOW

WHO’s authorisation of Bavarian Nordic’s vaccine opened the way for Gavi, an alliance that co-funds vaccines for lower-income countries, to negotiate a major deal for 500,000 doses

MPOX OUTBREAK

Vaccine equity challenge WHO calls for ‘global solidarity’ as virus spreads in Africa

By Kerry Lorimer

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he sluggish global response to the deadly mpox outbreak in central Africa has raised questions over equitable vaccine access – and the international community’s readiness to deal with a fresh public health crisis.

The virus was declared a new global health emergency by the World Health Organization in August, following a surge in cases in the Democratic Republic of the Congo, spreading rapidly to neighbouring Burundi, Uganda and Rwanda.

A plan issued by the WHO alongside the declaration stressed the importance of learning from the Covid-19 pandemic to halt the transmission of the disease, including the need for “global solidarity” and “equitable access to medical countermeasures”.

But the organisation itself has come under fire for its delay in approving potential vaccines already signed off in Europe and the US, leaving Africa dependent on richer nations to donate doses from their own stockpiles.

So far, just over 5% of the 5.3 million doses pledged to the continent

have been delivered, suggesting that “global solidarity” is somewhat thin on the ground.

In September, a vaccine developed by Danish manufacturer Bavarian Nordic became the first to be approved by the WHO for use in the fight against mpox.

The official authorisation opened the way for Gavi, an alliance that co-funds vaccines for lower-income countries, to negotiate a major deal with Bavarian Nordic for 500,000 doses.

Gavi chief executive Sania Nishtar said the agreement would give the countries affected by mpox the certainty they needed to plan for an effective vaccine rollout.

“It also serves as tangible evidence that the global

Photography: iStock

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health community has acted on what it learned from the Covid-19 pandemic about the importance of rapid access to vaccine financing during the early stages of a health emergency,” she said.

The financial mechanism under which the purchase was funded was developed in the wake of Covid-19, when the absence of ready cash made it impossible to secure sought-after production slots with vaccine manufacturers.

Nishtar was also optimistic that the launch of an African vaccine manufacturing accelerator would bring down the cost of vaccines across the continent in the longer term by supporting local production, helping to achieve the equitable access that was conspicuously absent during the pandemic.

In October, two months after the global declaration, a vaccination programme got under way in the DRC, targeting at-risk groups and frontline health workers in the highest-priority provinces.

“The rollout of the vaccine marks an important step in limiting the spread of the virus and

NEWS ANALYSIS

ensuring the safety of families and communities,” said Matshidiso Moeti, the WHO’s regional director for Africa.

But the 265,000 doses distributed under the programme fall far short of the 3.5 million that DRC health minister SamuelRoger Kamba says are needed to stem the spread of the virus.

According to the Africa Centres for Disease Control and Prevention (Africa CDC), at least 10 million doses will be required by next year across the continent as a whole.

Chris Beyrer, director of Duke Global Health Institute, said the scarcity of vaccines and treatments in sub-Saharan Africa made it critical that other countries provided access.

The WHO also needed to move more swiftly to approve new vaccine candidates that were ready for use.

Even as vaccination programmes are rolled out, social and political instability in the region would complicate efforts to contain the virus, he warned.

South Kivu, one of the most badly affected provinces, has been plagued by armed conflict and civil unrest, while the prevalence of the disease among the sex workers congregating around local mining communities increases the risk of the virus spreading.

“There is a political and human rights dimension to this outbreak, [which] complicates the situation and will hugely challenge both the WHO and Africa CDC in responding,” said Beyrer.

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COUNTRY FOCUS The EU has suspended Georgia’s accession process and withheld funding

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tug of war taking place between Russia and the EU is leading to tension in Georgia – a country that both major powers are trying to tempt.

Hundreds of kilometres from Ukraine, where equipment from both Russia and the EU is being used in a much more direct representation of the power struggle, concerns over democracy and the rule of law abound.

In May, the government, run by the Russia-oriented Georgian Dream party, adopted a law concerning “foreign agents”, requiring media outlets and nongovernmental organisations that receive more than 20% of their funding from overseas to register as “organisations acting in the interest of a foreign power”.

Under the law, which was initially vetoed by Westernaligned president Salome Zourabichvili before her decision was overruled by parliament (meaning it eventually became law), such organisations are required to submit to audits or face fines.

Critics have said the law is needlessly authoritarian and threatens civil society.

An Asian Development Bank report from June 2020 found that 95% of civil society organisation funding in Georgia came from international donors or development agencies.

Ahead of a parliamentary election on 26 October, the government began proceedings to impeach president Zourabichvili – repeating an attempt to do so last year.

GEORGIA

Caught in a tug of war A controversial law puts the small country in the Caucasus on the frontline of a geopolitical confrontation, with financial repercussions

By Calum Rutter

Georgia was granted EU candidate status in December 2023 – something the population appears to be in favour of (an International Republican Institute poll published in April that year found that 89% of Georgians

Critics have said the law is needlessly authoritarian and threatens civil society

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either ‘fully supported’ or ‘somewhat supported’ joining the bloc).

However, the government’s direction since then has weakened ties.

EU tensions “In recent months, the ruling government has introduced laws that have pushed the country away from [EU accession],” said European Commission vicepresident Josep Borrell in a speech to the European Parliament in early October.

“Despite massive protests, the ‘foreign influence’ law, which stifles civil society and media organisations, was reinitiated and passed. Other proposals that discriminate

[against] and stigmatise the LGBTQI community and weaken the independence of state institutions were also initiated. At the same time, anti-EU rhetoric intensified.”

The EU has responded with financial force.

It suspended Georgia’s accession process, suspended €30m of support within the European Peace Fund, began reviewing aid projects and, in its biggest single move, announced that €121m of unspent funding from 2022 and 2023 will be lost, citing “democratic backsliding”.

This mirrors conflicts that the EU has had closer to home, with Poland and particularly Hungary, where rule-of-law concerns have led to arguments and withheld funding.

Meanwhile, hundreds of NGOs have pledged to defy the ‘foreign agents’ law, meaning the domestic disruption is far from over.

At the beginning of this year, global pressure organisation Transparency International warned that power has been becoming more concentrated in Georgia and that “deepening state capture and high-level corruption are turning the government into a kleptocracy”.

Indeed, a new anticorruption agency, which was set up after an EU request, faces questions about its independence, having not been granted investigative powers to tackle high-level corruption, Transparency International says.

Photography: Shutterstock

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NEED TO KNOW

Simply intervening to ‘catalyse’ private investment is not sufficient

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his year’s upcoming United Nations climate conference, COP29, has been dubbed ‘the finance COP’ for its focus on how to fund the green transition.

Taking place in Baku, Azerbaijan, decision-makers from across the globe will discuss who should pay for what as the world moves to a low-carbon economy.

EU leaders have stressed their commitment to climate finance – namely, the 2009 pledge by developed countries to mobilise $100bn per year by 2020 for developing countries to fund climate change adaptation and mitigation measures, which was first reached in 2022.

EU countries together form the largest contributors.

Now, with the effects of climate change becoming more apparent, the developing world will reassert its call for major institutions and wealthier countries to do more.

Donald Trump has said he will withdraw the US from the Paris Agreement if he wins, just as he did in 2016.

– is proof that the UK government’s historically favoured approach to the green transition is flawed, a researcher has suggested.

Dr James Jackson, postdoctoral fellow at the University of Manchester, warns that simply intervening to ‘catalyse’ private investment is not sufficient.

However, Labour in its first 100 days in office has continued with the approach. Creating Great British Energy, the National Wealth Fund, de-risking investments in technology that cannot yet be scaled and making onshore wind development easier by revising the National Planning Policy Framework – all are examples.

Such moves are popular as they do not require much spending, but they do not guarantee private sector buyin, Jackson argues.

“That there remains what is often called a ‘finance gap’... even when assuming the private sector will come forth with the required capital, is evidence that such strategies do not work.”

He calls for a round of green bonds – to be invested in “mature, reliable technologies that have proved their viability (such as off/onshore wind and solar) and also yield reliable returns for the Treasury”.

“Bond issuances can be kept within the fiscal rules by ceasing fossil fuel subsidies, adjusting the Bank of England’s rules on

NET ZERO

COP to it Developed nations must do more, and the UK’s approach to the green transition is flawed

Mind the gap The ‘finance gap’ – the difference between the amount of money needed to green the economy and that actually invested

Photography: Shutterstock

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NET ZERO

indemnifying bond holdings at commercial banks and increasing windfall taxes on energy producers, supermarkets and banks.”

Threat level: green Climate threats pose an underappreciated risk to UK national security, experts have warned.

Research by the IPPR think-tank found major threats are not adequately addressed in the government’s national risk register, while ‘tipping points’ are not included at all.

Tipping points such as melting polar ice destabilising ocean currents could wreak havoc on seasons and weather patterns, destabilising national and even global security – and the UK is particularly vulnerable because of its position in the North Atlantic.

The report’s lead author, Laurie Laybourn, warned that like Covid-19, severe climate impacts can come out of nowhere. He urged the government to put climate risks at the heart of national resilience and security plans, create an independent Centre for Climate and Nature Security, and act on the recommendations of the UK Covid-19 Inquiry for bolstering national emergency preparedness.

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BIG PICTURE

INDONESIA

Investors eye new capital

A

lthough Indonesia’s new capital city, Nusantara, on the island of Borneo, is not projected to be fully built until 2045, the first of five stages of development were due to become operational this October. Indeed, the country’s first cabinet meeting session was meant to be held there in August to mark the beginning of a transition of political power, with Nusantara inaugurated as capital city on 17 August. However, while president Joko Widodo (known as Jokowi) did appear in Nusantara on that day, it was only to celebrate Indonesian Independence Day. The slip in the project’s schedule is attributed to lack of private investment. Indonesia’s government anticipated that state funds would cover 20% of Nusantara’s $35bn costs, with domestic and foreign private investors making up the significant difference. But, last November, Jokowi admitted that no foreign investor had, by that stage, contributed anything to Nusantara’s development.

Much is changing, however. Investor interest is reportedly on the rise, with the government offering 80-year land concessions in Nusantara, which will replace Jakarta as capital city. Jakarta is sinking at a rate of around 18cm a year and has been deemed unable to accommodate its function as seat of government and business centre.

Meanwhile, Jokowi was preparing to step down, with successor Prabowo Subianto set to take office in October.

It remains to be seen what the country’s new political make-up means for the pace of Nusantara’s development; Subianto is reportedly keen to assuage concerns over the strength of his support for the project.

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NEED TO KNOW

CIPFA STANDPOINTS

PUBLIC SECTOR CHALLENGES

Topical thoughts from CIPFA office-holders

preparedness. Frameworks such as AI Singapore’s AI Readiness Index focus on key pillars: organisational, ethical, business value, data and infrastructure.

This ensures that AI deployment is both effective and responsible.”

Florence Bastos is CIPFA’s public finance technical adviser

could drive significant change across the public sector.”

Lee Outhwaite is CFO of NHS South Yorkshire Integrated Care Board and chair of CIPFA’s Public Policy and Reform Forum

Reforming the UK’s public sector: what next for health?

Challenges and opportunities for the NHS estate

Lee Outhwaite’s case for a more integrated, mission-driven approach for the UK’s healthcare and the NHS “The traditional ‘new public management’ model, with its focus on targets and market mechanisms, holds us back from applying interconnected initiatives to today’s complex issues.

It’s time for a new description of a positive role for the state and an assertive role for the public finance professional within that.

“The NHS may be broken, but it perhaps isn’t the participants that have broken it. Rather, it has been a reluctance to really integrate beyond the structures we currently inhabit.

“I am increasingly interested in leanthinking approaches, as in the Toyota Production System. This focuses on whole-organisation participation, empowering staff to improve efficiency and quality with the goal of organising their activity to deliver greater benefits and value while eliminating waste.

“In Leeds and Coventry hospitals, projects such as Leeds Way and the UHCW improvement system are already showing how empowering frontline staff can lead to meaningful improvements. Embracing such quality improvement methodologies

Dr Eleanor Roy on tackling under-investment and availability of capital funding for the NHS estate “The state of the NHS estate is well recognised: crumbling buildings, service failures and an eye-watering maintenance backlog. Contributing factors are historic under-investment and under-spent capital budgets being used to plug in-year deficits.

“The elephant in the NHS estate is that more investment is needed.

In devising infrastructure plans, affordability and the state of the estate are front and centre. The ambition to transform services is quelled by the need to keep the rain off – literally.

“Capital, and how it is allocated, could be more clearly aligned with local and national priorities. The long-term planning horizon could be matched with a multi-year capital settlement and flexibility to shift capital across years and/or between partners.

“We have seen changes in structures, organisations, standards and policy, but the capital regime has failed to keep pace. We propose an end-to-end review, to ensure the system is lean and outcome-focused.”

Dr Eleanor Roy is CIPFA’s health and social care policy manager

Technological turbulence: navigating AI in public finance

For more opinion items from CIPFA voices and others, visit the link above

Florence Bastos on what professionals need to consider as AI becomes more prevalent in the sector “With the capacity to automate repetitive tasks, identify patterns in vast datasets and simulate complex decision-making processes, AI has the potential to streamline operations in areas such as payroll processing, financial reporting and fraud detection.

“Public finance professionals must support the evaluation of AI investments,challenging assumptions about the benefits and considering social costs, such as job displacement.

“As transaction volumes grow, AI is being integrated into routine financial processes such as payables, receivables and financial reporting.

AI-driven enterprise resource planning systems can automate invoice verification, process supplier invoices and facilitate demand forecasting.

“Unlocking the full value of these technologies requires a certain level of

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NEED TO KNOW

WORLD IN NUMBERS

£8.5BN Shortfall facing councils in England, Scotland and Wales by 2026-27.

60 YEARS RS Since the African Development Bank was established.

1.5TRN YUAN Special bonds issued by Chinese local governments in the first half of 2024.

17% Proportion of UN sustainable development goals that are on track to be met. Progress on more than a third has stalled or even regressed.

600 GIGATONNES

WORLD IN NUMBERS

Water lost by glaciers last year.

12% ‘Green wage premium’ for women in green jobs, compared with 7% for men.

55.4% Projected annual inflation in the G20 this year.

312,000 $125BN

METRIC TONNES

Estimated demand for rice next year in Indonesian government free meals programme.

Climate finance mobilised in 2023.

Sources: UNISON, African Development Bank, Asian Development Bank , UN, World Meteorological Organization, IMF, OECD, Reuters, UN

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OPINION

BUDGET BEN ZARANKO

Setting out the stall IFS senior research economist Ben Zaranko explores recent historical trends as PF asks: how similar are chancellors’ first Budgets?

On the spending side, it depends on what the new government was elected to do. It’s a good opportunity to get some bad news out of the way, when you can plausibly blame your predecessor, and hope people might forget by the next election.

it’s about getting the house Q So, in order. What about signalling that it’s a new government?

T

he new government, Budgets after elections in particular its new – whether or not there’s a chancellor Rachel change of party – tend to Reeves, has put the health have tax rises, whereas the of the public finances at the average pre-election Budget heart of its message. contains tax cuts.

Talk of a “black hole” in her BEN ZARANKO Budgets after an election predecessor’s spending plans where there has been a is senior research economist at the IFS has dominated the narrative. change of party – although Fiscal rules have possibly the sample size gets quite never been so prominent small here – tend to see even bigger in the national discussion. tax rises as standard. In 1997 and She has now delivered her first 2010, for example, there were fairly Budget in that context, taking her place chunky tax rises. in a long line of chancellors to hold the It’s not an iron rule of politics. We red briefcase. Although some (recently, didn’t see it in 1979 at the start of the notably, Kwasi Kwarteng) do not get the Margaret Thatcher government, for opportunity to formally present their example, but it has been true on a lot year-ahead plans to parliament, what of occasions since. can we learn from those who did?

Is there anything recent history can What about non-tax trends? teach us about what chancellors do There is a tendency to set new immediately after entering No 11? fiscal rules – a signal that there’s a new chancellor, a new strategy and a new slate.

What tends to happen with taxes

Q

Q in chancellors’ first Budgets?

It’s also about them fleshing out what their broader strategy is – when push comes to shove, are they going to keep taxes down or fix parts of the public services?

It is about setting out the stall, but I think also anybody who was paying even a little bit of attention to this would have expected tax rises after [this year’s] election. I think even if Rishi Sunak had won, we’d be seeing taxes go up.

Reeves’ position similar Q IstoRachel that of previous chancellors?

A lot of people have drawn comparisons between Gordon Brown and Rachel Reeves, in that they both committed to stay roughly in line with Tory spending plans. Brown diverged slightly from that by implementing a windfall tax on privatised utilities in his first Budget.

It wasn’t until a few years later that he turned the [spending] taps on.

But the plans Reeves inherited were far tighter.

It’s worth distinguishing between chancellors that take office midparliament versus those taking office after an election.

There is a tendency to set new fiscal rules – a signal that there’s a new chancellor, a new strategy and a new slate 18 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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OUR DOCTORS SAVE LIVES. SO CAN YOUR WILL. The lives we save start with the gifts you leave “When you are working as a doctor in a conflict zone, one of the things you learn is how to manage a mass casualty incident. This is when a large number of severely wounded people who have been caught up in an explosion, a shooting or a bomb blast all arrive at your hospital within a short period of time. When I was working at MSF’s hospital in the Yemeni city of Aden, we had to treat upwards of 50 people in the aftermath of one explosion.

In a situation like that, you can’t just rush into the single operating theatre with the first wounded people who arrive – you need to triage the injured first to decide who most needs surgery.

If I was working in the UK, ambulance crews would carry out pre-hospital triage and I would be confident that we had the resources

and capacity to conduct multiple surgeries at the same time. But in a conflict zone such as Yemen, you don’t have those resources.

The aftermath of an explosion is generally chaos. There are no ambulances, there is little communication from the scene, and the first people to arrive at hospital are often the least badly injured, as they’ve managed to walk or get a passer-by to help them.

PREPARING FOR THE FUTURE Whether I was in Syria or Libya or Yemen, if one or two people came in with blast injuries, in the back of my mind I always expected that more were on the way and that they would probably be in worse shape.

In Yemen, we worked as a team to triage the wounded and we ensured that those who went into theatre first were the most badly injured.

Sharing that knowledge with the teams you work with is central to the way MSF operates.

I was in Yemen to provide teaching in

intensive care for the junior doctors at the hospital, most of whom hadn’t been able to finish their training because of the conflict.

We focus a lot of attention on training and mentoring local staff. It’s a way for us to stand in solidarity with the people we work with and to invest in their – and their country’s – future.

It’s work that will continue to save lives long after MSF has left.

I’ve seen people at their best, coming together to provide lifesaving care. Each emergency is different, but we’re always committed to delivering care to those who need it. That is our legacy, but it is not ours alone.

One in six of our lifesaving projects is funded by people leaving gifts in their wills.

We can’t do what we do without you.”

THANK YOU Above: A man carries a wounded child into the MSF-run clinic at Rafah Indonesian Field Hospital in Gaza, 27 December 2023. Photograph MSF

Leave a legacy and help save lives Search ‘MSF Wills’, email legacies@london.msf.org or call 0207 404 6600 Charity Registration number 1026588

MSF348_PFinance_art_30.10.indd 1 PFNovDec24.019.indd 1

103655

DR RACHAEL CRAVEN MSF ANAESTHETIST

08/10/2024 14:39 15:52 09/10/2024

FEATURE

PLACE

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KNOW YOUR PLACE ‘Place’ is everywhere at the moment, but how can local authorities use it to drive decisions that will benefit their communities?

W O R D S C A LU M R U T T E R

P H OTO G R A P H Y R I C H A R D G L E E D

L

ook out of the window. What do you see? Physical aspects probably stand out the most – buildings, maybe. Or perhaps natural features if you can see trees or a river, or you might be looking down or up – or maybe at – a hill. What about people? Are there many? Who are they? Where have they come from?

What characteristics do they share with one another,

and in what ways are they different?

What experiences shape their lives?

These are all characteristics that policymakers and budget-setters need to consider when making decisions about their area. There is a word encompassing all of them, and hardly a conversation about policy passes these days without it: place.

Place has been, in one form or another, a major consideration in policy for as long as there has been policy at all, but it has risen in public

finance circles to further, explicit prominence in the past few years. Place is everywhere at the moment; at every conference, in every discussion and every presentation (indeed, even filling the pages of every magazine, it seems, too).

It is important, though, to work out what exactly it means for people in the profession, and to explore how the public sector can use it to drive good decisions that make a difference for the communities it serves.

First, what does it mean? “Place is the physical environment that PUBLICFINANCE.CO.UK 21

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FEATURE

PLACE surrounds us, and the relationship between that and the people who live in, work in, learn in or visit that environment,” says John Howie, service manager of place and health at Public Health Scotland.

“When I speak about people, I think about different stages of life and different populations: factors such as ethnicity, disability, sexuality and gender – place is a complex dynamic.

“Place also is not fixed. It changes based on the time of day and time of year. Take Buchanan Street in Glasgow, for example. Compare when the Commonwealth Games were on and being surrounded by people to, say, on a cold winter’s night when you’re walking alone. Now think of the difference if you are male or female. It’s the same location but feels like a different place depending on the circumstances.”

It seems like common sense that decisions should be made with these factors in mind. However, as always, it’s not that simple.

A lot of power and money are centralised (this is more true in some countries than others – see infographic, pp26-27), so the people making decisions are often making them without a direct interest in the place(s) they affect, and without specific local understanding that would benefit them.

Do they really care?

“Some leaders are place-based in that they care about the place, and the other kind are what I call ‘placeless’ leaders, who don’t necessarily need to care about the place,” says Robin Hambleton, emeritus professor of city leadership at the University of the West of England.

“The former understand place partly because they care about it. They often see

“The idea is that you don’t govern a place from city hall; your role is to orchestrate the whole city – the whole ‘place’. The state is part of the solution, but a lot of really important figures who bring additional perspectives are outside the state, and the collective spending power of all those actors is really quite significant” Robin Hambleton, University of the West of England, on the Bristol One City Plan

GEOGRAPHY LESSONS

Shine a light When thinking about place in depth, it might help to go back to basics. In 2014, geography teacher Denise Freeman and education researcher Alun Morgan outlined a ‘three lamps’ model for teaching school students about place.

In their model, three lamps illuminate different aspects of a place to provide a framework to cover different facets: Natural science/positivist.

Focus on the location and features of a place. What is the landscape like? How large is the settlement?

These are more objective truths.

Social science. Consider human-environment interactions, both socioeconomic and political.

What is the local economy like, and how does it affect people?

Humanistic/interpretivist.

Possibly the most subjective, this lamp illuminates the ‘sense’ or meaning of a place to people.

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things in the round precisely because they are place-based, [while] those in Whitehall are often forced into their silos so they can’t see the problems they need to deal with fully.”

The argument is that because problems are interconnected, someone with a geographically wider view of a specific issue might struggle to deal with that problem in a specific place. A person working on national policy might spot a local trend from data, but would not easily be able to fix the problem without policy levers affecting the wider determinants of that problem.

Things are rarely simple.

Hambleton believes the problem of placelessness has become worse.

“Multinational companies and globalisation have left communities behind. By being so neglectful of place, they have smashed many to bits.

We can see the way the power of place has been eroded by policy, too. The Rates Act 1984 [which set controls on councils’ tax-raising powers] removed the right of local citizens to set the level they tax themselves at. That completely undermines local democracy. It doesn’t happen in other western democracies.”

Hambleton worked with erstwhile Bristol mayor Marvin Rees on the Bristol One City Approach (leading to the Bristol One City Plan), which defined a vision for the city by 2050 and set year-by-year goals across six themes: children and young people; economy and skills; environment; health and wellbeing; homes and communities; and transport. Rees would hold meetings with all kinds of public sector organisations, businesses and charities working in Bristol to discuss issues affecting the city.

“The idea is that you don’t govern a place from city hall; your role is to orchestrate the whole city – the whole ‘place’,” says Hambleton. “The state is

PLACE TOOLKIT

Standard procedure

part of the solution, but a lot of really important figures who bring additional perspectives are outside the state, and the collective spending power of all those actors is really quite significant.”

Adjusting the mix The Place Standard is a tool developed by a partnership between the Scottish Government, Public Health Scotland and Architecture & Design Scotland in 2015. It is aimed at helping to draw a full picture of the quality of a place in order to identify areas that might be improved.

Public Health Scotland’s John Howie tells PF: “When it was being designed, it was answering the questions of how we break down place into its various components and how [they] relate to different age groups and populations.’”

The tool sets out 14 key areas to structure conversations about place. It deals with physical and social elements.

Those areas are: 1. Moving around 2. Public transport 3. Traffic and parking 4. Streets and spaces 5. Natural space 6. Play and recreation 7. Facilities and services 8. Work and local economy 9. Housing and community 10. Social interaction 11. Identity and belonging 12. Feeling safe 13. Care and maintenance 14. Influence and sense of control “It has been successful because of its simplicity. It takes complex public health theory and translates it into a language that everyone can engage with, while still generating the same outcomes,” Howie says.

Professor Sheela Agarwal, associate head of the school for research and innovation at Plymouth Business School, says a less place-based approach is not necessarily ‘wrong’ – she points to regional policy and funding in the EU, which has delivered genuine economic benefits to less developed parts of the bloc and is definitely not on the ‘place’ level. But she believes that increasing the place-based component in the mix is important.

“Increasingly, the [UK] government is recognising that localities and places are important and there need to be interventions that are tailored to local circumstances,” she says. “This is where it gets challenging. Traditionally, areas or challenges have been siloed into departments, and there has been little cross-departmental working – very little sharing of knowledge or data.”

Agarwal also co-leads the University of Plymouth’s Centre for Coastal Communities, and says place is “critically important” in both understanding and dealing with the issues she comes across. “Problems for coastal communities run deep,” she says. “Coastal areas are geographically disadvantaged from the get-go.”

When the government is assessing a business case for development or regeneration, and looks at the projected cost-benefit ratio, coastal areas do not look attractive, Agarwal points out.

There are disparate, small settlements and constraints on development such as valleys and about 180 degrees of sea in the way. Thus, from a national perspective, investment does not look attractive, even though it would benefit a community hugely.

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FEATURE

PLACE Agarwal also says that data often refers to the district – rather than settlement – level, hiding pockets of severe deprivation. “It’s a challenge to look at the data, which is a big problem for local authorities. There is huge power in data; without that evidence, you often can’t convince people in central government that there is a problem.”

Is devolution the answer? Jonathan Werran, chief executive of thinktank Localis, believes it should be.

“There’s been an observable shift in the language around place in the past few years. New Labour had some reforms based on the idea of ‘total place’, but although the coalition government paid lip service to carrying those ideas on, their heart wasn’t really in it. The levelling-up white paper recognised the crucial interdependent link between the quality of public services and the quality of local placemaking – that they’re two sides of the same coin. It’s gathering momentum.”

“But devolution to what end?” Werran asks. “We need to untwine genuine devolution, which involves transfer of power and resources to the local level, from simple decentralisation, through which local government is treated as a mere delivery arm for national policy.

The promise of genuine, full-blooded devolution is that by transferring powers and responsibility for services we get better outcomes, not because Whitehall is inherently bad but because local institutions have far more at stake in making their promises and budgets realistic in terms of trust and accountability.”

Werran’s advice to local place-makers? “Walk the ‘parish bounds’ to understand your area. It’s good to immerse yourself.”

It’s clear that in the UK there is at least a small shift towards place-based policy through devolution – although exactly how far this goes remains subject to central government’s whims. There is a better world to be won through it, seemingly, and all local policymakers, budget-setters, influencers and citizens would do well to know their place.

“The promise of genuine, fullblooded devolution [rather than simple decentralisation] is that by transferring powers and responsibility for services we get better outcomes, not because Whitehall is inherently bad but because local institutions have far more at stake in making their promises and budgets realistic in terms of trust and accountability” Jonathan Werran, Localis

PLACE-BASED MODEL

Preston, we have lift-off A famous example of place-based thinking, perhaps the most wellknown in the UK policy context, is the Preston Model. Through the model, the council sought to address the city’s needs in a sustainable way by transforming spending behaviour.

The project began in 2013, after Preston City Council wrote off a previous economic development plan as a failure (the authority tried to attract inward investment to spur local growth, but a major developer withdrew from the city).

Alongside the Centre for Local Economic Strategies, the council developed an approach to community wealth-building that has seen many millions more pounds of public money spent locally.

CLES found that 61% of the money spent on procurement by Preston’s ‘anchor institutions’ (the city council, Lancashire County Council, Cardinal Newman College, Lancashire Constabulary and social housing provider Community Gateway Association) on

each of their 300 biggest suppliers ‘leaked’ out of the Lancashire economy in 2012-13.

Just 5% was spent with organisations based within Preston itself.

The institutions were then able to address engagement in sectors with the biggest ‘leakage’ rate by targeting local businesses, letting them know that opportunities to bid for contracts were upcoming.

The model emphasised the importance of social value as a factor in procurement decisions, as opposed to a singular focus on cost.

Within just four years, millions of pounds more was being spent locally: 18.2% within Preston and 79.2% within Lancashire.

In 2016, the council and CLES looked at the further role businesses could play in building community wealth, by adopting similar principles to the anchor institutions.

A 2019 report found that the model had led to a more collaborative and effective relationship between institutions in Preston.

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SOUNDBITES

Contributors are all speaking at the Institute of Economic Development annual conference on 6 November.

How do you identify ‘place’ and build it into local decision-making?

“In a human-centric world, people identify and (re)define ‘place’, generation after generation.

Geography, environment, history and experiences may influence where people settle but it is the cultural connections that identify and amplify meaningful places for people. Places where people live, feel connected, have a sense of belonging and pride – a way of being. In the physical, temporal and spiritual places where people may feel safety, discomfort and ambivalence (at different times, all at once), it is imperative that people have the power to make and influence local decisions to shape their places, and futures. Communities, anchor institutions and agencies must work in tandem – where deep place knowledge, creativity and innovation collide to create sustainable, thriving spaces and places. This requires a fundamental shift in the power dynamics. It means valuing the complexity of lived realities; it means distributed place leadership, representing the needs, wants and desires of those inhabiting these places.

A ‘place’ is best defined by the everyday activities of residents and workers. The boundary will be defined by trips to access services or employment and can be termed the ‘local functional economic area’. In decision-making, this can be straightforward in those local authority areas where a single town is the focus of economic activity; it is complicated only slightly when there are multiple centres of activity.

Where the local functional economic area crosses administrative boundaries, difficulties can arise. In order to be effective, authorities need to consult with those across the boundary. There is no requirement to do so under their democratic remit, but wider benefits accrue in terms of economic activity.

Those areas that can collaborate across boundaries will build stronger places.

NIGEL WILCOCK, executive director, Institute of Economic Development

Our experience suggests that place-based interventions are best conducted with a population size of 8,000-10,000 people – too large an area makes it challenging to bring the community together, but too small and it becomes hard to influence decision-makers. What makes Big Local [a programme through which 150 overlooked communities are given £1m to improve their neighbourhoods] different is that the community has complete control over how the money is allocated. Having money of their own to spend gives them an experience of power that they had not previously had and has proven to be an effective way of levering in additional funding, support and interest from others looking to make an impact in the same areas.

RACHEL ROWNEY, chief operating officer, Local Trust

Place is very much a subjective thing and very much down to the individual: for some, it’s a street or neighbourhood; for others, a town or city. Interestingly, all are right when you consider that we’re all in a place-layering scenario of being in more than one place at once – street, neighbourhood, town, county, country. When it comes to decision-making, it’s whatever is pertinent for the relevant decision-making body – from parish council to combined authority. To ensure the place is considered in a relevant way, it really needs to have a shared narrative, determined by its stakeholders, which sets out its direction of travel, distinctiveness and opportunities. This way, any decision-making body can understand what it has to offer and how it complements places around it. This creates an appropriate environment for effective and appropriate decision-making, which any community can get behind and respect.

JOHN TILL, founding director, thinkingplace

CAROLYN ABEL, head of culture and tourism, Southampton City Council

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DATA

CENTRALISATION 69.57%

54.65%

35.7%

59.14%

81.11%

60.35%

70.5%

75.24%

70.56%

67.26%

69.16%

85.59%

56.39%

51.36%

38%

80.29%

GOVERNMENT SPENDING

Keeping it central The UK remains one of the most centralised countries in the world, despite a recent push towards devolution and trailblazer deals

In the UK, important spending decisions are overwhelmingly made in Whitehall rather than by the hundreds of local authorities, even though they are much ‘closer’ to many of the problems that the public sector is tasked with solving.

Portugal (85.59%) and France (81.11%) record similar amounts

of total public spending by central government as the UK (80.29%), but in many other countries in Europe the story is very different.

Think-tanks and sector leaders have argued for years that the UK’s system of subnational government needs reform – and more responsibility.

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P E R C E N TA G E O F T O TA L G OV E R N M E N T S P E N D I N G S P E N T BY C E N T R A L G OV E R N M E N T P E R C E N TA G E O F T O TA L G OV E R N M E N T S P E N D I N G S P E N T BY LO C A L G OV E R N M E N T

AUSTRIA

30.43%

BELGIUM

45.35%

DENMARK

64.3%

FINLAND

40.86%

18.89%

GERMANY

39.65%

ICELAND

29.5%

ITALY

24.76%

NETHERLANDS

29.44%

NORWAY

32.74%

POLAND

30.84%

14.41%

PORTUGAL

SPAIN

43.61%

SWEDEN

48.64%

SWITZERLAND

62%

A 2022 paper by Centre for Cities found that, despite developments in devolution, Britain had become even more fiscally centralised since 2015, discouraging councils from growing their local economies.

This led, the report found, to authorities spending just 9% of their budgets on local economic

FRANCE

development, in spite of growing acceptance during that period that the country faced a problem of ‘left-behind’ places.

In 2019, IPPR found that the UK was more regionally divided than comparable economies such as France and Germany.

Health, jobs, disposable income and productivity all faced huge

Source: OECD

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19.71%

UK

disparity – to levels not seen in similar countries.

Devolution is now a priority for the government, with elected mayors growing in both number and power. Trailblazer deals for Greater Manchester and the West Midlands are charting a path forwards – but they have yet to deliver the

kind of economic benefits to their surrounding areas that London does.

An important readjustment is set to take place, as long as national decision-makers commit to relinquishing some of their responsibilities – an impulse that doesn’t seem to come naturally, in the UK at least.

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FEATURE

INTERVIEW

EXPERIENCED SECTION 151 OFFICER BRENDAN ARNOLD REFLECTS ON THE ROLE AND TELLS PF HOW A SECTION 114 NOTICE CAN BE AN OPPORTUNITY TO TACKLE CULTURAL, COMMUNICATION AND COMMERCIAL ISSUES

A CHANCE T O TA K E S T O C K W O R D S M A RT I N R E A D P H OTO G R A P H Y R I C H A R D L E A - H A I R

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ast year, Brendan Arnold made the news as the interim director of finance and Section 151 officer with Woking Borough Council who was obliged to issue its high-profile Section 114 notice, citing a debt portfolio of £1.8bn and such issues as under-calculating minimum revenue provision obligations trailing back as far as 2007-08.

A year on, Arnold has had time to reflect on his time as a Section 151 officer and the broader state of that role, as well as how councils typically respond to being Section 114-adjacent. But first, what can Arnold tell us of his Woking experience?

“It’s worth remarking that the experience of Woking is ongoing,” begins Arnold.

“It has excellent commissioners who are continuing to manage the impact of the losses identified, and such was the size and scale of some of those issues that I think people will be drawing conclusions from further analysis for some time. What I can say is that a district council with a very modest revenue budget ran up a deficit of £1.2bn. And of course, that suggests significant weaknesses in the control environment generally across the organisation.”

Having reflected on this, Arnold thinks one core issue is that of a power imbalance.

“Woking had the elements of good governance, by which I mean a scrutiny function, meetings of cabinet, and full council and took decisions on the key issues brought before it. But while it had the form of governance, it possibly did not have the power and grip implied by those arrangements.

In other words, those functions, which are really important in any council may, not have asked some of the appropriate questions or, with the benefit of hindsight, drawn suitable conclusions from the answers received.”

It’s important that councillors and officers “do the boring stuff well,” Arnold continues.

“Colleagues will recognise sitting in a scrutiny or audit committee of an evening, engaging with an agenda and trying to help where you can. This needs to be regarded as really important work, because the questions asked – and critically, the answers given – need to be the fullest questions and answers possible, so that a viable process of challenge can take place. Where this PUBLICFINANCE.CO.UK 29

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FEATURE

INTERVIEW doesn’t happen there is a risk that events will unfold as we’ve seen in Woking and other distressed councils. Investment in ‘commercial’ assets that are novel in character requires a keen view of the accompanying risks and their mitigation.

“I think some of this is cultural. In councils over the past two plus decades we’ve become used to reacting to events very quickly; things are often done at enormous pace. In developing novel proposals, that can be a perilous course.

I sometimes reflect whether, for large schemes associated with high levels of risk, it might be better to build in more Commercial mindset time for bottoming out the issues before proposals are This issue of novel commercial approaches crops up considered for decision. several times in our conversation. Arnold has noted “I’m saying, let’s spend a lot more time exploring the risks how, over the past 10 to 15 years, councils have sought to earlier in the process and before we put proposals before become increasingly commercial, with job adverts seeking Members for decision. You don’t need to buy an enormously candidates offering a commercial approach. expensive system to do that, you just need to build the time for “I fear that the understanding of a commercial approach that really critical tyre kicking to take place on the journey.” has not always included the analytical side of commercial How does Arnold see the current situation? Is a spike in management,” says Arnold. “It’s not simply about exploiting Section 114 notices on the cards? We meet in late September, with assets to gain income or creating assets to gain additional all eyes on the new chancellor’s October’s Budget statement. revenue streams; it’s about successfully managing the risks “We’re at an interesting point in public finance,” says that go with that.”

Arnold of the new government, “it’s a seminal moment.

“In local government we have an opportunity to strengthen Generally, councils are in a difficult position. Bread and our approach in terms of risk management. For years, butter services, with arguably less resource in real terms than councils have produced risk registers that have been reviewed before, have seen significant increases in demand. The age by management teams, sometimes by cabinets, often by structure of the population has changed with people living audit committees; and good work has been done. But where longer and needing care. And in deprived communities, councils wish to enter commercial deals with partners that the care of children needs greater support. are novel in character a different approach is required.

“So, there are real calls on the financial resources of At a business case level, I don’t think many councils have councils. Then you look at the pandemic, and I would argue historically asked, ‘What happens if a key component of this the dislocation of society caused by set of proposals doesn’t work?’ ‘What if a that is only now being fully understood. funding stream is removed?’ ‘What if an CV Inflation’s impact on the purchasing asset or a component of the governance power of the resource base has also been arrangements for a particular scheme unhelpful. In summary, we have higher doesn’t operate as intended? How are we levels of demand at greater cost and lower going to deal with that?’ levels of resource in real terms, as well as “These are questions that can be resources that would have been supplied framed in the preparation of business 20, 30 years ago as part of the Revenue cases, and they need to be answered. It’s Since 2005, Brendan Support Grant now being presented to important in any management endeavour Arnold has held 11 directorships in the Civil support an array of policy initiatives. that you have your plan A, but also your Service and Local These, while well intentioned, have Plan B or even Plan C. Of course, it may Government. diminished the flexibility councils once be that in some of these commercial had in using those resources. deals, Plan B and Plan C might be things Eight of these positions “It makes the life of council leaders, that cannot readily be articulated. were as finance director/ cabinets and council management Nonetheless they should be raised and Section 151 Officer. teams very challenging. So, while some members should be entitled to ask of the financial failures we’ve seen have questions about that and receive viable Three of the cities for which been based on poor risk management, answers. All of us in local government Arnold has served in this many are associated with the pressures have to look to see what we can do better capacity are: I’ve described. We wait to see what the in this regard in the years ahead so that chancellor’s proposals are.” some of the problems we’ve seen in recent 2020 - 2022 “It’s also worth paying tribute to years don’t recur.”

Plymouth councils that have taken active steps to review business models, pursue value Calculating risk 2010 - 2016 for money and reach for technology as All of this, says Arnold, is not so much Hull a driver of transformation in service an issue of council capability as it is the delivery. Local government remains grading of project risk in a way that forces 2005 - 2008 active and successful; we need to hear different levels of analysis.

Birmingham

Brendan Arnold

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more from councils that have surmounted the challenges that lie before the sector.”

In it together During his numerous appointments, many as Section 151 officer, Arnold has developed a geographically varied CV (he believes he has driven at least 800,000 miles during his career) and come to several conclusions about what councils need to consider when sailing close to a Section 114 notice.

“Being a Section 151 officer can be an extremely lonely place and I think it’s important that the head of paid service, Section 151 officer and monitoring officer work closely in general, but particularly where financial stresses are bearing down.

“I also think that if there’s an opportunity for people to be worried about a Section 114 notice, that implies there’s still time to do something about the underlying problem.

The first thing is to take some advice; there are Section 151 officers out there who have found it necessary to issue Section 114 notices and I’m confident they would happily share their experiences. I know I would, and indeed people sometimes do contact me for confidential advice.

“Second, I see CIPFA as an enormous source of advice and support for the Section 151 community, and I want to pay tribute to the quality of its support. But ultimately, if you think you are heading for a Section 114 position, the key thing is to set down for the council, in a timely way and in discussion with others, what you think needs to be done. This needs to be shared and developed with the other statutory officers in the first instance, working together with members so those messages are heard within the organisation and taken forward through the channels that exist within that particular council.

“One more point,” adds Arnold. “Too often, the Section 114 notice is seen as a negative thing, as a penalty. I see it rather differently. It allows a breathing space for the council to stop and reflect on how things are going, adopting responses to begin turning the ship onto a course that will moderate any negative impact for the council or its services. There is always the prospect that some of the negative impact might be avoidable by taking certain decisions and taking them early.

“Too often the Section 114 notice is seen as a negative thing, as a penalty. I see it rather differently. It allows a breathing space for the council to stop and reflect on how things are going”

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FEATURE

INTERVIEW Taking it to the top Has Arnold ever felt held back in his work? Are there elements of the Section 151 role he’d like to see changed?

“There is an issue here,” he suggests. “The Section 151 role is more important now than it ever has been.

Personally, I think it’s important that the role is set in council structures at executive director level. Some councils set it as a third tier service director level, some even at the fourth tier as a head of service. I don’t think that maximises the benefit the Section 151 role can bring.

Setting it at executive director level will, in most cases, be best to ensure the voice of the post holder is heard fully.

“I’d add that while Section 151 officers are employees of their councils, they are also office holders under statute which implies accountability to parliament. Given the difficult times we continue to live through, I sometimes

“The Section 151 role is more important now than it probably ever has been…

I think it’s essential that the role is set in council structures at executive director level”

reflect on whether there might be a case for strengthening that accountability to parliament in some way.”

More broadly, Arnold believes now is the time for a national debate around what it is local government needs to do – “not necessarily in terms of its functions, but the extent to which services need to be provided,” he explains.

“Clearly, it’s infeasible to continue to provide services in a way which is arguably not fully funded and has not kept up in real terms with the declining value of money. That would imply to me that we need to moderate what we’re demanding from that expenditure base in order to make delivery to budget a viable proposition. Because these pressures are not going to go away, I think it is inescapable that this debate is needed and that decisions are made on the financial liability that communities and taxpayers are asked to assume.”

As to what he’d like to see from such a debate: “I think I’ll leave that conversation to those qualified to undertake it.”

People at the centre Recently, Arnold became a CIPFA lead reviewer, working on reviews of several councils. “I like helping to unlock their issues and find solutions,” he says. “It’s extremely rewarding. I’m enjoying my work at the moment more than I ever have, and I think I’m doing the best work I’ve done. I’m not looking to finish any time soon.

“Over the years, I’ve come to understand that, in the public sector, an accounting qualification can take you into many interesting places. The variety of places and number of people I’ve met – government ministers, permanent secretaries, leaders of councils, TfL’s management team, the Metropolitan Police, and most importantly the thousands of dedicated public sector team members I’ve worked with who undertake the daily hard graft to deliver services – has been a huge privilege; none of it would have been possible without my CIPFA qualification. It’s been a joy.

“I’ve come to understand that while you might initially think of this work as principally about assembling the nuts and bolts of accounting practice, in fact you must put people at the centre of such work in the best way you can while at the same time achieving the business objective. That presents an intellectual and a practical challenge, and sometimes an emotional one too. Surmounting those challenges to help communities and organisations and to help people achieve; that’s where I get my job satisfaction.”

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PARTNER CONTENT

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18/10/2024 11:08

FEATURE

TAX REFORM

THE GREAT EQUALISER? PF examines the progress of the UN tax convention hoped to address discrimination against lower-income countries WO R D S C A LU M R U T T E R 34 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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s we navigate through a world marked by unprecedented challenges, economic uncertainties, the lingering effects of the Covid-19 pandemic and the present climate crisis – and even worse – the role of inclusive and effective tax cooperation becomes more crucial than ever. This resolution is not just a policy document; it is a testament to our collective resolve to foster a fairer, more resilient global economy. For developing nations, this resolution represents a beacon of hope.”

So said Tijjani Muhammad-Bande, Nigeria’s representative to the United Nations, when presenting a motion to the General Assembly a year ago.

Nigeria, on behalf of the Africa Group, proposed to negotiate a UN tax convention – under which all the world’s countries will have a say on international tax reform.

Countries around the world are set to miss out on nearly $5trn of tax revenue in the coming decade as a result of multinational companies and wealthy people using tax havens to under-pay, according to research by the Tax Justice Network. Rich countries stand to lose out, but, as

a proportion of total revenue, it is developing countries that are more seriously affected.

Human cost The Tax Justice Network estimates that higher-income countries will lose $433bn per year, equal to about 9% of their public health budgets, whereas lower-income countries’ losses of $47bn are equivalent to 49% of their public health budgets. The group’s chief executive, Alex Cobham, tells PF: “That translates very directly into child mortality, excess mortality and poor health outcomes. It has a direct human cost. The system PUBLICFINANCE.CO.UK 35

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FEATURE

TAX REFORM

fails everyone, but it still discriminates against lower-income countries.”

Recent efforts to curb tax abuse have stuttered, and rising anger among developing countries over unmet promises to fix what they regard as an unfair tax system have led to a growing demand for change. The Africa Group’s motion was passed, and developing countries and campaigners hailed the victory.

Since then, the UN has adopted a mandate for three legally binding tax deals, covering issues such as taxing multinationals, wealth taxes, environmental measures and the digital economy. Negotiation will begin on reforming these vital aspects of the world economy.

But not every country was in favour.

A group of 48 mostly developed countries voted against the initial proposals, while nine abstained. Those voting against, including the US, UK, Germany and Japan, wanted to keep responsibility for the oversight of international tax reform under the auspices of the OECD – a slowly expanding group of the richest countries in the world, which has held that responsibility for six decades.

The UK, a member of the OECD and a significant advanced economy figure in the global financial system, tried to limit the proposal by suggesting an alternative framework whose resulting work would not be legally binding.

TA X R E V E N U E S

Getting personal It is, of course, not just corporations whose taxes pay for public services.

Personal income taxes contribute huge amounts to government revenues – particularly, as one might expect, in high-income countries.

Personal income taxes and social security contributions made up 49% of total tax revenues in high-income countries, but only 17% in low-income and 13% in middle-income countries in 2021, according to OECD figures.

Governments implemented cuts during the recent economic shock and cost-of-living crisis, but evidence now suggests the momentum could swing the other way.

“Tax reforms have been one of the key policy tools used by governments to protect households and businesses from decade-high inflation levels and the economic impact of the Covid-19

The OECD has attempted to foster international consensus on tax reform in the past decade through the inclusive framework on base erosion and profit shifting. BEPS refers to tax strategies used by huge multinational businesses to exploit loopholes, ‘shifting’ profits to arms of the enterprise that are based in

pandemic,” said OECD secretarygeneral Mathias Cormann.

“We are now seeing the policy focus shift, and it should continue shifting, towards creating the fiscal space needed to respond to future shocks and support the long-term structural transformations our economies and societies are facing, including digitalisation and AI, evolving patterns of trade, climate change and population ageing.”

Personal income tax revenue declined in 2021, partly because of relief measures and partly because of high unemployment, and highincome countries continued to provide substantial tax relief in 2022 and 2023.

Social security contributions face the opposite trend; the OECD found a “significant rise” in countries that have increased their contributions since 2022.

low-tax territories in order to pay less.

It culminated in an agreement that 138 tax jurisdictions signed up to – a so-called ‘two-pillar solution’: setting an effective minimum global corporate tax rate; and assigning some profits to be taxed in the territories where the revenue is generated, rather than where the company is headquartered.

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“We cannot escape the fact that the OECD remains a club for rich countries. It is difficult, although not impossible, for developing countries to influence international tax rules in this context” Alexandra Readhead, International Institute for Sustainable Development

Advocates for reform feel that the ambition was lost along the way, though.

The minimum tax rate was set at 15% – far below the proposed 21% – and it does nothing to stop tax havens offering other incentives, such as subsidies, to attract companies. The mechanism to allocate profits differently will also affect roughly only 100 companies and only a proportion of their revenue generated in non-headquarter countries.

“The evidence is abundantly clear that, while these things won’t be very effective for OECD members, they will do next to nothing for lowerincome countries,” Cobham says.

“That is why there has been this surge of momentum.” Meanwhile, many countries’ reforms are stuck in their national legislatures. However, would UN tax reform be any different?

“One answer is that nothing would stop the same thing from happening,” says Cobham. “At a superficial level that’s certainly true, but there’s also quite a big difference. One of the

many issues with the OECD is that its negotiations are carried out effectively without rules and in complete secrecy. There is no trail or history of negotiations. Governments can’t point to evidence of trying to negotiate a better position when convincing lawmakers to support reforms.”

Secret society Critics of the OECD commonly say that global reform should be more democratic. Votes at the OECD governing council are, as Cobham says, secret, and only member countries (and the EU) have a vote at all. Nearly 200 countries have seats at the UN. “While it has made significant efforts to be more inclusive, we cannot escape the fact that the OECD remains a club for rich countries,” says Alexandra Readhead, director of tax and sovereign debt with the International Institute for Sustainable Development’s economic law and policy programme. “It is difficult,

although not impossible, for developing countries to influence international tax rules in this context.”

“The main advantage of taking international tax rulemaking to the UN is that developing countries – African countries in particular – have the numbers to push through reforms that better reflect their interests,” Readhead continues. “The UN is seen as an honest broker; general levels of trust are higher than at the OECD, where developing countries have been discouraged by the influence of rich countries over pillars one and two.”

There have already been concessions.

By August this year, when the UN voted to approve the terms of reference for a UN Framework Convention on International Tax Cooperation, just eight countries were left in opposition: the US, Canada, the UK, Japan, Israel, South Korea, Australia and New Zealand. EU countries were among the 44 who abstained, while 110 voted in favour. The change was a sign PUBLICFINANCE.CO.UK 37

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FEATURE

TAX REFORM that many advanced economies saw the mood shifting, saw the faltering OECD reforms, and decided not to waste political capital defending a bloc that, in truth, they have concerns about as well.

It signifies the waning influence on the global stage of what is clumsily often called ‘the West’. Europe, the US and its allies have struggled to muster support for Ukraine in global fora. They continue to lose support in light of their position on Palestine, and frustration grows over missed promises on aid and climate finance. All the while, China seeks to boost its own influence through development deals.

Asymmetric power struggle Perhaps other global finance issues will soon be run through the UN. Debt treatment is seen as an asymmetric power struggle between rich ‘Paris Club’ countries (and China) and private creditors versus poorer, indebted nations. The current debt treatment framework was established by the G20, and has largely failed to deliver for countries that have applied to it, owing to its unwillingness to compel private creditors to offer similar terms to governments.

“In a first best world, it would be desirable for the UN to take a more prominent role in the shaping of the international financial architecture, and on debt treatments in particular,” says Readhead. “In the world as it is, however, this is highly unlikely to happen.” IISD wants more coordination through the UN, raising the voices of debtor countries and promoting equitable restructuring.

Alone, these things are unlikely to provide the resources the developing world needs to meet the UN’s sustainable development goals – targets for human and environmental progress by 2030 that were set just a few years ago. But, while the promises of a decade of development are unlikely to be met, momentum might be starting to shift. If the Africa Group, and other developing countries, continue to find their voice, they will not be afraid to use it to call for a fairer world.

U N TA R G E T S

Long way to go The United Nations revealed this year that just 17% of the world’s sustainable development goals were on track to be achieved by the 2030 deadline.

Nearly half showed minimal or moderate progress, and more than a third have stalled or even regressed.

An additional 23 million people were in extreme poverty – and more than 100 million more were suffering from hunger – in 2022, compared with 2019 when the goals were set.

For the first time this century, advanced economies’ GDP per capita is growing faster than more than half of the world’s most vulnerable countries.

Global unemployment reached an historic low of 5% in 2023, but many

jobs are insecure and poorly paid.

The UN blamed Covid-19, conflicts and climate chaos.

Officials estimate that the ‘SDG investment gap’ – the difference between what is spent on trying to meet the targets and what is needed – is now $4trn per year.

Reforming the global finance system, such as through changes to international tax, will be vital to fill the gap.

Other efforts, including debt restructuring – or even cancellation – would help many nations, with 60% of low-income countries either at high risk of debt distress or already experiencing it.

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ANALYSIS

TAX REFORM

Out on a limb Ireland’s low corporation tax has seen its fortunes soar, but this leaves it highly exposed in the face of reforms W O R D S C A LU M R U T T E R

J

itters about international tax reform have been felt keenly by many countries, but – other than the US, the country from which most huge technology multinationals have sprung – perhaps none more so than Ireland.

The relatively small country has attracted a huge number of multinational companies to set up European headquarters there by setting a low corporation tax rate of 12.5%, becoming the second most attractive country in the world for foreign direct investment – beaten only by Singapore.

According to Enterprise Ireland, nine of the top 10 global ICT companies, eight of the top 10 gaming companies, eight of the top 10 pharmaceutical companies, six of the top seven diagnostics companies, 15 of the top 20 medical device companies and half of the world’s leading financial services firms have set up continental hubs in Ireland. Facebook, Google and Apple are among the big names to have done so.

Ireland has increased its corporation tax takings by more than 500% in the past 10 years as the profits of major digital businesses have soared.

A 2021 report from the country’s central bank, which came amid global negotiations overseen by the OECD for major international reform, warned of the risk, citing “longstanding concerns

over the reliability and sustainability of revenue from this tax heading”.

In the latter half of the 2010s, government spending repeatedly overshot budgeted levels, funded by the bumper receipts. However, more recently, the government has resisted calls by citizens and campaigners to use the takings to fund higher spending on social programmes. It has instead now set up a sovereign wealth fund, aiming to invest €100bn by the mid-2030s, funded by the receipts.

From 2040, the government will be able to access the fund for pensions and health spending, as it deals with the fiscal fallout of an ageing population, as

well as digitisation projects or those that reduce carbon emissions.

Proposing its creation last year, then-finance minister Michael McGrath said that about half of the country’s corporation tax revenue could be “transitory”.

“Looking ahead, [the] government is also aware of the major expenditure challenges on the horizon,” he said.

“Shifting demographics and adapting to the climate and digital transitions will impose large costs on the public finances.

“While the Irish demographic picture is currently favourable, developments in the coming decades will mean that we will be spending significantly more just to maintain the current level of service.”

From the end of 2023, Ireland implemented part of the OECD-led reform and set a corporate tax rate of 15% for the very large businesses covered by the arrangement (ie, those with revenue over €750m).

“The decision to join this global agreement was not taken lightly,” McGrath said at the time.

“Ultimately, it is our assessment that the positive effects will be greater than the challenges, as the agreement has the potential to bring much-needed stability to the international tax framework after the turbulence… of recent years, safeguarding our future competitiveness by providing a sound and stable basis for inward investment into Ireland in the long term.”

Ireland has increased its corporation tax takings by more than 500% in the past 10 years

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FEATURE

OVERTOURISM

Is it possible to harness the economic benefits of tourism while protecting the social, economic and environmental fabric of the destinations we love?

W O R D S K E R RY LO R I M E R

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T

ourists Go Home, You Are Not Welcome, Barcelona Is Not For Sale.

Placards held aloft in the Catalan capital echo a mounting backlash that has seen anti-tourism hostility boil over into street protests across Europe.

Activist Daniel Pardo, who has lived in Barcelona for the past 18 years, says that tourism in the city – which attracts 32 million visitors a year, outnumbering residents by 20 to one – affects every aspect of day-to-day life.

Grocery stores have been replaced by “useless” tourist shops and prohibitively expensive bars and restaurants, and residents, subconsciously at first, take circuitous routes to avoid the worst tourist hotspots, he says.

SU S TAIN ABIL IT Y Gradually, he has seen friends, priced out and alienated, deserting their old neighbourhoods.

“For me, the most important impact is that it destroys the possibility of a community, or weakens it, little by little,” he says.

The destruction of neighbourhoods fuels a sense of loneliness and disconnection, which, together with the impact of night-time noise on sleep patterns, gnaws away at mental health.

“Even if I can stay, many of my people are leaving, and have been for years, so my human circle disappears,” says Pardo.

Vulnerable to crises An organiser with the Assembly of Neighbourhoods for Tourism Degrowth, he believes that overdependence on tourism leaves the city vulnerable to unexpected crises such as the global financial crisis or the pandemic, which saw visitor numbers virtually wiped out overnight.

Photography: Getty

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FEATURE

OVERTOURISM “We need to diversify the economy [into] other sectors, which are more compatible with life in the city and on the planet,” he says.

The growing dissent on the city’s streets reflects wider social and economic tensions rather than visitor numbers per se, according to Claudio Milano, an anthropology of tourism researcher at the University of Barcelona.

“The rise of the social movement that we have seen in past years is related to such struggles as housing, decent jobs, the privatisation of public spaces, the substitution of resident-orientated businesses into tourist-orientated businesses – what we would call commercial gentrification,” he says.

“So, when we talk about overtourism, we are not only talking about issues related to the volume of tourists.”

Barcelona has for years grappled with how to harness the economic benefits of tourism – which last year contributed €12.75bn to municipal coffers – while protecting the social, economic and environmental fabric of the city.

Like many leading destinations, it has introduced a city-wide tourist tax that is levied on overnight visitors alongside a regional charge, whose rate varies depending on accommodation type.

The city tax was significantly increased this year, and a hefty daily fee introduced for the cruise passengers whose breakneck stopovers make up half of the city’s visits.

Barcelona also plans to end apartment rentals to tourists by 2028 by scrapping the licences of those 10,000 properties currently approved as short-term lets.

Airbnb action The move, which follows a partial ban three years ago, is part of a growing worldwide clampdown on rental platforms, notably Airbnb, whose popularity has been blamed for intensifying local housing shortages.

Keen to shift to a ‘quality over quantity’ model of tourism, Barcelona bid successfully to bring the prestigious America’s Cup sailing 42 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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“The rise of the social movement [against overtourism] is related to such struggles as housing, decent jobs, the privatisation of public spaces, the substitution of resident-orientated businesses into tourist-orientated businesses – what we would call commercial gentrification. We are not only talking about issues related to the volume of tourists” Claudio Milano, University of Barcelona Photography: Getty

18/10/2024 12:42

A mounting backlash against overtourism has boiled over into protests across many popular European destinations

with the tourist apartments… but it ended up putting pressure on other areas of the city,” he says.

Across the world, tourist meccas face a similar dilemma: how to preserve the charm of a distinctive destination – and the quality of life of its residents – without relinquishing valuable visitor revenues.

Venice, faced with chronic overcrowding, has become the first city in the world to trial charges for daytrippers as well as overnight visitors.

In the UK, the idea of taxing visitors is also gaining pace, with Manchester already having brought in a £1 per room per night charge and Edinburgh eyeing a 5% levy on tourist stays.

Tourism taxes

event to the city, as well as a slew of year-round international congresses aimed at well-heeled delegates.

But Milano warns that these solutions, far from addressing the problem, risk exacerbating it.

Revenue from the tourist tax has been used to promote the city further, bringing in yet more visitors, he says, while attempts to attract big-name events out of season have served only to boost visitor growth in other neighbourhoods and at other times of the year.

Likewise, measures to curb the licensing of tourist apartments in the centre were initially successful but have, over time, fuelled an explosion of holiday accommodation in neighbourhoods that never used to feature on the tourist map.

“It was a good solution to respond to the emergency that we were having

According to Linda Osti, senior lecturer in tourism management at Bangor University, more than 60 destinations worldwide have introduced some form of tourist tax, with little evidence that these charges have deterred people from visiting.

As part of her research, she looked at how the revenue raised from tourist taxes was being spent in seven different destinations.

“Initially, for most places, tourism tax revenues were being used to fund marketing and branding – so invested directly into promoting more tourism,” she says.

The income was also used to fund tourism infrastructure, from toilets and cycle paths to a multi-billiondollar convention centre in Orange County, Florida.

In the Balearic Islands, revenue has been directed at mitigating the negative effects of tourism, including the conservation of local habitats and the development of much-needed social housing – but that has not been enough to prevent widespread antitourism protests.

“There is a need for multiple interventions – tourism tax cannot be the only solution,” she says.

Osti believes that the unrest seen across Europe points to a lack of engagement between local authorities

and the people they serve, who could have vented their frustration by campaigning for better use of tourist tax revenues or more stringent regulation of tourist apartments.

“But they didn’t target the government or local authorities; they targeted tourists in order to be heard,” she says.

“We need to help local residents to articulate their problems better… and local authorities should be open to hearing [them] and to seeking solutions together with local communities.”

In the meantime, it is easy to see how tourism has become a scapegoat for wider social ills.

“We have seen inflation rising, local communities everywhere are struggling economically, and we’ve seen a shortage of housing but wages are not growing, so it’s getting more and more difficult for local communities to afford life,” says Osti.

The targeted marketing campaigns of the past have been superseded by the uncontrollable promotion of honeypot destinations on social media, making flows of visitors much harder to manage.

She gives the example of Pragser Wildsee, a lake in her native Italian Dolomites, where an overwhelming influx of sightseers in the summer months forced the closure of the local road, with access limited to shuttle buses.

“Influencers were called in to take pictures and show how nice that lake was, and it got to the point… that it had to stop; it really went out of control,” she says.

Keep it in the family In that part of Italy, which gained Unesco World Heritage status 15 years ago, studies show that residents are happy to trade the inconvenience of seasonal congestion for the immense economic benefits reaped by the small family firms that make up the local economy.

“They understand that their wellbeing is tied to tourism,” she says.

“When there are fewer familyowned small businesses and more international entrepreneurs, these economic effects are less likely to be seen on the ground.”

PUBLICFINANCE.CO.UK 43

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18/10/2024 12:42

FEATURE

OVERTOURISM For Guy Bigwood, who heads the Global Destination Sustainability Movement, a successful tourism strategy depends entirely on effective engagement with residents.

“Local buy-in is critical, because all the research tells us that happy locals make happy visitors,” he says.

Destinations must embark on a journey of public participation that goes from simply informing people to empowering them, regardless of how challenging this might be in practice.

His organisation has worked with seven local authorities in north-east England, drawing on the views of hundreds of local stakeholders, to create a framework for a regenerative visitor economy – “tourism that gives back”, as he puts it.

“We’re really trying to change the system,” he says.

Through the framework, which prioritises investment in local businesses, high-quality employment, infrastructure improvements and the restoration of natural landscapes, the region hopes to become an international model for regenerative tourism.

Community wellbeing Bigwood believes lessons can be learned from the early experiences of Barcelona and Amsterdam to ensure that visitor growth becomes a vehicle for community wellbeing.

European tourist taxes have traditionally been badly structured, he says, but positive changes are starting to appear, with more destinations

understanding the importance of aligning revenues with the priorities of local people.

“For tourist taxes to work, they’ve got to be ringfenced, collaborative, and clear and simple,” he says.

“Visitors are also happier to pay a tourist tax if they know it’s going to be spent right.”

Ultimately, he believes that while cheap, low-cost tourism may survive as a model in certain destinations, mass tourism on the scale seen today is no longer sustainable.

“It’s very important that the tourism industry starts to challenge itself and reinvent the system,” he says.

There are signs that destinations are waking up to the risks as well as the benefits of tourism. Norway was about to launch a new campaign to attract people to its wild spaces but abandoned the initiative after it began to receive kickback in the consultation process over potential visitor numbers.

Where there is conflict between development on one hand and the community and environment on the other, Bigwood says that the wellbeing of the latter must take precedence.

“We have to change the model – otherwise, we’ll kill the places we love,” he says.

POINTS FOR PRIVILEGES

The gamification of sustainable tourism The tiny Pacific island of Palau has become the first country in the world to offer exclusive experiences to travellers who respect its stunning but fragile ecosystem.

Under the Ol’au Palau scheme, visitors earn points for certain behaviours, such as eating sustainably sourced local food, learning about the island’s cultural heritage and using reef-safe sunscreen.

In return, they gain access to experiences normally reserved for Palau residents and their close friends, including the chance to meet elders, hike off the beaten track and swim in spectacular hidden caves.

“In most destinations, money buys access to the best and most exclusive experiences,” says the Ol’au Palau website.

“We are inviting the world to access our most treasured natural and cultural wonders, not according to how much you spend but how gently and respectfully you treat our beautiful but fragile island home.”

Like many island nations, Palau has been heavily dependent on international visitors, with tourism making up 85% of its GDP – only to see traveller numbers collapse during the pandemic, with not a single visitor in two years.

“Palau’s tourism sector is determined to stick to its highvalue ecotourism strategy and find a way to bounce back sustainably,” says Alan Marbou, a board member of the Palau Visitors Authority.

Visitors to Palau must already pledge to “tread lightly, act kindly and explore mindfully” before gaining access to its pristine beaches and rich marine environment.

Since 2017, the pledge – backed up by potential fines of up to a million dollars – has been stamped into the passports of those travelling to the island and must be signed as part of the visa requirement for entry.

44 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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18/10/2024 12:42

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17/10/2024 11:22

ANALYSIS

OVERTOURISM

Wish you were here sustainably From tourist taxes to planning permits, a post-pandemic surge in visitor numbers has led to a variety of responses to overtourism across the globe WORDS MARTIN READ

DUBROVNIK

LAUTERBRUNNEN A fee of €5 has been proposed for entry to Lauterbrunnen, a picturesque Swiss mountain village with a local population of fewer than 2,500. Like other such spots, the problem is one of high and thus damaging footfall but with minimal gain to the local economy from tourists who often stay less than a day. Those who stay overnight in local hotels would be exempt from the charge.

The plan follows the example of Venice, the first city in the world to charge an entry fee for day-tripper tourists in a scheme similarly aimed at reducing the number of short-stay visitors.

At a national level, the Swiss parliament’s lower house recently voted against a proposal for an across-the-board tourist ‘entry fee’, which would have seen revenues directed to the state pension fund. A Swiss tourist tax already exists.

The Unesco-protected port city of Dubrovnik in Croatia is an understandable draw for tourists, and one which saw a 32% increase in tourists from 2022 to 2023. Many are attracted to the town because of its role as one of the major sets for the internationally acclaimed TV fantasy series Game of Thrones.

A German holiday rental website claimed Dubrovnik suffered most from the impact of overtourism in the EU. One proposed initiative, since revealed as a hoax, was a ban on wheeled suitcases because of the noise and environmental impact on Dubrovnik’s cobbled streets.

More practical is that planning is being seen as part of a longer-term solution. A recent amendment to Dubrovnik’s general urban plan is set to limit construction of new holiday apartments, while the city voted to ban new rental permits for the city’s Old Town earlier this year. A ‘Respect the City’ project is being underpinned by an ‘integrated action plan for Dubrovnik as a sustainable tourism destination’.

46 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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BALI

COPENHAGEN As with Palau (see p44), Copenhagen is working on a solution to overtourism that involves tourists themselves. Record numbers of tourists have visited Copenhagen in recent years. This August, the pilot ‘CopenPay’ scheme sought to encourage tourists to think and act sustainably. By opting to travel by bike or pick up rubbish, tourists were rewarded by such perks as free kayaking, cups of coffee and discounted venue admissions. The test scheme was seen as one which allowed visitors to embrace the city’s specific local culture while cutting their typical impact; a ‘nudge’-based approach with potential to be expanded further. The results of the 2024 trial are currently being assessed.

The Indonesian province of Bali has long been known as a draw for tourists, but the scale of recovery in visitor numbers since the pandemic has concerned authorities, who fear catastrophic impacts on the island’s infrastructure, services and environment.

This year, the Indonesian government has introduced a temporary ban on the construction of new hotels, nightclubs and villas in certain areas of the island.

It’s a move that comes after the imposition at the beginning of this year of a tourist tax of €8.15 on foreign visitors.

The money will go principally to deal with issues of waste management and traffic congestion. (New rail links between Bali’s airport and the island’s main tourist spots are planned to ease road congestion.) Prior to the tax, a voluntary contribution scheme had been in place.

BRUGES EDINBURGH In September, City of Edinburgh Council approved Scotland's first tourist tax, coming just three months after the Scottish Government introduced legislation allowing local authorities the ability to do so.

The ‘transient visitor levy’ is a 5% tax on hotel rooms that will become operational from 2026. Edinburgh Council will use the money raised in a similar fashion to other tourist-taxing cities, with infrastructure, housing and the arts set to benefit. A public consultation, in which Edinburgh’s residents are being asked whether the levy should be higher or lower than the proposed 5%, is ongoing. A figure of around €60m per annum is expected to be raised.

Photography: iStock, Shutterstock

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The city of Bruges / Brugge in Belgium offers a classic example of the resident-to-tourist ratio that can birth overtourism. Its population of little more than 100,000 contrasts with in excess of eight million tourists who take to the town’s cobbled streets each year.

A ban on the construction of hotels in the picturesque heart of the medieval city centre has been introduced, as well as curbs on the number of Airbnb rental properties.

There have also been moves to actively discourage tourists, in a similar vein to fellow canal cities Amsterdam and Venice, through the withdrawal of day-trip promotion and a limiting of the number of cruise ships arriving at the nearby port of Zeebrugge.

PUBLICFINANCE.CO.UK 47

18/10/2024 12:45

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15/10/2024 11:26

PARTNER CONTENT

Councils must reconsider sale of valuable assets Richard Gawthorpe of Norse Group believes there are other ways to meet the financial challenges faced by local government

L

ocal governance is at a critical juncture, with the sale of capital assets becoming a central issue in discussions on financial sustainability. Labour’s new five-year plan presents both challenges and opportunities for local authorities, demanding innovative solutions for effective service delivery.

Labour’s strategy emphasises significant investment in public services and housing, placing increased responsibilities on councils. The goal of building 1.5 million homes and reducing inequality through regional development challenges councils to adopt sustainable financial strategies to achieve these ambitious targets.

Councils across England face multiple challenges in delivering both statutory and non-statutory services, hindered by a lack of specialist expertise and operational capacity.

While Labour’s push for regional devolution offers potential tential long-term relief, immediate capacity-building building remains essential.

The elephant ephant in the room is, of course, capacity apacity and resilience.

Attracting g and retaining a skilled, diverse verse workforce is also critical to ensuring councils have the capability bility to meet these ambitiouss goals. Labour’s plan includes measures to make the public sector ctor more appealing, yet councils must develop innovative recruitment ent and retention strategies or consider er alternative delivery models like insourcing. rcing.

Balancing g long-

49 Advertorial - Norse_Nov-Dec 2024_Public Finance.indd 49

term strategic goals with the daily demands of service delivery will be crucial to meet Labour’s housing and infrastructure targets.

Effective risk management and governance are key to maintaining public trust, especially with Labour’s focus on decentralisation and local authority empowerment, which demands transparency in service delivery.

Given the dynamic nature of service demands, councils must stay adaptable.

Labour’s emphasis on community-led decision-making reinforces the need for flexibility in addressing local priorities.

Innovation and continuous improvement in service delivery are vital to achieving the long-term sustainability that Labour’s digital transformation agenda envisions.

Community alignment Councils must also tailor their services to their communities’ unique needs. Labour’s focus on local empowerment is expected to heighten collaboration between councils, third-sector organisations and residents. Councils will need to lead in designing services that align with local priorities while balancing financial and operational constraints.

As Labour advocates for sustainable financial strategies, the debate on asse asset sales to balance budgets remain remains relevant. While selling assets can offer short-term financial re relief, it risks undermining the long-term longsustainability of public services serv and depleting valuable community resources.

Labour’s fiscal policy supports innovative fundi funding models like public-private partnerships and fiscal devolution, encour encouraging councils to protect their assets while w exploring explor

new ways to close budget gaps. In this evolving landscape, Norse Group’s partnership model stands out as a leader in collaborative solutions. By forging strategic alliances, Norse Group enables councils to address the complexities of public service delivery while ensuring long-term financial sustainability.

Norse Group promotes a balanced approach to asset management, prioritising financial health without compromising the long-term value of public assets. This strategy aligns with Labour’s vision of public service reform and community-led development, guiding local authorities toward sustainable growth and resilient communities.

The combination of fiscal pressures, operational challenges and political shifts under Labour’s five-year plan underscores the need for forward-thinking strategies in local governance. As councils strive to meet housing, infrastructure and regional empowerment objectives, they must embrace innovative service delivery models, prioritise sustainable asset management and foster cross-sector collaboration.

Norse Group’s approach – centred on alternative delivery models, strategic partnerships and long-term sustainable financial strategies – provides a clear path to navigate these challenges. By adopting these strategies, councils can build financial resilience, enhance operational adaptability and remain committed to meeting the evolving needs of their communities.

RICHARD GAWTHORPE is group business development director for Norse Group.

As the UK’s leading LATCo, Norse Group believes there is always a better way to deliver for the public. Across our four core areas – Care, Commercial, Consulting and Specialist – we have the capability to design, optimise and operate the spaces and services that communities need to thrive

18/10/2024 11:09

PARTNER CONTENT

Q&A

TIPPING POINT? With the need to manage the complexity of operating and finance leases, could IFRS 16 be the compliance standard that finally forces local authorities away from their spreadsheet-based approach?

L

ease management software as a means of centralising and thus better controlling complex lease arrangements is not new, but the demands of IFRS 16 could be the compliance demand that finally convinces local authorities to take the plunge and invest in such solutions. Here, MRI Software’s strategic accounts manager, James Foster, and head of accounting solutions, EMEA Sachin Naran, consider the current state of their market.

has this class of software Q How solution afforded greater control of lease data? What fresh insight is this now affording those in charge of public sector lease accounting?

Sachin Naran: “During the past five or 10 years, we’ve found that lease management software allows clients to gain more visibility and control over their leases; a centralised platform to store all their lease information, allowing them to track, manage and report it. ”The software alleviates any concern about data being disparately held. It drives control, because as a central repository it allows the ability to feed information to people who need it at the time of request.”

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James Foster: “For properties, equipment, vehicles, payable lease agreements, sublease agreements, receivables, we see clients having one spreadsheet for each. And before you know it you have six or seven spreadsheets requiring a VLOOKUP in one master spreadsheet to produce reports. ”Having one solution to house everything in one place means that data can then be easily funnelled through to a KPI dashboard and reports that can be exported. It can

also go beyond lease accounting to be used by the wider organisation, informing other business-critical decisions.”

SN: “We’ve often found that clients have been paying for leases that they don’t need to pay for, or that they have taken penalties because of a lack of visibility around their data. You may be surprised that that is quite the norm for some organisations.”

18/10/2024 13:22

Speakers James Foster Strategic account manager, MRI Software

Sachin Naran Head of asset accounting solutions, EMEA and North Africa, MRI Software

which can take a long time and cause a delay with the audits. Instead, they can go into the system and see exactly where that data point is coming from, from the exact lease document. You get greater control over the whole process.

“That’s quite a key requirement.

OK, you can produce an output - but how can you know that the data is correct? There’s now an AI function that wraps around the whole offering to assist with that.”

is it that people Q What are generally most concerned about when assessing the value of these kinds of software solution?

JF: “AI allows us to abstract key lease data from a document and store it in the system.

That data can then be used to run disclosure audits and general postings, giving greater control to those in the accounting space.

So should an auditor want to get granular with the detail, asking why a particular rental cost is a certain value, the finance and real estate team do not need to search through documents, lean on other teams or flick through multiple tabs on a spreadsheet

AI allows us to abstract key lease data from a document and store it in the system

SN: “The key concern in the public sector in general is the cost of implementing a solution as opposed to continuing with whichever system they already have. But then there can be an underestimation sometimes about the time and effort it takes to manage an existing system.”

JF: “With lease management, there’s a cost element too in the sense that organisations can end up missing termination options or break options and therefore be tied into another three year or five year contract at a facility that they don’t necessarily need, but because they didn’t have visibility of key dates they are trapped again. For

Photography: UNP

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18/10/2024 13:22

PARTNER CONTENT

MRI Software recently sponsored a Public Finance networking lunch where the topic of software and organisations’ ability to operate it were brought to the fore

assessing their Q When compliance issues, what is

commercial facilities this isn’t just £10, this is £100,000’s if not more a year being spent on a facility you don’t need.

Imagine, instead, that you could receive a notification of a break option coming up in a couple of months for a property and you can exercise a termination and exit from the contract saving you a lot of money which can then be used on other critical priorities.

JF: “There can also be an issue of resources; organisations don’t necessarily have the team and peoplepower to implement their shiny new system properly. Sometimes there’s a nervousness around the capacity to introduce these solutions and a need for help to make sure it is implemented effectively. So, as well as an implementation and support team there’s increasingly an ongoing managed service element where software companies can help with the ongoing maintenance of the system. It’s a service that can be outsourced to us or to a managing agent.

SN: “This issue of the skills and internal capability necessary to maximise investment in this technology was a topic that came up in our recent networking lunch with Public Finance. Invariably end users don’t know about implementing software solutions, which is why we also now offer workshopping to showcase what other clients have done. ”There can also be concerns about how a lease management solution is integrated with existing systems and processes. This

50-53 MRI advertorial_Nov-Dec 2024_Public Finance.indd 52

it that prospective clients are most likely to give insufficient credence to?

AI allows us to abstract key lease data from a document and store it in the system is about looking at the system holistically: what are the inputs and outputs we’re looking for? What information can/must be drawn from other systems? What reports are then required? We sit down with clients and walk through that to make sure we capture all prospective data points and outputs that the organisation might need to provide a full end to end solution set.

SN: “Over the last five to ten years there’s been a realisation that with IFRS 16 reporting the complexity inherent with pretty much all lease agreements comes to the fore, where you might have a lease with indexation increases or terms that are not linked to a specific data point or indeed a specific amount. Then there’s the fact that these things can all change on a monthly and yearly basis. A lot of people underestimate all of that.”

JF: “There can also be an underestimation of the number of leases they have.

Some local authorities have a lot of vehicles, for example. Or in the NHS they might have more leased properties and equipment that they didn’t know are covered by IFRS 16. Local authorities now need to put residential accommodation into IFRS 16. There can be a bit of naivety around the IFRS 16 transition itself; some organisations uncover leases that they weren’t sure weren’t there before when it is too late causing a mad panic come year end.

has the past five years of Q How dealing with IFRS 16 changed attitudes towards the use of this class of software?

18/10/2024 13:22

MRI Software recently conducted a survey focused on IFRS 16 audit process quality JF: “Previously, dedicated software solutions weren’t seen as necessary for handling IFRS 16, but over time organisations have started to realise that spreadsheets, while good at holding and storing data, fall short when you need to access data for a disclosure audit or a journal posting. That’s why we’ve started to see more acceptance for this kind of solution for handling IFRS 16, especially in the public sector.

JF: “Auditors are getting a lot more granular with what they’re wanting from a disclosure audit and are more likely to query individual figures. As a result, the attitude of users has shifted to a realisation that they really need to understand what the data is saying rather than just provide an output.”

at solutions in the Q Looking months after their installation, how has the type of work and makeup of the teams operating them changed?

SN: “That shift from manual data entry to using data more strategically to perform financial analysis and then inform the decision-making process around leases. Taking the conversation to another level in that sense is a key element.

We’ve also found that the automation of manual tasks has changed the focus of people from data entry to actual accounting work and decision making, and being a bit more strategic about the information and the role that they play in the organisation.”

JF: “Having a platform that provides automation that streamlines everything

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IFRS 16 COMPLIANCE

53%

Of those polled used ‘Good’ to describe compliance levels with the IFRS 16 standard.

TIME CONSUMPTION

Six weeks Was the most frequently reported average audit time, accounting for 32% of responses.

(There were also reports of audits taking more than two months, especially within the NHS.) DATA ACCURACY AND COMPLETENESS

51%

Reported encountering issues with data accuracy or completeness during the auditing process.

CURRENT LEASE / ACCOUNTING PLATFORM

52.5%

Indicated that they are still using spreadsheets for capital accounting and IFRS 16 lease accounting.

and brings data under one roof doesn’t alleviate the need for an accountant, it helps the accountant by having the data ready to go so that they can do what they’ve been brought into the company to do, which is to assist with an IFRS 16 transition or assist with their reporting.

“I don’t think the makeup of teams has changed. Teams are quite lean in the public sector anyway. But the type of work changes because there’s less checking if a spreadsheet is correct, or if there’s a decimal point where there shouldn’t have been, or if a number in a spreadsheet is correct, or if it’s transferred from the property team correct to the spreadsheet in the finance team. It’s become more about ‘how we lean on our technology to assist with our day-to-day jobs?’

“Some organisations still find that there’s a lot they need to do outside of their core function and we’ve started to see a lot of organisations wanting to outsource day-to-day management of the system to a company like us or a managing agent whereby we both supply the system and then take on a day-to-day, month-to-month role to manage it. Then accountants can just come in at month or year-end to pull the report.

SN: “Ultimately, teams have more time to focus on their lease portfolio to negotiate better terms or align with their strategic objectives, that ultimately drives the efficiency of the business, and that’s not to be underestimated.”

18/10/2024 13:22

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ȟ DŽîĿŕîċŕĚ îƙ î ƙƥîŠēîŕūŠĚ ƐƭîŕĿǛ ČîƥĿūŠ îŠē as a levy-funded apprenticeship.*

• Leads to the internationally recognised Chartered Public Finance Accountant (CPFA) designation.

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• A future-ready syllabus balancing technical competency, ethical principles, sustainable public value and strategic thinking.

Learn more: visit www.cipfa.org/paq email hello@cipfa.org call +44 (0) 20 7543 5600 *England only.

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09/10/2024 13:57

TIPS / LESSONS / CASE STUDIES / VIEWPOINTS

p57

p59

p60

NEW ERA Key preparations as countdown to the Procurement Act begins

LONELY TONIGHT? Addressing the loneliness epidemic in our workplaces

WEIGHING UP WORTH A framework to capture the value of co-operatives

GOVERNMENT EFFICIENCY FRAMEWORK

Doing more with less Standardised reporting should underpin five key drivers of productivity

I

n times of tight budgets, as the public sector has become all too used to, the call for productivity grows in volume.

With new spending envelopes for departments, and as budgetsetting season in councils grows nearer, now is a good time to take a fresh look at spending.

Can we do more with less?

Central government departments spent the 2023-24 financial year implementing the new Government Efficiency Framework. This year, arm’slength bodies are doing the same, but there are lessons in there for all public sector organisations.

Photography: Getty

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PUBLICFINANCE.CO.UK 55

18/10/2024 13:16

IN PRACTICE

EFFICIENCY FRAMEWORK

As Cat Little, at the time second permanent secretary of the Treasury, wrote in her foreword to the framework: “Delivering our public services efficiently is a core leadership responsibility for everyone.”

The hope was that, by standardising reporting, the sector could foster trust through transparency, as well as putting productivity at the heart of its work alongside outcomes and the public good.

The document set out a standard approach and framework for tracking, monitoring and overseeing efficiency savings, as well as best practice for reporting processes and guidance on how departments should report the savings to the Treasury.

Little continued: “This guidance establishes that when we think about delivering efficiency in government, we are thinking about whole-system impacts and using high-quality data. As public servants, we need to make sure that decisions are considered properly, that we assess and quantify benefits realisation in all that we do.”

An important takeaway is ‘data, data, data’ – through which to identify, monitor and track efficiencies – which the framework splits into two types: ‘technical’, ie, making efficiency gains when using fewer resources; and ‘allocative’, ie, finding the best ratio of costs to benefits achieved.

The framework lists five drivers of productivity:

Markets The private sector can play a role in delivering services “in some situations”, where competition drives price down. And where there is good data about common categories of cost and associated

Service redesign and alternative delivery mechanisms

When we think about delivering efficiency in government, we are thinking about wholesystem impacts and using high-quality data… We need to assess and quantify benefits realisation in all that we do. quality measures, unit cost benchmarking can provide valuable insight.

Organisation and workforce Sharing best practice, training and restructuring can all help efficiency when done right. Organisational design represents an opportunity; the framework gives the example of co-locating responsibility for both the policy and operational teams together, which it said could avoid challenges when implementing complex policy changes.

Cloud technology has made shared services, both between and within organisations, all the more easy. Identify processes that can be shared between departments.

Data can also be used to detect issues early, requiring a less expensive intervention.

Technology efficiencies Improvements in technology could reduce effort through automation, or reduce reliance on expensive, customised IT systems.

Digital transformation Organisations can also look to digital services to save on costs. Automation, online communication and cutting paper processing can all make processes more efficient.

As comptroller and auditor general Gareth Davies said earlier this year in an event in parliament: “We will only realise the full potential if government makes improving its own productivity a high priority, with serious cross-government weight behind it. Some of the savings can be realised quickly; others require upfront investment and will grow over time.”

56 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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IN PRACTICE

PUBLIC PROCUREMENT

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new era in UK public procurement is imminent, with legislation aiming to create a more efficient, transparent and value-driven system.

The Procurement Act 2023 will eventually take full effect from 24 February 2025, marking a significant departure from previous EU-derived regulations.

It will unify various regimes under a single framework that oversees public contracts, utilities, concessions and defence and security procurement.

Key changes Tender process objectives on equal treatment and nondiscrimination remain, but the act goes further with an overarching principle to ensure that contracting authorities deliver value for money, maximise public benefit and act with integrity throughout.

Greater flexibility is afforded for how authorities design their procurement procedures to best suit their needs in each project.

A major change concerns how contracts are awarded. The “most advantageous tender” criterion replaces the “most economically advantageous tender” approach.

This allows for consideration of factors beyond price, including quality, innovation and environmental impact.

There’s a requirement to consider “national priority outcomes”, and, in some cases, a non-financial criterion such as local job creation or reduced carbon emissions can be the deciding factor in contract awards.

Greater transparency means authorities must publish information to the public on pre-market engagement, such Photography: Shutterstock

57 IP - Procurement_Nov-Dec 2024_Public Finance.indd 57

PROCUREMENT ACT COUNTDOWN

On your marks…

As landmark legislation aims to streamline public sector purchasing, Louise Bennett explains the key changes needed as contract notices or prior information notices, from planning to contract expiry.

For contracts over £5m, there’s a new obligation to also publish at least three key performance indicators and regularly assess supplier performance.

Aligned to this, a central debarment list will be set up, excluding suppliers or associated suppliers and subcontractors on their performance.

Several procedure changes will streamline procurement: The standstill period is reduced to eight working days from a contract award notice New provisions allow direct contract awards in some circumstances, ie, emergencies Contracting authorities have extended rights to end contracts under specific conditions.

1

Which regime will apply?

Procurement commencing on or after 24 February 2025 will need to comply with the Procurement Act, whereas the existing Public Contracts Regulations will cover procurement under way prior to this date. Authorities must be mindful of the two regimes, and their governance documentation should reflect this position.

2

Does your tender pack and contract documentation meet the new requirements?

All precedent and standard documentation will need updating to reflect the act, particularly to allow for the increased transparency requirements and the flexibilities afforded by the competitive flexible procedure and the ability to refine award criteria.

3

Getting ready Public authorities might need to adapt procedures, adopt new technologies and train staff to comply with the act.

For procurement professionals, there will be a greater emphasis on strategic procurement, sustainability and digital tools.

Proactive contract management will also be hugely important to ensure that realistic KPIs are set and that suppliers are on track.

To determine readiness for the new procurement regime on 24 February, public authorities can ask themselves three questions.

LOUISE BENNETT is a senior associate at UK and Ireland law firm Browne Jacobson

Do you have the appropriate resources and skillset?

Do areas of your team require upskilling to comfortably meet these new demands? The Cabinet Office training programme is a good place to start.

Bespoke training may be helpful in certain areas – in particular, to meet the new contract management provisions.

It’s important that teams can draft effective KPIs to be reported against annually, so the authority can meet new KPI obligations.

Training may also be required for the drafting of compliant and robust evaluation and moderation notes to meet new assessment summary requirements.

PUBLICFINANCE.CO.UK 57

18/10/2024 11:09

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cipfa.org/

This 24/25 edition of the Code has been developed by CIPFA/LASAAC and effects ǛŠîŠČĿîŕ NjĚîƑƙ ČūŞŞĚŠČĿŠij ūŠ ūƑ îIJƥĚƑ ǧ ƎƑĿŕ ǨǦǨǪȦ ¹ĺĚ ūēĚ îƎƎŕĿĚƙ ƥū ŕūČîŕ ijūDŽĚƑŠŞĚŠƥ ūƑijîŠĿƙîƥĿūŠƙ îČƑūƙƙ ƥĺĚ Àe ĿŠČŕƭēĿŠij ŕūČîŕ îƭƥĺūƑĿƥĿĚƙȡ ƎūŕĿČĚ ċūēĿĚƙȡ ǛƑĚ services and other local public service bodies.

This edition of the Code introduces mandatory adoption of IFRS 16 Leases.

Other amendments include: • a suggestion that narrative reporting Čūƭŕē ƑĚǜĚČƥ ūŠ ƥĺĚ ƑĿƙŒ ƥĺîƥ î ¬ĚČƥĿūŠ ǧǧǪ notice might be issued • recent changes to the IFRS treatment of sale and leaseback arrangements • specifying the treatment on initial application of IFRS 16 where service concession arrangements provide for variable payments that depend on an index or rate.

• Guidance notes for the 2024/25 edition of the Code of Practice will soon be available to pre-order and are your expert support in dealing practically with ƥĺĚ ƎƑĚƎîƑîƥĿūŠ ūIJ NjĚîƑȹĚŠē ǛŠîŠČĿîŕ statements and reports that accompany them.

Find out more about the Code visit https://bit.ly/codeofpractice24 the Guidance notes visit https://bit.ly/4dKDyDL email hello@cipfa.org call +44 (0) 20 7543 5600

PFNovDec24.058.indd 1

09/10/2024 13:58

IN PRACTICE

MANAGEMENT

Allow time for micro-moments of connectivity. Our daily work is often packed with virtual meetings, schedules and tasks.

But we also need to allow time for human connections, keeping space in our diaries for informal, in-person catch-ups with colleagues and strategic partners.

LONELINESS EPIDEMIC

Alone in a virtual crowd Despite living in an age when we are more connected than ever, loneliness poses a major workplace problem

A

s the days shorten and winter approaches, business leaders must turn their attention to feelings of loneliness and isolation within their organisations.

The emotional state, often overlooked, can significantly affect employee wellbeing and overall productivity. The paradox lies in our modern capabilities.

We are more connected than ever before across organisational and geographical boundaries, yet loneliness is rising rapidly in both our home and work lives.

A 2023 study by People Management revealed that more than half of employees across all age ranges and sectors feel lonely most of the time. A recent report for the All–Party Parliamentary Group on Tackling Loneliness and Connected Communities revealed that 10% of all employees in the UK experience loneliness in the workplace. It manifests as a chronic condition, where emotional closeness with colleagues is elusive, and where there is an internal belief that few people ‘truly know me or

Insist on staying connected and provide virtual working skills. Our genetic make-up

would support me in a time of need’. Despite advancements in technology and communication tools, the human need for genuine connection persists.

In contrast to the current view of the UK government, which promotes hybrid working, Amazon has instructed all employees to return to the office five days a week. Andy Jassy, chief executive of Amazon, argued that working at the office supports collaboration, connectivity and wellbeing. However, by itself, this will not reduce loneliness.

For many, when they do come to work, there is no one around.

Unless we take action, loneliness in the workplace can spread like a virus. Below are several measures leaders can implement to reverse this trend.

favours face-to-face connection.

Where possible, aim to get teams together. But it’s important not to lose the progress made with virtual connectivity. Our research showed that employees are asking leaders to help them develop new skills in maintaining connections with people working from home.

Show empathy and concern.

The late actor Robin Williams said in World’s Greatest Dad: “I used to think the worst thing in life is to end up all alone. It’s not.

The worst thing in life is to end up with people who make you feel all alone.” Leaders at all levels can benefit from reflecting on whether they are unintentionally making people feel alone. Are they open to other people’s feelings and emotions, or are they busy with their own agendas?

Increase psychological safety.

Suffering from loneliness carries stigma and shame. It is important to invest more in a climate of psychological safety, where people can express painful emotions around loneliness without fear of being ridiculed.

Reset expectations. Leaders need to reset expectations with their team. This includes having regular meetings to discuss the right balance of face-to-face and virtual working, and open conversations on how roles are shifting and how decisionmaking should be carried out.

GUY LUBITSH is professor of leadership and psychology at Hult International Business School

The loneliness epidemic is affecting us today, and leaders must act now. Turning a blind eye can have significant implications for productivity and morale.

PUBLICFINANCE.CO.UK 59

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18/10/2024 11:10

IN PRACTICE

CO-OPERATIVES

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cross the UK, more than 7,000 co-operatives with nearly 14 million members are shaping local economies, and the sector is growing. Collectively, UK co-operatives have a combined turnover of almost £40bn. The size of the co-operative sector in the UK is, however, smaller than in many comparative countries.

Co-operatives offer a wide range of benefits to local economies and communities.

Their democratic, sustainable and community-minded nature means they often deliver intrinsic value to both members and their wider communities.

Expanding the scale of the co-operative sector is crucial in creating more resilient and pluralistic local economies.

The new government has recognised this. Labour’s manifesto included a pledge to aim to double the size of the co-operative and mutual sector. From its missions on kickstarting economic growth and spreading opportunity, to its commitments to improve rights for workers, co-operatives can play an important role in the government’s agenda.

To achieve this, though, a number of barriers affecting the growth of co-operatives need to be overcome. One is that the many positives co-operatives offer tend not to be adequately captured by traditional models of appraising economic and social value. This means co-ops can lose out to other forms of business organisation.

IPPR North’s recent report, An Alternative is Possible: Measuring the Impact of Co-operatives, sets out a framework for better assessing the value of co-ops. To develop and test our framework, we

SOCIAL VALUE

Beyond gross value added Developing a framework that captures the community value of co-operatives collaborated with SPACE4, a co-working, training and events space in Islington, north London, set up by tech-for-good worker co-operative Outlandish.

We identified five key themes to help demonstrate the holistic positive impacts of co-operatives.

1

The business practices of co-operatives mean they are more likely to display economic resilience and sustainability than typical, more extractive, business models.

2

Co-operatives and social businesses support economic democracy through membership participation.

3

Their organisational and workplace practices can boost innovation and inclusivity.

4

Co-operatives often provide education, skills and training for both co-operative members and the community.

RYAN SWIFT is a research fellow at IPPR North

5

Solidarity across the co-operative movement contributes to building up the wider social economy movement.

Based on these five themes, we set out a range of criteria to assess co-operatives’ performance and impact against each of them. We identified measures for both co-operative members and the wider co-operative movement, and ones related to the community beneficiaries of co-ops. We then tested, refined and applied this framework practically with SPACE4.

The framework we have developed is an important first step in thinking about how we can better capture impact and consider it more holistically, enabling decisions that can drive economic policy that benefits communities more effectively.

We would like to see the framework being applied to and tested with more co-operatives to continue improving it. More broadly, co-operatives should use such tools to argue for their wider impact to be better captured.

Local policy actors should consider wider impact, as outlined in the framework, when setting economic strategies and designing investment programmes. The broader understanding of value and impact put forward in IPPR North’s report should contribute to wider thinking about measuring local economies beyond jobs and gross value added.

60 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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09/10/2024 14:39

IN PRACTICE

RECRUITMENT Find the latest public finance roles at www.pfjobs.co.uk PAY AWA R D S

Public sector pay awards process starts early Pay award bodies began work on their recommendations for 2025-26 at the end of September – months earlier than the process began last year.

Public sector workers in many fields have faced delays to their pay award for 2024-25, and the government has brought forward the process for next year in response.

It said it “plans to fully reset the timeline by the 2026-27 round”.

The pay award bodies the government wrote to cover the Armed Forces, NHS workers, teachers, police officers, prison service staff, the National Crime Agency and senior public sector staff.

C O N S U LTA T I O N

Government promises ‘overhaul’ will fix local audit capacity issues Concerns about capacity in local external audit teams, as well as within council finance teams themselves, were highlighted in the government’s English local audit backlog consultation.

Respondents said the backlog solution will not fix the crisis by itself, commenting on systemic problems.

“Feedback on this question, as well as the wider consultation, highlights systemic issues that transcend the backlog,” the government said in its response. “The government has inherited a broken local audit system in England. Clearing the backlog is not enough, which is why work is also under way to deliver the manifesto commitment to overhaul the system.”

Details are promised for “the autumn”.

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JOBS&CAREERS RECRUITMENT

CIPFA warns over finance team capacity

E

xcessive staff vacancies and turnover are putting “unsustainable pressure” on council finance teams, with pay the main barrier to attracting qualified candidates, according to research.

A survey of senior leaders by CIPFA and the Local Government Association found that one in six finance posts is unfilled, while average annual turnover has reached 12.5%.

Accountancy professionals are the hardest to recruit, with more than a quarter of posts vacant, followed by internal audit and business partner roles, where one in five jobs remain empty.

Average turnover is rising across the board, but is highest in districts where the impact of staff departures is greatest.

The main reason for employees leaving was financial, with almost two-thirds quitting for more money elsewhere, while retirement was the second most common reason.

The research, based on an online survey of 317 directors of finance or their equivalents at councils across England, found a deep-seated lack of morale across finance teams.

“General feeling at the moment around resilience or lack of it – we sort of feel like the mood in finance is that we are destined to fail,” said one chief financial officer.

“Our staff are overstretched – we have staff doing three or four roles [and] it’s not sustainable,” said another.

The report concludes that more work is needed to promote careers in local government finance. Building a positive working culture, offering career progression and reducing reliance on agency staff are vital to improving retention, it adds.

Immense pressure CIPFA chief executive Owen Mapley (pictured) said intervention was crucial.

“Local government finance teams are under immense pressure, and, without strategic investment in people and skills, these issues will only get worse,” he said.

“CIPFA and the LGA’s report offers practical solutions to help councils recruit, retain and develop the talent they need.”

Pete Marland, chair of the LGA’s economy and resources board, said: “Finance teams play a crucial role in helping councils deliver the valuable services our communities rely on.

“This report highlights the urgent need to invest in and develop the finance workforce, and we look forward to working with government and the sector on safeguarding the future of this profession, which is vital for local government.”

18/10/2024 13:23

IN PRACTICE

DIARY DATES

CIPFA is now offering a mixture of physical, online and hybrid conferences and training as we monitor Covid-19 and how it affects live events. Our event programme reflects local conditions and regulations in each of the nations of the UK. The format and provision of events is under constant review – please refer to each event’s details online for the latest information.

EVENTS

Visit www.cipfa.org/training to search for the events you are looking for, or contact customerservices@cipfa.org

CONFERENCES

S TA R T S 1 0 F E B R U A R Y

CIPFA Accredited Counter Fraud Specialist 2025 Providing students with the necessary practitioner skills and knowledge for the effective end-to-end management of fraud, from upstream activity of prevention and creating an anti-fraud culture to downstream investigation and resolution to the highest evidential standards.

14 NOVEMBER 2024

Public Finance Live Cymru (Wales) Marriott, Cardiff A combination of keynote speakers, plenaries and workshops will allow delegates to gain insights into today’s and future challenges. It’s a one-day live event bringing together public figures, public sector innovators, finance professionals, commentators, analysts and other experts, as well as CIPFA’s public sectorfocused commercial partners.

COURSES – ONLINE 19 NOVEMBER 2024

Understanding How To Use The AFEP Dashboards This event will cover the material that’s present in the CIPFAstats dashboards, with a particular focus on the police financial resilience index and police productivity tool. In the sessions, we will cover how to use these dashboards from a technical point of view, and how to get the most value out of them.

public sector data into compelling insights to support decision-making. Public sector and CIPFA practitioners will present relevant use cases.

watchdog the National Audit Office has warned. This session will consider how to avoid assets being returned to councils in a worse condition than agreed.

19 NOVEMBER 2024

S TA R T S 1 4 J A N U A R Y

Procurement Through The Lens Of The Finance Professional Mohamed Hans, CIPFA’s procurement adviser, will discuss the key takeaways of the upcoming Procurement Act. Co-hosted with OneAdvanced, provider of sector-focused SaaS software, the conversation will look at how technology can support the implementation of the Procurement Act. A senior finance professional will talk about how procurement is implemented in the world of public sector finance.

Diploma In Public Sector Asset Management With little practical and bespoke training directed at the public sector asset management professional, CIPFA Property and the Association of Chief Estates Surveyors have designed a modular diploma to deliver the skills and knowledge in those key areas of public sector asset management identified as requiring the greatest support.

19 NOVEMBER 2024 11 DECEMBER 2024

Technology In Focus: Power BI Uses Cases In The Public Sector This joint webinar with ICAEW allows attendees to discover the benefits of Power BI, a technology already adopted in many public sector organisations, to transform

PFI Exit Strategies Many local authorities have underestimated the time, resources and complexity involved in managing the end of private finance initiative contracts, the public spending

COURSES – IN PERSON 26 NOVEMBER 2024

Technology In Focus: Streamlining Finance Processes For Success Moorgate, London In collaboration with Access PaySuite, this in-person CIPFA discussion considers the impact of technology, automation and integration on finance processes, teams, overheads and how local government adoption of the right technology can drive a better public service for communities. The discussion will explore benefits, challenges and implementation strategies.

20-21 JANUARY 2025

15 JANUARY 2025

Introduction To NEC4 Contracts For Public Sector Practitioners This event has been developed to support public sector practitioners develop a practical understanding of the NEC4 Suite of Contracts (with reference to the Engineering and Construction Contract).

Better Business Cases Foundation 2025 If you develop or review business cases, HM Treasury is recommending accreditation on the Better Business Cases programme, jointly developed

by HM Treasury and the Welsh Government. The course provides accreditation on HM Treasury Green Book guidance.

64 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

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IN PRACTICE

ON ACCOUNT AMIT VERMA is CIPFA’s FA’s ager sustainability policy manager

CONFERENCE ROUND-UP

Charting a greener horizon Discover the highlights of the annual CEF-CIPFA conference on sustainable public finances

T

his year’s annual Center of Excellence in Finance-CIPFA conference, ‘Charting a Greener Horizon: Navigating Towards Sustainable Public Finances’, brought together public finance professionals from across south-east Europe to discuss sustainability challenges faced by the sector. From panel discussions to networking, the conference provided a platform to delve into contemporary issues.

Anti-corruption Anti-corruption expert Liljana Cvetanoska delivered an insightful talk on the intersection of corruption risks and sustainability. Greenwashing has emerged as a significant and growing concern. She focused on practical measures, such as corruption risk assessments and integrating public procurement principles, such as those already established by the OECD. She underscored that, without transparency, there can be no accountability.

European Green Deal The conference kicked off with Hana Huzjak from the European Commission Representation in Croatia, who spoke about the European Green Deal – which aims to tackle climate change and a more sustainable European economy, centred on the EU’s transition to climate neutrality by 2050. She shared figures showing EU’s economic growth alongside emissions reductions, demonstrating that both economic prosperity and climate goals can be achieved without compromise.

An integral part of the European Green Deal is the introduction of the €80bn Social Climate Fund to support vulnerable citizens most affected by energy and mobility poverty.

Other topics included green future investment, the Recovery and Resilience Facility, multinational financial frameworks, next-generation EU green bonds and climate estimated funds.

Changing regulatory landscape and green skills needs assessment Panel discussion on the changing regulatory landscape included delegates

International standards

from the International Public Sector Accounting Standards Board, Audit Wales and the European Commission.

Key messages included challenges and opportunities for sustainability reporting, including skills and capacitybuilding, performance measurement against the sustainable development goals, five ways of working and auditing, data gap analysis, performance-based instruments and results monitoring, and green skills assessment.

Delegates from CEF, LSE and subject matter experts from Albania, Bosnia and Herzegovina, Kosovo, Serbia and Macedonia discussed green skills needs assessment. The key messages included embracing multidisciplinary stakeholders with diverse learning priorities, improving coordination and collaboration, and acknowledging that the standards and principles guiding green skill development are still evolving.

A session led by IPSASB’s Ross Smith detailed the board’s exposure drafts for new reporting standards on climate-related disclosures and natural resources. The focus, he said, should be on enhancing existing standards rather than starting from scratch. He highlighted materiality as a distinct challenge and encouraged the exploration of different approaches.

Wellbeing of future generations Audit Wales facilitated a case study discussion with auditor general Adrian Crompton and wellbeing of future generations manager Catryn Holzinger, focusing on the Well-being of Future Generations Act (2015). It translates the SDGs into Welsh policy, with 50 indicators to measure progress. A fundamental aim is linking sustainable development with value for money.

An overall message from the twoday conference was the importance of making incremental progress, while working on skills and capacity.

PUBLICFINANCE.CO.UK 65

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LAST WORD

WHERE NEXT?

Give this your fee mo db @PU nth’s m ack on agaz BLIC ine a _ F IN t @PF _FO ANCE_ CUS

READ…

From CIPFA Exploring challenges and solutions for the NHS estate Capital availability is a key challenge. Affordability and the current state of the estate can limit ambition, driving a tendency to focus on maintaining services rather than taking a more strategic, transformative approach.

Collaboration is key to maximising the NHS and wider public sector estate. Yet the NHS is often not perceived as a credible partner.

Elements of the NHS capital regime have not kept pace with changes in structures, standards or policy and are obstructing infrastructure planning, delivery and collaboration.

This report builds on a roundtable of finance and estates professionals to explore the challenges of NHS infrastructure planning and delivery. It identified potential solutions the government could explore.

Visit publicfinance.co.uk and publicfinancefocus.org for exclusive news and opinion on the latest developments affecting public finances. Sign up for news bulletins direct to your inbox FISCAL REALITY “It is easy to think that we face a shortterm challenge somewhat artificially created by a particular set of arbitrary fiscal rules. That would be a mistake.”

Paul Johnson, director of the Institute for Fiscal Studies

CRISIS IN CARE “This sector is at breaking point, with vacancies, turnover and low pay creating growing pressures that have led to a significant amount of unmet and undermet need. Without urgent intervention, councils will struggle to meet their legal duties to people who draw on care.”

David Fothergill, chair of the LGA’s community wellbeing board

ACCESS the full report at bit.ly/CIPFAInsights

REA READ the full articles at www.publicfinance.co.uk

Trus is too precious a Trust commodity to be cast aside. commo Politicians cannot accept Politi defeat defea and mildly submit to the th idea of a low-trust society. societ Trust is the essential currency currenc which enables every part of our society to function Ministe for the Cabinet Office Pat McFadden Minister in a for foreword to the report The Fight for Trust fr from the Social Market Foundation 66 PUBLIC FINANCE NOVEMBER/DECEMBER 2024

66 Where next?_Nov-Dec 2024_Public Finance.indd 66

SHARE

Have your say INTERNAL AUDIT CIPFA is consulting on a code of governance of internal audit from the perspective of the organisation responsible (ie, local government body). The code, which complements the standards that apply to the head of internal audit, is a response to the Global Internal Audit Standards (UK public sector), which will be mandated from 1 April 2025.

RESPOND to the consultation at cipfa.org by 5pm on Thursday, 28 November

GOING FOR GROWTH The government is building its industrial strategy, through which it aims to create “long-term, inclusive, secure and sustainable growth”.

It is asking for views on its proposed approach, including evidence, analysis and policy ideas.

The document contains a full section on ‘place’, and sets out a vision for concentrating efforts on “places with the greatest potential” for eight highgrowth sectors.

Jobs “will be at the heart” of the strategy, the government said, backed by “employment rights fit for a modern economy”.

FIND the consultation at gov.uk

Photography: Crown Copyright

18/10/2024 14:15

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