Funding

Pandemic Prep

How can we come together to address future pandemics?

The Independent Panel for Pandemic Preparedness and Response was set up by the World Health Organization (WHO) in September 2020. The Panel published its report, ‘COVID-19: make it the last pandemic’, in May 2021. In March 2021, 20 world leaders and senior figures from across the world called for a more joined-up approach to pandemics in the future. This call was picked up by the Working Group on Strengthening WHO Preparedness and Response to Health Emergencies (WGPR) who have been drafting a Pandemic Preparedness Treaty. How is the treaty being drafted, what does it propose, and what might it mean for rural communities? Jessica Sellick investigates. ………………………………………………………………………………………………..

The Independent Panel for Pandemic Preparedness and Response began its work in September 2020. It was established by the World Health Organization (WHO) Director-General in response to the World Health Assembly resolution 73.1. The Panel was given a mandate to review the experiences gained and lessons learned from the WHO-coordinated international health response to COVID-19. In October 2020, the Panel published its programme of work. This contained 4 interconnected enquiry themes: 

  1. Build on the past: learn from previous pandemics and the status of the system and actors pre-COVID-19. 
  2. Review the present: analyse the accurate chronology of events and activities in relation to the COVID-19 pandemic, the recommendations made by WHO, and the responses by national governments.
  3. Understand the Impacts: review how health systems and communities responded and assess the direct and indirect impacts of both the pandemic and the response measures.
  4. Change for the future: an analysis and vision for a strengthened international system ideally equipped for pandemic preparedness and response.

The Panel provided scheduled briefings and reports to WHO Governing Bodies. This included: a briefing to the WHO Executive Board Special Session in October 2020; presenting its first progress report in November 2020; producing its second progress report in January 2021; and publishing its main report in May 2021. The main report was supported by a companion document describing 13 defining moments which shaped the course of the pandemic; and by 15 background papers including the chronology of the pandemic, and reflecting the voices heard in townhall meetings. The main report contained the following key findings: 

  • Early failings
    • The world had been warned of an inevitable pandemic threat, but many countries were not prepared and had not learnt from the past. 
    • Valuable time was lost as the formal notification and emergency declaration procedures under the International Health Regulations were too slow. 
    • Too many countries took a ‘wait and see’ approach rather than enacting an aggressive containment strategy. 
    • Countries with delayed responses were also characterised by a lack of coordination, inconsistent strategies, and the devaluing of science in decision-making. 
  • Preparedness was under-funded and response funding too slow
    • Financing at the scale required was not available to supply medical equipment, kick-start the search for diagnostics and therapeutics, or ensure vaccines would be available to all. 
    • International financing was too little, too late. 
  • Lack of planning and gaps in social protection resulted in the pandemic widening inequalities, particularly for:
    • Women and vulnerable and marginalised populations, including migrants and workers in the informal sector. 
    • People with underlying health conditions. 
    • The most disadvantaged children whose education was terminated early by the pandemic. 
  • Some successes:
    • Health workers have been stalwart in their efforts. 
    • Open data and open science collaboration were central. 
    • Vaccines were developed at unprecedented speed. 
    • Successful national responses. 
    • Country wealth was not a predicator of success. 

The Panel presented its recommendations in two parts. The first part made immediate recommendations to curb COVID-19 transmission. The second part contained recommendations which if adopted, as a package, are intended to transform the international system for pandemic preparedness and response. Seven recommendations were made in Part two: 

  1. Elevate pandemic preparedness and response to the highest level of political leadership – including the establishment of a Global Health Threats Council and the adoption of a Pandemic Framework Convention. 
  2. Strengthen the independence, authority, and financing of the WHO – including resourcing and equipping WHO Country Offices and prioritise the quality and performance of staff at each WHO level. 
  3. Invest in preparedness now to prevent the next crisis – ask all national governments to update their preparedness plans. 
  4. Establish a new agile and rapid surveillance information and alert system – using state-of-the-art digital tools. 
  5. Establish a pre-negotiated platform for tools and supplies – to deliver global public goods of vaccines, therapeutics, diagnostics and essential supplies. 
  6. Raise new international financing for pandemic preparedness and response.
  7. National Pandemic coordinators should have a direct line to the Head of State or Government. 

The main report identified a need for stronger leadership and better coordination at national and international levels. 

What is the Pandemic Preparedness Treaty? On 30 March 2021 the then Prime Minister Boris Johnson, along with 20 other world leaders and senior figures from international organisations, published a joint article calling for a more joined-up approach to pandemics in the future. In noting that the world would face major health emergencies in the future, world leaders emphasised how “we must be better prepared to predict, prevent, detect, assess and effectively respond to pandemics in a highly co-ordinated fashion”. In the article the leaders proposed a Pandemic Preparedness Treaty which would “greatly enhance international co-operation to improve…alert systems, data-sharing, research and local, regional and global production and distribution of medical and public health counter-measures”.   

In October 2021, the Working Group on Strengthening WHO Preparedness for and Response to Health Emergencies (WGPR) published a zero draft report outlining the benefits of developing a new instrument to promote high-level political commitment and strengthen health systems and their resilience. A special session of the World Health Assembly (WHA) was held to discuss the report where it was agreed that the WHA would establish an Intergovernmental Negotiating Body (INB) to draft and negotiate “a WHO convention, agreement, or other international instrument on pandemic prevention, preparedness and response”. 

How is the Treaty being developed? The INB describes how its work is based on the principles of inclusiveness, transparency, efficiency, Member State leadership and consensus. Following the special session, the INB have held a series of meetings and put a timeline in place with the final outcome of its work to be presented at the 77th World Health Assembly in May 2024. 

While developing a Treaty involves negotiating and seeking consensus amongst the WHO’s 194 member countries, article 3 in the Zero Draft sets out the main objective of having a treaty: “The WHO CA+ aims to comprehensively and effectively address systemic gaps and challenges that exist in these areas, at national, regional and international levels, through substantially reducing the risk of pandemics, increasing pandemic preparedness and response capacities, progressive realisation of universal health coverage and ensuring coordinated, collaborative and evidence-based pandemic response and resilient recovery of health systems”.   

The INB is consulting and negotiating on:

  • The definition, means and procedure for declaring a pandemic, and what this means in practice for states. 
  • How the treaty will work alongside the International Health Regulations. 
  • Key international principles that will guide the treaty (e.g. human rights, equity, accountability). 
  • How states and the WHO should be coordinating and cooperating in pandemic preparedness and response. 
  • How to finance pandemic preparedness and response initiatives. 
  • Setting up a new Governing Body for the treaty. 
  • General legal issues (e.g. amendments, disputes, withdrawal). 

This involves a series of public hearings and informal, focused consultations. The public hearings have explored what substantive elements should be included in a new international instrument, and what can be done at the international level to better protect against future pandemics. At its meeting in July 2022, the INB agreed that the new international instrument on pandemic preparedness should be legally binding.  

How is it being received? The group of Friends of the Treaty argues that “the world cannot wait until the COVID-19 pandemic is over to start planning for better pandemic preparedness and response and implementing the lessons from the crisis…the key to the success of this endeavour will be a collective approach that puts aside business-as-usual”. 

A petition calling on the UK Government not to sign a new treaty without a public referendum received some 156,087 signatures when it closed back in November 2022. The petition led to a parliamentary debate in April 2023. In response, the Government said the UK would “work towards building a consensus on how the global community can better prevent, prepare for, and respond to future pandemics and will actively shape, develop and negotiate the text. The new instrument would only be adopted by the World Health Assembly if the text achieves a two-thirds vote of the Health Assembly…once adopted, the instrument would only become binding on the UK if and when the UK accepts (ratifies) it in accordance with its constitutional process”.   

The European Council is a proponent of the treaty and has identified the following potential incentives and benefits of it: 

  • Better surveillance of pandemic risks – including knowledge sharing on new infectious diseases. 
  • Better alerts – supporting real-time communication and early warnings which would trigger a more rapid response. 
  • The ability to deploy medical equipment and highly-skilled international medical teams on the ground. 
  • The development of timely medical solutions (e.g. vaccines, treatments, diagnostics). 
  • Collective instruments to address global needs equitably in future pandemics. 
  • To improve the flow of reliable and accurate information as well as tackle misinformation globally. 

For some the treaty is rooted in ideals of what perfect pandemic governance should look like and that it has little regard for practical realities where state security and the health of the few has been prioritised. Some commentators argue that it will take years to negotiate the scope and powers of the treaty – citing how previous protocols that took 3-7 years to develop, and 10-11 years to enter into force.  

The German Alliance on Climate Change and Health, King’s College London and the LSE have suggested protocols, guidelines and standards could be used to lay out specific commitments – similar to the UN Framework Convention on Climate Change approach. They also acknowledge that there is unlikely to be consensus on all issues, especially those that are seen to infringe on trade or sovereignty.  

Treaty negotiations have focused on preventing pandemics that resemble COVID-19. However, the Global Leaders Group on Antimicrobial Resistance have emphasised that the next pandemic could be caused by bacteria or other microbes. The Leaders Group also want the negotiations to include measures that prevent infections such as better access to safe water, hygiene and sanitation and higher standards of infection prevention and control.  

It is also not clear what would happen if the measures agreed in the treaty were not followed – would there be a peer-review process or a set of sanctions for non-compliance?  Academics have called for an independent body to be responsible for monitoring the alignment of countries’ commitments to pandemic preparedness with their actions.

It is also unclear how the treaty would fit with the 2005 IHR. Indeed, separate talks on reforming the regulations taking place, with some 300+ amendments proposed.  

Since the release of the main report, the Co-Chairs and Panel members have continued to support discussions focussed on implementing their package of recommendations. In November 2021, the former Co-Chairs released a six-month accountability report. This flagged the need for strengthened leadership and accountability through an inclusive leader-level council independent of the WHO. In May 2022, the former Co-Chairs released a one-year assessment report. This called for rapid announcement of a pandemic threat to be made should one arise before legal reform processes are concluded. In May 2023, the former Co-Chairs released A Road Map for a World Protected from Pandemic Threats. This set out how two legal instruments are needed: revised IHR and a new pandemic agreement. Their recommendation is that the revised IHR should focus on surveillance and alert systems; and a new pandemic agreement on addressing the whole prevention, preparedness and response cycle. 

What does it mean for rural communities?In theory, areas with lower and sparser populations should have been at a lower risk of COVID-19 transmission. Yet global analysis from the OECD found while the virus arrived later in rural areas, COVID-19 case rates exceeded those in urban areas. They provide examples of super-spreader events such as wedding parties and religious festivals; and draw attention to meatpacking plants in rural areas of Germany, Ireland and the United States. Similarly, the analysis found rural populations to be at greater risk of COVID-19 complications and mortality. This is because the virus is particularly dangerous for older people and rural areas tend to have higher proportions of older residents. Rural dwellers were also found to have a higher prevalence of pre-existing conditions and co-morbidities (e.g. diabetes, heart disease, obesity). Rural hospitals were found to be less able to cope with an influx of COVID-19 patients because they had fewer specialists and less technology and capacity (i.e., intensive care beds).   

Back in the UK, analysis from the Nuffield Trust highlights how:

  • COVID-19 had a more detrimental effect on hospital waiting times in rural and remote trusts compared to trusts in more urban areas. Activity fell dramatically in emergency medicine and in referrals for talking therapies. 
  • Remote trusts were already struggling to recruit staff, spending more on temporary staff compared to other areas – the pandemic has exacerbated rural workforce issues. 
  • The underlying financial position of rural and remote services was worse than the position of more urban trusts before the pandemic started. In rural areas trust debt is equivalent to 56% of their annual operating income and they typically do not get their fair share of additional funding that goes into the NHS.    

If we know rural communities have nuanced risks and access to health care and infrastructure challenges, how can we ensure the design and implementation of any pandemic treaty would support rural communities in the event of a pandemic? For example, how will we collect data and undertake surveillance? How can we ensure we have sufficient qualified staff who can be flexible in their response and have the resources they need (i.e., PPE, diagnostics, therapeutics, beds) to deliver pandemic-related health care – including managing any surges?

Where next?The co-chairs of the Panel highlight how “a new pathogen with pandemic potential could emerge at any time, and then there will be no excuse for a wait and see” approach. There has to be investment in preparedness now, not when the next crisis hits”. Dialogues around whether and/or where an international pandemic treaty or other international framework should sit will continue to take centre stage between now and May 2024. It is worth noting that treaty powers of the WHO have only been used once: for the adoption of the WHO Framework Convention on Tobacco Control in 2003. So there is still much work to do to design the treaty and its interaction with the IHR. Will governments think beyond national interests? And if we already know the timing and impacts of pandemics differ in rural areas, will they think rurally? Watch this space. 

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Jessica is a senior research fellow at The National Centre for Rural Health and Care (NCRHC) and a project manager at Rose Regeneration. She is currently evaluating hospital discharge and hospital avoidance schemes, and a service that supports older people to maintain their independence.  Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Is the most money spent on the areas which need it?

Is the most money spent on the areas which need it?

The UK Government allocates funding to Scotland, Wales and Northern Ireland in two ways: either by spending UK-wide, or by allocating funding to the relevant devolved administration. The Barnett Formula is the way the UK Government provides the devolved administrations with a share of any additional funding. While intended to ensure each nation receives the same ‘pounds-per-person’ funding, there are calls to introduce a new ‘universal needs-based’ factor into the Formula. How does the Barnett Formula work, and are changes needed? Jessica Sellick investigates. ………………………………………………………………………………………………..

What is the Barnett Formula – and where does it come from? The Barnett Formula is named after its founder Joel Barnett – a former Chief Secretary to HM Treasury in the 1970s who devised the formula in 1978. The Barnett Formula was first used in the 1978 Public Expenditure Survey to provide devolved administrations with the same ‘pounds per person’ change in funding as the equivalent UK Government spending. Until 1999 it was used to determine the level of UK Government spending on public services in Scotland, Wales and Northern Ireland. Since then it has been used to set the budgets of devolved administrations.  

In practice, it means if spending on health in England increases by £100 per person, the devolved administrations funding will also increase by £100 per person. This is intended to ensure that cash changes in public spending per head will be equal across all 4 nations. The Barnett Formula is only applied to public services that are devolved. 

The devolved administrations are able to spend the increased funding they receive as they wish – i.e., if the additional £100 in England is for health, there are no requirements for devolved administrations to spend their increased allocation on health. Additionally, the UK Government is able to make changes to funding without applying the Barnett Formula (known as a ‘formula bypass’), and it is not a statutory instrument.  

How is it calculated? Under the Barnett Formula, the Scottish Government, Welsh Government and Northern Ireland Executive receive a population-based proportion of changes in planned UK Government spending on services in England and Wales, or Great Britain. It therefore determines changes to each devolved administration’s funding with references to changes in departmental expenditure limits (DELs) within UK Government departments. Three variables are multiplied together to determine each devolved administration’s block grant under the Barnett Formula:

(1) The change in planned spending by UK Government departments X (2) the extent to which services delivered by UK Government departments correspond to services delivered by devolved administrations X (3) each nation’s population as a proportion of England, England and Wales, or Great Britain [as appropriate]. 

 Mid-Year population estimates published by the Office for National Statistics (ONS) are used, with HM Treasury notifying devolved administrations of the population proportions that will be applied in advance. 

The Barnett Formula is applied slightly differently between spending reviews and budgets. At spending reviews, the Formula is generally applied to relevant changes in overall departmental spending. At Budgets, the Formula is applied to changes in funding for individual spending programmes. 

Is the Barnett Formula in need reform? The Institute for Government (IfG) describes the Barnett Formula as a ‘mechanistic formula’ that helps depoliticise the process of setting devolved budgets; and removes the need for annual negotiations between the UK Government and devolved administrations. The IfG cites the stability and predictability of the approach as each year’s budget uses the previous year’s budget as a starting point. The lack of ringfencing also means devolved administrations can use the funding to meet their own spending priorities. 

In practice, the application of the Formula results in higher spending per person in the devolved nations compared to England. This is because using the previous year’s devolved budget as a starting point preserves historic differences in spending between nations. This results in devolved nations starting from a higher base of public spending per head. Yet devolved administrations have argued that their populations are sparser (making the cost of providing the same level of public services as in England higher); the size of the public sector varies across all 4 nations; and in some areas there are higher levels of demand and need for public services. According to the IfG, for example, Scotland receives funding for public services that is 29% above the level in England in per capita terms. Spending per person in Northern Ireland is also 29% above England; and in Wales the figure is 23%. 

The Welsh Government published two reports back in 2009 and 2010 [as part of the Holtham Commission] highlighting what it called the “Barnett Squeeze”. The Commission concluded that “the Barnett Formula lacked any objective justification and had survived for 30 years solely for reasons of political and administrative convenience. As a direct result of the formula, the relative funding per capita for devolved activities in Wales has converged markedly towards the average level of funding in England over the past decade for reasons that have nothing to do with the relative needs of Wales”.  

The Holtham Commission recommended a funding floor be introduced to prevent the gap widening. It was estimated that Wales’s additional needs would mean its relative block grant funding per head would need to be around 114% to 117% of equivalent funding per head in England. The Commission’s work resulted in the introduction of a ‘needs-based’ factor into Wales’s block grant.

The UK government introduced the block grant floor for Wales in the 2015 spending review. In December 2016, the UK and Welsh governments agreed to implement a new funding floor that would apply from 2018-2019. This funding floor added a needs-based factor to Wales’s Barnett formula. Currently the needs-based factor is set at 105% of comparable funding per head in England, but the UK and Welsh governments have agreed that it will rise to 115% in the long term. The factor is currently lower (105%) as Wales’s relative block grant per head is greater than 115% at around 120% of England’s. Once Wales’s relative block grant funding reaches 115% of England’s, the multiplier will be set at 115%.

In another instance, Northern Ireland’s budget determined by the Barnett Formula is reduced by 2.5%. This is because the Northern Ireland Executive does not require funding for VAT expenditure because it is refunded by HM Revenue and Customs.

The UK Government only releases additional funds when it spends more in England. During COVID-19 devolved administrations argued it was harder to plan their own pandemic responses or recovery planning as they had to wait for confirmation of additional funding from the UK Government.  

In 2022, the Constitution Committee said it “continue[d] to believe” the Barnett formula required reform “to introduce a fairer allocation of funding among the four nations”. And it said that the Treasury’s statement of funding policy “merit[ed] a higher profile” and should be subject to greater parliamentary scrutiny.

Does the Barnett Formula work for rural areas? The Independent Commission on Funding & Finance for Wales demonstrated how a needs-based formula was achievable. They set out three types of need with seven indicators: 

  1. Demographics: a higher prevalence of school age, older people and certain minority ethnic groups will generate a higher need for public services. Indicator 1: under 16 dependency ratio. Indicator 2: retired persons dependency ratio. Indicator 3: percentage of population that is from a minority ethnic group.
  2. Deprivation: individuals who are disadvantaged in various ways will have a greater need to access public services. Indicator 4: percentage of the population claiming income-related benefits. Indicator 5: percentage of the population with a long-term limiting illness.   
  3. Costs: the cost of delivering public services tends to be greater in areas where the population is relatively sparse. Indicator 6: proportion of people living outside of settlements of 10,000 people or more. Indicator 7: inner London weighting. 

The Commission recognised it would be ‘necessary to decide how much importance should be attributed to each indicator’ and how ‘real funding decisions are based on assessments of need that have thrashed out over the years and reflect decisions that are the responsibility of elected officials’ (page 26). 

In May 2023, the Northern Ireland Fiscal Council provided an estimate of relative need for public spending in Northern Ireland. They also highlighted differences in population characteristics and socio-economic conditions such as sparsity and replicated the Holtham Commission’s work to show how minor changes in inputs can affect the overall estimate of relative need, concluding that the relative need for public spending in Northern Ireland is around one-fifth to one-quarter higher than in England. 

The population proportion (mid-year estimates) and comparability percentage (the extent to which services are devolved) in the Barnett Formula do not take account of sparsity, the unavoidable costs of providing services in rural areas, or the public services needs of rural dwellers. 

In relation to farm and fisheries support payments, the UK Government decided to make above Barnett Formula allocations to the devolved administrations to replace EU funding. For agriculture this includes providing £3.7 billion to support farmers and land managers in Scotland, Wales and Northern Ireland. This includes £85 million for the Scottish Government and Welsh Government as part of the recommendations of the Bew Review.  Known as the Intra-UK Allocations Review, it was chaired by Lord Paul Bew of Donegore, supported by a team of advisory panel members appointed by the Prime Minister after consultation with the devolved administrations. The Review were asked to make recommendations on the allocation of farm support ‘convergence’ funding between different parts of the UK for the financial years 2020-2021 and 2021-2022. 

Stakeholders responding to the Bew Review argued that population size and distribution across the UK should not have any influence over the allocation of farm support funding – indicating that agri-food products are processed and consumed in different parts of the UK. For the 2020-2022 period, the Review proposed modest changes in the allocation of funding to benefit those farmers challenged by difficult terrain which coincided with areas recognised by the EU’s external convergence formula. In a UK context these areas are predominantly in Scotland. For the period 2020-2022 they therefore recommended that the convergence funding budget be split according to the proportion of low per-hectare land in each part of the UK. The Review concluded that this would offer a means of retaining a link to the formula whilst also enabling the UK Government to take advantage of the opportunities afforded by leaving the EU. 

An extra £51.4 million was allocated to Scottish farmers for 2020-22 (on top of the one-off historic convergence uplift). The Government also said that to implement Lord Bew’s recommendations while making sure that funding allocations for farmers in England and Northern Ireland were unchanged, the UK Government would commit over £56 million of new money. This included over £5 million for farmers in Wales. The Direct Payment to farmers (Legislative Continuity) Act 2020 enabled the UK Government to implement this decision allowing Ministers to increase the overall budget for direct payments.

Because the Barnett Formula is HM Treasury policy and not part of any legislature, it can be changed or omitted at any time. While the broad framework has been in place since 1978, and some fiddling has taken place since 2015-2016 in a Welsh context, it is in relation to farm support payments that above Barnett funding has been allocated. This has led to wider calls for the Barnett Formula to be reformed to take greater account of socio-economic needs. When asked back in February 2023 whether it would review the Barnett Formula, the UK government said it recognised that the system was not perfect but argued that it was “simple and efficient”, provided the devolved administrations with a “clear and certain outcome” and that it has “stood the test of time”. Do we need to better understand what the Barnett Formula allocations mean for rural areas? And what are the implications of the Holtham Commission and Bew Review in shaping future formulae?     

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently supporting the National Federation of Young Farmers’ Clubs and Lantra to gather the views of young people on what the future of farming should look like, and what they want to see in new agricultural and environmental policies. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

What does the future public service workforce look like?

What does the future public service workforce look like?

Back in July 2022 the House of Lords Public Services Committee published its report ‘Fit for the future? Rethinking the public services workforce’. This identified how public sector staffing was “facing a crisis” due to a “vicious circle” of increasing demand, staff shortages, low morale and recruitment issues. What does this crisis mean for rural areas, and what can be done to secure a public services workforce for the future? Jessica Sellick investigates. ………………………………………………………………………………………………..

How many people work in the public sector? 

According to the Institute for Government (IfG), the public sector ‘consists of all workers employed by the state – whether UK Government departments, devolved Governments, Local Authorities or other Government agencies and public bodies’. The Census collects data on public sector personnel. This comprises people employed in central and local government, and public corporations, including people with second jobs in the public sector. The House of Lords Select Committee on Public Services, however, considers public services in a broader sense – including the role of community-level initiatives and private, voluntary and charitable sectors. All of these definitions exclude organisations such as museums or universities – which despite receiving taxpayer funding in some instances – are defined as private sector organisations. Indeed, some private sector bodies have found themselves reclassified as public sector bodies and vice versa. For example: Royal Bank of Scotland (included as a public sector body since Q4 2008), further education and sixth form college corporations (private sector since Q1 2012); Royal Mail (private since Q3 2013) and English Housing Associations (private since Q4 2017). 

A statistical bulletin published by the Office for National Statistics (ONS) in December 2022 estimated that there 5.77 million employees were working in the public sector in September 2022 – 28,000 (or 0.5%) more than in June 2022 and 73,000 (1.3%) more compared to September 2021. It attributes the increase to the impact of COVID-19 on the NHS and Civil Service, and to Local Authority schools becoming academies:  

  • Employment in Central Government was estimated at 3.57 million in September 2022, a rise of 22,000 (0.6%) compared with June 2022, and 74,000 (2.1%) compared with September 2021.   
  • The NHS employed an estimated 1.90 million people in September 2022, an increase of 12,000 (0.6%) compared with June 2022 and an increase of 47,000 (2.5%) compared with September 2021. 
  • Employment in Local Government was estimated at 2.00 million in September 2022, an increase of 3,000 (0.2%) since June 2022, but a decrease of 3,000 (0.1%) since September 2021. 
  • There were 513,000 employees in the Civil Service in September 2022, up 1,000 (0.2%) compared with June 2022, and up 8,000 (1.6%) compared with September 2021.
  • Private sector employment was at estimated at 27.00 million in September 2022, slightly lower than for June 2022 (by 1,000) but higher than in September 2021 (by 117,000).

According to its definition, the IfG estimates 5.6 million people were employed by the public sector in Q1 2022. While the number of people employed by the public sector reduced between 2009 and 2016, the impact of Brexit and COVID-19 have seen numbers increase – there are now just 1% fewer employees in 2022 compared to 2009. It is estimated that the public sector now makes up 17.5% of total employment. 

What skills do we need (now and in the future) in the public sector? 

In 2021, the OECD published its report on the future of public services. This looked at the factors affecting the work of civil service leaders from OECD countries, and the employment policies needed to support their work. The report highlights how: ‘in the short to medium term, public servants will be called upon not only to help manage the health, social and economic impacts of the [COVID-19] crisis, but to also find innovative solutions to help rebalance budget deficits in the immediate aftermath of recessions. The opportunity and policy challenge is to find a way to use budgetary pressure and high expectations from citizens to spark transformation in the public sector rather than making short-term cuts that freeze renewal and stunt progress, as was often the experience resulting from the 2008 financial crisis’. Leaders participating in the study generally agreed that: 

  • The promise of new technology to improve government service delivery will only be achieved with a commensurate investment in the capabilities of civil servants.
  • Change is not new but is happening at a pace that requires constant reconsideration of what civil servants know, and how they learn and acquire new knowledge.
  • Civil services need to become more flexible, agile and responsive in the way they organise, reward and employ.
  • There are important new possibilities to focus people management on the experience of work, public service values, mission and the public good to attract and retain diverse employees.

In reflecting on the public service workforce that is needed to deliver post-pandemic policies today, and into the future to respond to the next set of crises, three overarching reflections were offered: 

  1. A forward-looking public service is one that is able to identify the emerging technical skills and competencies needed to ensure resilience in an increasingly uncertain future. This will require workforce planning methods that recognise uncertainty and prepare for the next shock.
  2. A flexible public service in the future will be one where different kinds of people work from more locations at different times, contributing their skills and experience to projects, across multi-disciplinary teams, and learning as they go. This will require flexibility, a culture of learning, better risk management and experimentation.
  3. The public service of the future will attract, retain and optimise the use of the skills it needs by providing fulfilling work experience to an increasingly diverse range of employees. This will require improved job design to increase autonomy and recognise employees as individuals.

In January 2022, the House of Lords Public Services Committee launched an inquiry on designing a public services workforce fit for the future. The Committee published its report in July 2022. This set out how the public services workforce was ‘facing a crisis’ and that employers were ‘not doing enough to make public service careers attractive to prospective staff’ leading to recruitment difficulties: 

‘The inescapable demographic fact is that demand for services will rise far faster than the working-age population. The proportion of the population with multiple and complex needs will rise further, even as the labour market available will be smaller. The challenge is substantial: the public sector will have to deliver the same or better outcomes with less labour available’ (page 3). 

The report contained five key findings: 

  1. Many public service workers face “intense pressure” and “suffering”, as well as unacceptable levels of discrimination. 
  2. The potential of many staff to deliver services is largely untapped, with a need to think imaginatively about how and where they could be better deployed.
  3. There are simple ways to enhance the “offer” of public service careers that should be taken.
  4. Traditional routes into public service careers are limiting and action must be taken to make them more accessible.
  5. The public sector needs to “train to retain” and must rethink its training and development offer to allow staff to meet their full potential. 

The Committee used the report to develop to develop an action strategy. The strategy includes taking steps to: 

  • Understand the problem by collecting and sharing workforce data. 
  • Get the most out of the workforce by empowering them and thinking imaginatively about where they could be deployed. 
  • Make services work for users through meaningful consultation. 
  • Use technology in the most productive and informative ways. 
  • Prioritise preventative services. 
  • End the culture problems driving people to leave. 
  • Make the offer of public service careers more attractive by fixing pensions and offering flexible working. 
  • Fix the broken brand of public service careers, and get an appealing message out. 
  • Create new and accessible entry routes, and properly use those that already exist. 
  • Train to retain: rethink development so that skills can be recognised and used more effectively across broad careers. 

In May 2022, the Local Government Association (LGA) published the Local Government Workforce Survey 2022. All heads of human resources [or in an equivalent position] in England were asked to complete an online survey between March and May 2022. Of the119 Councils that responded: 

  • 94% said they were experiencing recruitment and retention difficulties. In response to these difficulties, 81% said they provided market supplements for some posts – with 48% providing market supplements for children’s social workers, just over 25% for planning officers, and 18% for building control officers. 
  • Of those undertaking actions to help with recruitment and retention, over a quarter said they considered flexible working to be the most effective one. 
  • 62% said they were considering increasing apprenticeships in 2022-2023. 

In July 2022, the Government Skills and Curriculum Unit and Leadership College for Government published research looking at the future issues facing public service leaders. This identified future pressures around: (1) moving public services online; (2) the changing role of the state; (3) rising complexity; and (4) new expectations of leaders. There was agreement on the central importance of collaboration – including the need for a holistic systems approach that reaches across traditional sectors of public services. 

In November 2022 the Government responded to the House of Lords Public Services Committee’s report. It cited several areas where positive progress had been made. These include: the introduction of a public sector apprenticeship target to boost starts across the public sector; a commitment of £500 million to improve the recruitment, retention, progression and staff wellbeing of the adult social care workforce; issuing digital and data guidance setting out the required capabilities for all senior civil servants; and running a supporting families programme.  

In terms of horizon scanning, Deloitte describes the Government worker of 2035: 

‘The government workforce will likely consist of technologically advanced generations with different employment expectations. These new workers may be less attached to “career tenure” and will expect to work on short-term, specialized projects where they can apply their innovative technology skills. Future public service workers will likely be interested in performing meaningful work with tangible evidence of social responsibility and impact, and leaders should be prepared to respond’. 

In a context of increased uncertainty and disruption; how can we ensure we have a good grasp of the current workforce (and gaps), and that we can attract, retain and develop the public sector employees we need for the future?  

Navigating the transition 

To make public sector careers attractive and ensure there is a sustainable workforce for the future, the House of Lords Public Services Committee identified how action is needed around:

  • Workforce experience: a need to end the culture problems driving people to leave and ensuring the experiences of staff are broadly positive. 
  • Workforce development: a need to get the most out of staff by empowering them to think about where they could be deployed. 
  • Workforce recruitment: a need to fix the broken brand of public service careers by looking at the ‘offer’, including fixing pensions and offering flexible working. 
  • Routes into careers: a need to create new and accessible entry routes, including apprenticeships and local talent pools – including those who may not be able to afford to do a degree. 
  • Training: public sector employers must train to retrain and rethink development so that their skills can be used and recognised across broad careers. 

The Committee Chair, Baroness Armstrong of Hill Top said: “We need to reshape – and rebrand – public services to make then an attractive career choice. We can do that by empowering people, and providing innovative training with personal and professional development, so they feel valued and want to remain in these important careers. In addition, consultation with service users and those with lived experience will allow their input to be a real part of redesigning services to deliver exactly what is needed, when it is needed”. 

 Deloitte also highlighted mitigation strategies to support the transition to a sustainable workforce: 

  • Prepare an inventory of the regulatory changes needed to accommodate a largely “non-career” employee model. 
  • Conduct annual public service planning exercises using a more forward-looking approach comprised of employee predictive scenarios, and labour markets and technology trends as a way of mitigating a radical, disruptive shift to a new workforce model.
  • Rethink current staff performance management practices to enhance the focus on individual accountability for results and career mobility.
  • Collect and review success stories of interagency collaboration and public innovation projects.
  • Increase virtual collaboration and use of digital technologies.
  • Conduct periodic workforce studies and employee surveys to understand and map the expectations and preferences of a younger workforce.

More workers are economically inactivity now than before the COVID-19 pandemic. Labour market data has shown that older workers and those without a higher education continue to drive the increase in inactivity. However, increased retirement is a more important reason for their increase in movements from employment to inactivity rather than necessarily increases in ill health. At the same time, the number of people moving into low-paying occupations from inactivity has also fallen. Evidence also shows as inactivity has risen, existing recruitment difficulties have been exacerbated. The Government is currently exploring a range of options and reforms to encourage people back into the workforce – from changes to sickness and disability benefit legislation to a bigger tax allowance for people aged over 50. Alongside the Government’s approach to employment support, such as DWP’s network of 50PLUS champions, the Centre for Ageing Better is calling for a national programme aimed at those aged 50 plus, and bringing forward by a year the People and Skills element of the UK Shared Prosperity Fund (UKSPF) to deliver place-based and responsive support. In a rural context, for example, limited access to affordable and accessible transport and/or childcare prevents some employees from taking on additional hours or accessing the wider labour market. 

What more can be done to support workers to return to fill labour and skills shortages in the public sector short term – and will the actions and mitigations outlined above encourage others to enter it?   

How many public sector employees work in rural? 

While data is available on people employed in central and local government, including regional and diversity analyses, it is not possible to determine how many employees are involved in supporting rural communities. For example, as of September 2022, the Department for Environment, Food and Rural Affairs (Defra) had a headcount of 12,790 employees, comprising 10,630 full-time staff and 2,160 part-time staff (table 8). While Defra provides a breakdown of resources allocated to different priority outcomes in its delivery plan, it is not possible to determine how many employees have rural communities as all or part of their remit. Indeed, Defra works with colleagues in other Government departments to ensure that the needs and opportunities presented by rural communities and businesses are reflected in Government priorities.  

In terms of sectors, staffing is a make or break issue for the NHS in England. Workforce recruitment and retention difficulties have a direct impact on patient care and staff experience. The Parliamentary Inquiry into Rural Health and Care and numerous other reports have all highlighted the unmet and growing health and care needs of people living in rural areas alongside growing staff shortages. In a rural context, the Parliamentary Inquiry identified how: 

  • There are workforce challenges due to high demand but low supply, with overall fewer NHS staff per head in rural areas compared to urban areas. 
  • High employment rates and lower rates of economic inactivity means rural labour markets are relatively tight. 
  • Individuals often develop their clinical career where they train and there is a need to enhance training and development opportunities in rural areas.  
  • There is a need to create more specialist generalists and other fluid and adaptable workforce positions in rural areas. 
  • The variety of roles and career development opportunities available in rural areas needs to be better promoted.  

The National Rural Crime Network (NRCN) has looked at the complex and varied demands on police officers and budgets in rural areas. Research commissioned from the University of Plymouth found: 

  • Fixed, non-staff costs are higher amongst rural forces which cannot benefit from economies of scale due to the need to serve more dispersed, low density populations. For example, this equates to £32.1 million across the 10 smallest forces (by population), the equivalent of over 600 officers. Given that rural forces generally have smaller workforces than urban forces, this has implications for service delivery.
  • Significantly higher round-trip distances are found in forces serving low-density populations, increasing costs. As rural forces have lower officer numbers, the burden per officer is also higher by up to 65%.
  • All forces experience seasonal variations, but the minimum-relative-to-maximum variation, especially for daily crime and Anti-Social Behaviour is far greater in rural forces, especially those with National Parks and coastal areas attracting holiday-makers.

While workforce issues are everywhere, these examples illustrate how they can be more pronounced in rural areas. Rural residents often have different (and greater) needs, are spatially dispersed, and require services from staff with different skillsets. This is not always reflected in Government funding support or in workforce planning and development.     

If we are to address rural workforce challenges now and into the future, there are three important questions we need to respond to: (1) how can we reduce demand? (2) How can we deliver services in a way that means we have a more sustainable workforce? (3) How can we ensure the current and future workforce are in tune with rural needs, circumstances and opportunities? 

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently evaluating a support programme for patients waiting to receive NHS and local government services; and a Warm Hubs scheme. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

 Exploring Rural Content in Public Service Media

 Exploring Rural Content in Public Service Media

Public Service Broadcasting (PSB) refers to broadcasting intended for public benefit rather than to serve purely commercial interests. Ofcom, the UK’s communications regulator, requires these broadcasters to fulfil certain requirements as part of their licence to broadcast. How do PSBs reflect rural communities and perspectives in their programming and outputs? Jessica Sellick investigates. ………………………………………………………………………………………………..

What is public service broadcasting? According to Ofcom, public service broadcasters (PSBs) in the UK include the BBC, those providing Channel 3 services [ITV in England and Wales, STV in Scotland and UTV in Northern Ireland], Channel 4, Channel 5 and the Welsh language service S4C. PSBs must comply with a range of programme and output quotas that set minimum levels of the types of programmes that they must show. These obligations originate in the Communications Act 2003 and/or in European legislation. 

Section 264(4) of the Communications Act 2003 specifies the purposes of PSBs in the UK:

(a) the provision of relevant television services which secure that programmes dealing with a wide range of subject-matters are made available for viewing;

(b) the provision of relevant television services in a manner which (having regard to the days on which they are shown and the times of day at which they are shown) is likely to meet the needs and satisfy the interests of as many different audiences as practicable;

(c) the provision of relevant television services which (taken together and having regard to the same matters) are properly balanced, so far as their nature and subject-matters are concerned, for meeting the needs and satisfying the interests of the available audiences; and

(d) the provision of relevant television services which (taken together) maintain high general standards with respect to the programmes included in them, and, in particular with respect to—

(i) the contents of the programmes;

(ii) the quality of the programme making; and

(iii) the professional skill and editorial integrity applied in the making of the programmes.

Section 264(6) states the objectives of PSBs, which are to:

  • Inform, educate, and entertain.
  • Reflect and support cultural activity in the UK, such as drama, comedy, and music.
  • Facilitate civic understanding and fair and well-informed debate on news and current affairs.
  • Satisfy a wide range of different sporting and other leisure interests.
  • Include a suitable quantity and range of educational programmes and programmes dealing with science, religion and other beliefs, social issues, matters of international significance or interest and matters of specialist interest.
  • Include a suitable quantity and range of high-quality and original programmes for children and young people.
  • Reflect the lives and concerns of different communities and cultural interests and traditions within the UK and locally in different parts of the UK and include programmes made outside the M25.

Individual PSBs have further specific obligations placed on them. For example, section 265 of the Communications Act 2003 sets out the public service remits for Channel 3, 4 and 5 services. The BBC’s Royal Charter sets out its object, mission, and purposes.

The House of Commons Digital, Culture Media and Sport Committee identified three core principles for all PSBs: 

  1. Universality of access: there is an expectation that public service content is widely available and free at the point of access. The content is expected to represent the diversity of the UK, and the range of genres covered should reflect this.
  2. Accuracy and impartiality: news and current affairs content made by PSBs should be accurate, reliable, and impartial.
  3. Independence: PSBs should be able to function “free from government interference or political pressure.”

How is PSB changing? Back in November 2019, the House of Lords Communications and Digital Committee published its report: ‘Public service broadcasting: As vital as ever’. The Committee found PSBs faced competition from “hundreds of other channels and online services”, with almost half of UK households subscribed to a video-on-demand service. The Committee found PSB to be “as important as ever to our democracy and culture” and that other media could not “bring the nation together” in a way that PSB could. However, the Committee found PSBs struggling to serve all audiences because of increased competition and changing viewing habits – and were not serving younger people and people from Black, Asian, and Minority Ethnic (BAME) backgrounds well enough. 

COVID-19 has had a significant impact on broadcasting – with the Department for Digital, Culture, Media and Sport describing it as one of unprecedented challenges…[causing] significant financial and practical impacts across the entire industry. “The public service broadcasters have a vital role to play in supplying information to the public and bringing together the nation in these unprecedented circumstances. They have been an important source of news and in countering misinformation”. Ofcom research found that while the UK population’s engagement with TV, radio, online news and other home media has grown since the Covid-19 crisis, and that the appetite for news about the pandemic has boosted engagement with news across a number of sources; weekly reach is in decline. PSBs also experienced  a significant decline in advertising revenue, as well as considerable challenges in producing programming in line with social distancing restrictions. Ofcom published notes to broadcasters providing guidance on broadcast content relating to the coronavirus as well as the outcomes of investigations it carried out on specific programmes thought to have breached its broadcasting rules. 

The Government suggested these changes would likely accelerate some pressures on PSBs and the wider system and would need careful consideration by the Government, Ofcom and the sector itself going forward. 

In November 2020, the Government announced the creation of an expert panel to advise on the future of public service broadcasting. The panel would provide independent expertise and advice as part of the Government’s strategic review of public service broadcasting. In March 2022, the Government confirmed the panel had met six times, but was not expected to meet further, and that the Government would publish the conclusions of its strategic review in due course.

In May 2022, the Government launched the mid-term review of the BBC to “focus on impartiality and ‘levelling up’ job opportunities”. The Royal Charter includes a requirement for a mid-term review between 2022 and 2024 “focusing on the governance and regulatory arrangements for the BBC”. The Government stated that the updates included commitments for the BBC to:

  • More fully reflect and represent people and perspectives in the UK that currently are under-represented in the BBC’s content.
  • Increase investment outside of London, with 60% of radio and 50% of television programme production expenditure to be outside London by the end of 2027.
  • Deliver 1,000 apprenticeships per year by the end of 2025.
  • Make progress on workforce accessibility targets, including the new target for 25% of staff to be from low socio-economic backgrounds.
  • Report on how the BBC’s commercial activities increase the UK’s cultural and economic impact abroad. 

Is the legislation underpinning PSBs in need of reform? The House of Commons Committee on Digital, Culture, Media and Sport report found the Communications Act 2003 to be pre-dated in light of streaming platforms. The Committee identified four key areas for reform:

  • New primary legislation to replace the 2003 act. The Committee highlighted a need to reform rules around prominence “to ensure that the PSB compact is sustainable within the new, increasingly internet-based audio-visual landscape.”
  • The remit of the digital markets unit should be expanded to “consider whether the dominance of online platforms gives them undue influence over the distribution of, and access to, PSB content”.
  • Requirements for diversity reporting should be extended to streaming services.
  • If PSBs are expected to maintain linear broadcasting as well as expand their on-demand services, they need sufficient funding.

The Government responded to the Committee in June 2021, stating that it would consider if changes were needed “to ensure that PSBs continue to deliver these benefits in light of broader industry and economic trends”. This was followed, in April 2022, by the publication of a white paper on the future of broadcasting, and the announcement of a media bill in the May 2022. This is intended to act as a legislative vehicle for several of the Government’s policies in the area of PSB. The Government is using the Bill to make changes to legislation around PSBs to:

  • Ensure that public service content is prominent, available, and easily accessible across a range of platforms.
  • Update the public broadcasting framework to better facilitate the delivery of public service broadcasting through digital platforms and promote the production and distribution of distinctively British content.
  • Give Ofcom new regulatory powers to draft and enforce a video-on-demand code to make sure services which target and profit from UK audiences are subject to stricter rules protecting UK audiences from harmful material.
  • Allow for the conversion of Channel 4 from a statutory corporation to a new corporate structure that could be sold, and other changes concerning Channel 4’s obligations and remit to ensure the sustainability of the broadcaster.
  • Update the public service remit of S4C to include digital and online services.
  • Remove the current geographical broadcasting restrictions so that S4C can broaden its reach and offer its content on a range of new platforms in the UK and beyond.
  • Repeal Section 40 of the Crime and Courts Act 2013 which would force new publishers to pay the costs of any court judgment if they were not a member of the approved regulator, regardless of the outcome of the court judgment.

The appointment of Liz Truss as Prime Minister in September 2022, led the Government to indicate that it would be reassessing the Channel 4 privatisation policy. In an answer to a written question on 24 October 2022, the Government stated that it would introduce the bill when parliamentary time allowed. Following the appointment of Rishi Sunak as Prime Minister on 25 October 2022, the Government restated that it would be  carefully considering the business case for a sale of Channel 4 and would set out further details in due course. On 5 January 2023, the Government announced instead of a sale, reforms to help Channel 4 grow and better compete in the age of streaming giants would be agreed. 

How much of PSB’s programming and output quota rural? Back in March 2014, the BBC Trust published qualitative research on BBC coverage of rural areas in the UK. This considered how rural affairs in the UK were being covered by the BBC in its television, radio and online output. The Trust found, overall, that the BBCs coverage was impartial, strong, and that network factual programmes which focus on rural matters, such as Countryfile and Farming Today, were highly regarded and broadcast a wide range of opinions and analysis. However, audience feedback also suggested some people believed news coverage to be too simplistic (focusing on protests rather than their underlying issues), that the BBC had a metropolitan bias and that a small number of organisations and charities were having a disproportionate influence on rural affairs coverage. Concerns around an apparent deficit in the coverage of rural affairs in England were also noted. The report contained 7 recommendations:

  1. Re-establish the post of Rural Affairs Correspondent. 
  2. Identify a senior figure to take an editorial oversight role and champion rural affairs across the network. 
  3. Accelerate measures to make it easier for local and regional journalists to deliver news content at the network level. 
  4. Gather together BBC journalists and programme makers at least annually to share ideas, experiences and contacts. 
  5. Involve senior network news and commissioning editors to ensure they are kept abreast of rural affairs. 
  6. Consider holding an off-the-record discussion on rural policy with a wider mix of institutional and local voices. 
  7. Revitalise the BBC’s rural contacts list across a wide range of expertise. 

In 2015 the Trust published an update on these areas. This found that three senior journalists already working in the English regions would be charged with taking on specific network responsibilities in this area. Measures to improve links between different programmes and output areas were also committed to, including a day for staff working in this area to connect with each other. Furthermore, network news teams were found to have covered stories to convey a more nuanced picture of rural issues. 

More recently, in 2022, Ofcom commissioned research to explore audience attitudes towards the due impartiality of BBC services in the context of the wider news landscape. While fieldwork was conducted across rural and urban locations across the UK; there were no notable rural specific findings in the subsequent report – with the exception of one audience reference to Countryfile being aimed more at older people.    

Also in 2022, the Countryside Alliance ran a survey asking people living in rural areas for their views on the BBC and its rural programming. 3,400 people responded to the survey which revealed: 

  • 77% of those taking part said that the licence fee was not value for money – with 68% suggesting it should be scrapped altogether. This follows an announcement from the Government, in January 2022, that the licence fee settlement which applies until the end of the charter period in 2027 would include a freeze in the licence fee for two years, from 2022-2023, followed by a rise in line with consumer price index inflation until 31 March 2028.
  • Almost half of those taking part were over the age of 65 years, and 80% watched the BBC on TV. 
  • Springwatch and Autumnwatch were deemed to be amongst the worst shows for representing rural issues – with more than 90% of respondents saying that they did not do so adequately. 
  • 92% of respondents said the BBC’s national news was failing to represent rural issues. This was closely followed by Countryfile, of which 89% of those surveyed said it did not ‘adequately’ cover the issues that matter to them. 
  • Radio 4’s The Archers was deemed not to reflect country life properly by 79% of respondents. 
  • Just under half of respondents believed Radio 4’s Farming Today properly covered the issues that matter to them. 

Tim Boner, chief executive of the Countryside Alliance described how “the BBC must appreciate that the minority rural audience does not feel fully represented. Rural programming should not only take into account what urban viewers may find of interest and it needs to showcase the value of important rural activities like farming, shooting, hunting and angling”. 

The survey was in response to the BBC announcing it would undertake an impartiality review to see if Countryfile meets its editorial standards. This is an internal content review which according to the BBC: will assess editorial standards and culture including impartiality, freedom of expression, diversity of voices, accuracy, fairness and trust. The programmes chosen – BBC Breakfast, Countryfile and the English language morning radio news programmes in Scotland, Wales and Northern Ireland – represent a range of output, across different BBC Divisions. The BBC confirmed these selections were not made because of particular impartiality concerns. 

Other PSBs have not undertaken a comprehensive review of rural broadcasts – referencing rural programming instead: from coverage of the Royal Welsh Show by S4C, or specific programmes such as Young Black Farmers or Sarah Beeny’s New Life in the Country (both channel 4), or City Life to Country Life (channel 5). 

Where next? While audiences clearly have an appetite for rural programmes, to what extent current PSB highlight the ups and downs of growing up, living and working in the countryside continue to cause debate. If we want PSBs to reflect the lives and perspectives of different communities, what rural programming would rural residents and businesses like to see going forward? ………………………

Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently evaluating a support programme for patients waiting to receive NHS and local government services; and a Warm Hubs scheme. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

money

How will the UK National Infrastructure Bank benefit rural areas? 

Back in 2018, the National Infrastructure Commission (NIC) recommended setting up a UK national infrastructure bank to replace the functions of the European Investment Bank (EIB) after Brexit. The bank launched in June 2021 and since then has been operating on an interim basis. With Government wanting to put it on a statutory footing, how will its investments benefit rural areas? Jessica Sellick investigates. 

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Why set up a National Infrastructure Bank? The National Infrastructure Commission (NIC) was established in 2015 and is an executive agency sponsored by HM Treasury. It is charged with providing Government with ‘impartial, expert advice on major long-term infrastructure challenges.’ Every 5-years the NIC is tasked with producing a National Infrastructure Assessment (NIA) which analyses the UK’s infrastructure needs including a strategic vision and recommendations for the next 30-years. The NIA published in 2018 contained a recommendation that ‘Government should maintain access to the European Investment Bank if possible. If access is lost, a new, operationally independent, UK infrastructure finance institution should be established by 2021. To enable this, Government should consult on a proposed design of the new institution by Spring 2019’ (page 118). 

This recommendation was picked up in March 2019, when HM Treasury and the Infrastructure and Ports Authority (IPA) launched a consultation on infrastructure financing in the UK. This explained the role the European Investment Bank (EIB) had played in financing long-term investments in UK infrastructure. The EIB was established in 1958 and is the lending arm of the European Union (EU). It is one of the largest multilateral financial institutions globally, having invested over a trillion euros since then.

With the UK leaving the EIB when it ceased membership of the EU, the consultation looked at how the UK would be ready to ensure infrastructure projects could continue to access the finance they need. The consultation asked respondents to assess the EIB’s roles both in addressing market failure, and in providing additionality – and the extent to which the private sector could fill the gap in infrastructure finance when the UK ceased membership of the EIB. 

In November 2020, HM Treasury published a summary of the consultation feedback. Respondents identified several benefits to the EIB’s presence in the UK, including competitive rates with flexible terms, and the capacity to step in during economic downturns by offering additional liquidity in the event of insufficient private sector appetite to finance infrastructure projects. The EIB’s independence from Governments was also identified as a key benefit. Respondents also noted the EIB’s support for new technologies and green investments, and its ability to act as a catalyst to bring in additional funding for higher risk projects. Some respondents suggested the private sector would be able to fill some of the lending gap left by the EIB, however, they further highlighted how the private sector would find it difficult to fill certain gaps such as new technologies, where a long-term UK replacement would be required. HM Treasury stated there was support for a ‘new, enduring body to deliver infrastructure finance support tools’ (page 10) and set out the Government’s commitment to establishing ‘a major new national infrastructure bank… [with a] high degree of operational independence [but within a mandate set by Government]’ (page 12). 

In Spending Review 2020, the then Chancellor Rishi Sunak announced ‘plans to create a new infrastructure bank to catalyse private investment in infrastructure projects across the UK’. The National Infrastructure Strategy (NIS) was published alongside the Spending Review and set out plans to level up the country, strengthen the Union and achieve net zero emissions by 2050. In the foreword, the then Prime Minister Boris Johnson indicated how the national infrastructure bank would be a co-investment with private sector partners, available to mayors and Local Authorities, with its HQ based in the North of England. The proposed bank was a means of marking the Government’s commitment to ‘end the stop-start pattern of investment that has been common in the UK in the past…Public investment is only part of the story. Private infrastructure investment will be crucial for the UK’s economic recovery from the pandemic…the Government will support private sector investment, including through a new infrastructure bank for the UK which will co-invest with the private sector’ (page 10). 

Within the NIS, the UK infrastructure bank was described as acting as a ‘cornerstone investor’ that would seek to release investment from pension funders and insurers – which the Government estimated could provide £150-£190 billion for infrastructure over 10-years. The NIS stated co-investors might include banks, institutional investors, sovereign wealth funds and global infrastructure investors. The Government also stated that while the new bank would replace ‘some of the activities’ of the EIB its investments would be ‘more targeted’ than those of the EIB, and ‘better aligned with the UK Government’s objectives.’ 

When and how was the UK National Investment Bank established? The Spring 2021 Budget contained information on establishing the UK Infrastructure Bank: 

  • The Bank would be provided with £12 billion of equity and debt capital to deploy to finance Local Authority and private sector infrastructure projects across the UK. 
  • The Bank would be able to issue up to £10 billion of guarantees. 
  • The Bank would be able to offer a range of financing tools including debt, hybrid products, equity and guarantees to support private infrastructure projects. 
  • The Bank would be able to offer loans to Local Authorities at a rate of gilts + 60 basis points for strategic infrastructure projects. 
  • The Bank would establish an advisory function to help with the development and delivery of projects. 

Also in March 2021, HM Treasury published a policy design document setting out the Bank’s strategic objectives and operating principles. The Bank’s operating principles included how it should (i) generate a financial return while also contributing to the Government’s priorities such as climate policy and levelling up; (ii) prioritise investment where private sector finance is lacking and ‘crowd in’ private sector investment; and (iii) take a long-term approach to provide the market with confidence and clear direction. 

In June 2021, the Government published a further document setting out the principles underpinning the relationship between it and the Bank. This Framework document set out the governance and accountability arrangements and the parameters within which the Bank would be expected to operate. While the Bank would be expected to operate across a range of sectors, the Framework asked it to prioritise clean energy, transport, digital, water and waste. The document also confirmed that HM Treasury would be the sole shareholder of the Bank, and that the Chancellor of the Exchequer would have ministerial responsibility for it. 

On 17 June 2021, the Bank was launched in an interim form from its headquarters in Leeds. At the launch event, the then Chancellor Rishi Sunak described how the Bank will “accelerate our ambitions for tackling climate change and levelling up, while creating new opportunities across the UK as part of our Plan for Jobs…Through the Bank, we are investing billions of pounds in world class infrastructure that will support people, businesses and communities in every corner of the UK”.     

What has it delivered so far? Since launch, HM Treasury and the Bank have focused on setting up the Bank’s structures – with the interim Board, chief executive, chief operating officer and non-executive director being filled with permanent appointments between September 2021 and June 2022. 

In November 2021, HM Treasury and the Bank agreed a Financial Framework, providing more detail on HM Treasury’s requirements of, and expectations of, the Bank. These details: 

  • Confirmed the Bank’s financial resources – its transaction delegations and limits. The Bank was given delegated authority up to £5 million with thresholds ranging from £125 million for equity deals to £500 million for Local Authority lending. 
  • Contained details about managing public money – setting out the Bank’s responsibilities and the principles within which it should operate. 
  • Required the Bank to develop sound financial and risk management structures and processes. 
  • Specified an annual financial performance (return on equity) target of 2.5%-4% before tax by the end of a 5-year period. 

HM Treasury requested the Bank produce its first strategic plan within 12-months of launch. To do this, the Chancellor provided additional guidance to the Bank on the Government’s policy priorities for the Bank and its mandate. 

In January 2022, the Bank published a discussion paper on ‘private sector opportunities in priority sectors’. This document set out the Bank’s offer to the private sector and public sector, what distinguishes it from other lenders, and the progress it had made since its launch. The discussion paper informed the Bank’s Strategic Plan. This confirmed the Bank’s focus on ‘increasing infrastructure investment across the United Kingdom’ in pursuit of two strategic objectives’: 

  • To help tackle climate change, particularly meeting the Government’s net zero emissions target by 2050. 
  • To support regional and local economic growth through better connectedness, opportunities for new jobs and higher levels of productivity. 

The Strategic Plan contained four principles against it will assess investments: 

  1. Investments must support the Bank’s objectives to drive regional and local economic growth or support tackling climate change. 
  2. Be in infrastructure assets or networks, or in new infrastructure technology. This principle reaffirms the Bank’s commitment to operate across a range of sectors but to prioritise clean energy, transport, digital, water and waste. 
  3. Be intended to deliver a positive financial return. 
  4. Be expected to crowd in significant private capital over time. 

Private sector projects must meet all four of these investment principles, and Local Authority projects must meet the first three. The Strategic Plan further explained how the Bank is developing KPIs to measure the impact of its investments. Organisations representing business, finance, trade unions, academia and civil society have provided feedback on the development of KPIs – calling on the Bank to take a broad interpretation of return (i.e., not just financial but also social, climatic and environmental); to implement Do Not Harm Standards and ensure all investments contribute to a nature positive economy; and to recognise the links between KPIs and transparency. The Bank is in the process of developing an ESG policy and framework. 

In March 2022 the Government set out its ‘strategic steer’ to the Bank. It asked the Bank to prioritise the energy security sector in sharing its concerns about energy security and energy prices following recovery from COVID-19 and the war in Ukraine. This means investments in nuclear energy, retrofitting energy efficiency measures into homes and greenhouse gas removals have increased in prominence within the Bank’s investment scope. On regional and local growth, the strategic steer referenced prioritising projects that fit with the missions contained in the Levelling Up White Paper, in particular, improving employment and productivity, transport infrastructure and digital connectivity. The Government also highlighted the role the Bank would take over in running the UK Guarantees Scheme. 

Between its launch date and June 2022, the Bank made five deals amounting to some £311.5 million. They comprise: South Bank Quay (£107 million), Gigaclear (£100 million), NextEnergy (£44.5 million), A45 Sprint Bus Route (£10 million) and Fibrus (£50 million). All of these deals are loans, and many came from existing proposals being considered elsewhere in Government and/or from existing initiatives underway. By April 2022, the Bank had a project pipeline of some 44 potential deals with a total value of approximately £5 billion. As well as existing contacts, the pipeline is also the result of enquiries through the Bank’s website and market engagement with potential customers. 24 of these pipeline projects are seeking to help tackle climate change, 9 relate to regional and local economic growth, and 11 projects cover both of these priorities. 

Why put it on a statutory footing? The Bank was set up in June 2021 as a company under the Companies Act 2006 and wholly owned by HM Treasury. At the outset the Bank began by operating under existing legislation through the Infrastructure (Financial Assistance) Act 2012 and the United Kingdom Internal Market Act 2020. 

In May 2022, HM Treasury published the UK Infrastructure Bank Bill. The Bill seeks to provide a specific parliamentary mandate for the Bank, placing its objectives into legislation and creating statutory forms of transparency, accountability, and governance. It is also intended remove legal obstacles to the Bank’s capacity to lend directly to Local Authorities and the Northern Ireland Executive for infrastructure purposes, and to give the Treasury financial assistance powers specific to the Bank. The Bill further provides flexibility for future changes should the Government wish to adjust the scope and/or focus of the Bank’s mandate. John Glen, then Economic Secretary to the Treasury, described how the Bill “sets out the Bank’s long-term purposes as an enduring institution…helping tackle climate change and support levelling up.” 

The Bill consists of eleven clauses – these reference the Policy Design Document and Framework Document in setting out the objectives and activities of the Bank; the Government’s strategic steer in supporting the Bank to set strategic priorities and plans; Treasury arrangements for money to be paid out of the National Loans Fund; and the need for the Bank to publish its first review of its effectiveness and impact with 10-years. It also confirms the financial capacity with the £22 billion provided to the Bank comprising £5 billion as equity from the Treasury, £7 billion in debt that it can borrow from the Treasury, and £10 billion in guarantees that can be issued by the Bank as part of the UK Guarantee Scheme. The Bank can also borrow from private markets and grow through recycling and retaining return on investments. 

How will the Bank benefit rural areas? The Bank’s strategic plan contains five references to rural. These include:  

  • How the UK is one of the most geographically unequal developed economies and opportunity is not spread equally across the country – with complex rural-urban disparities (page 41). 
  • Fast, reliable, digital connectivity drives regional and local economic growth, particularly in rural communities as it helps businesses grow, innovate, and create jobs (page 54). 
  • The Government has a goal of delivering 4G mobile coverage across 95% of the UK landmass by 2025. We do not see a role for the Bank because existing investment will be sufficient to reach this target, and the Shared Rural Network will support roll-out in the remaining harder-to-reach areas (page 55).

Back in December 2021, the Bank announced a £100 million investment in the internet provider Gigaclear. The Bank also facilitated £90 million of private sector investment from five other lenders: ABN Amro, ING, Lloyds Bank, Natwest and NIBC. The overall investment is for Gigaclear to deliver broadband to a further 250,000 properties in the south west, midlands and south east of England, with 90% of these in hard-to-reach rural properties currently underserved by the commercial market. In April 2022, the Bank provided a £50 million loan to Fibrus to support ‘full fibre broadband connections to approximately 220,000 properties in rural areas and market towns in Northern Ireland’. More recently, in August 2022, the Bank announced it was investing £100 million in the Digital Infrastructure Investment Fund (DIIF) to accelerate the digital roll out of ultrafast broadband to rural homes across the UK. 

There are circumstances where markets do not meet all of a rural population’s needs and must be supplemented either by the state or by civil society. In its strategic plan, the Bank indicates its focus on ‘where there is an undersupply of private sector financing…by reducing barriers to investment and market failures’ (page 71) and how it ‘will be judged over time on whether we have accelerated infrastructure investments, helped shape markets, addressed market failures’ (page 73). While financing to benefit rural residents and businesses through the Bank’s digital priority sector is welcome, other priority sectors within its portfolio (e.g., transport, energy, water) are also important to rural communities – how and when will these be picked up through investment opportunities? While the Bank acknowledges spatial disparities, how is (or will) it ensure that rural areas are taken into account in its decision making processes and investments?    

Unlike other financial facilities operated by or on behalf of HM Treasury (e.g., UK Debt Management Office), the Bank works on a single project basis. In a rural context, this means propositions could not necessarily group several projects up into one application or package thus discouraging potential customers from approaching the Bank. 

Where next? Successive Governments have sought to address market failures. Back in October 2012 the Government established the UK Green Investment Bank plc (GIB) – selling it off to Macquaries in August 2017 for £2.3 billion. According to a report published by the National Audit Office (NAO), while the GIB was set up with a clear rationale, mission and objectives to help the Government achieve its commitments on climate change; the Government lacked clear criteria or evidence to show that it had achieved its intended green impact. The sale of GIB was at the lower end of the expected valuation range and Macquarie has no legal obligation to ensure GIB will keep focusing on green objectives nor to keep the institution going in the long term. In relation to the UK Investment Bank, these findings suggest the need to set clear KPIs or metrics to measure the Bank’s impact; and the need to put the Bank on a legal standing to ensure it can fund, borrow, and reinvest in the longer-term. 

The NIC’s next major assessment of the UK’s long term infrastructure priorities is due to be published in 2023. In November 2021 the NIC published a baseline report surveying the state of national systems of digital, energy, flood resilience, water and wastewater, waste and transport.  For rural areas, the baseline report highlights instances of lower levels of productivity, variations in digital connectivity and the need to invest in rural fibre. The NIC will be framing its next assessment around three strategic themes: (i) reaching net zero; (ii) reducing environmental impacts and building resilience to climate change; and (iii) helping level up communities across the UK.

On 23 September the chancellor, Kwasi Kwarteng delivered his Growth Plan 2022 speech. In the speech he highlighted the need for an ambitious agenda which will look at the planning system, agricultural productivity, and digital infrastructure. He further described how ‘an essential foundation of this growth is infrastructure.’ The Government is now intending to bring forward new legislation to make it quicker to plan and build new roads, speed up the deployment of energy infrastructure like offshore wind farms and streamline environmental assessments and regulations. The Government is also in discussions with 38 Local Authority areas to establish investment zones in England.  

 The NIC recognised the need for a new financial institution for infrastructure investment. What will Growth Plan 2022, the Bank’s investments and the next NIC assessment all mean for rural communities? Watch this space… 

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently supporting a Community Renewal Fund project; and evaluating employability schemes and a veterans programme. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

shared prosperity

Will the Shared Prosperity Fund help rural communities? 

The Government is creating a UK Shared Prosperity Fund (SPF) to replace structural funding that the European Union previously allocated to the nations and regions of the UK. The SPF was announced in 2017, launched in April 2022 and is expected to allocate funding between October 2022 and March 2025. What might the SPF mean for rural communities? Jessica Sellick investigates. 

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The European Union (EU) provides several funding streams to its Member States. One of these streams, the European Structural and Investment Funds (ESIF), aims to reduce disparities by helping less developed regions to catch up with more developed regions. When the UK was a Member State four funding streams were provided through ESIF: 

  1. The European Regional Development Fund (ERDF): this provides support to small businesses and is focused on research, innovation and moving towards a low carbon economy. 
  2. The European Social Fund (ESF): this focuses on encouraging people into the workforce and also funds schemes such as apprenticeships and traineeships for young people.  
  3. The European Maritime and Fisheries Fund (EMFF): this provides funding to support improvements in fisheries. 
  4. The European Agricultural Fund for Rural Development (EAFRD): this focuses on improvements in farming as part of the EU’s Common Agricultural Policy (CAP).  

For the programming period 2014-2020, ERDF and ESF accounted for two-thirds of ESIF funding. 

ESIF is administered jointly between the EU and Managing Authorities nominated by each Member State. It is the Managing Authorities that produce an operational programme, that is signed off with the European Commission, which then allocates funding to the Authority so they can distribute it. In England, the Departments for Business, Energy and Industrial Strategy (BEIS), Levelling Up, Housing and Communities (DLUHC), and Environment, Food and Rural Affairs (Defra) are all Managing Authorities. 

Because the UK has left the EU, new funding has stopped. The Withdrawal Agreement between the UK and EU included provisions to maintain the existing arrangements for structural funding until the end of 2020. Spending from ESIF lags behind its allocations, so funding remained unspent when the transition period ended. This money can still be paid out, providing the funding was agreed before this point. Furthermore, the EU allows a 3-year window after the close of each of its funding programmes so that this can happen. 

The Government has now created a replacement for ESIF: the UK Shared Prosperity Fund. How has this funding stream been developed; how does it compare to structural funding from the EU that it is intended to replace; and what does it mean for rural communities? 

What is the UK Shared Prosperity Fund (SPF)?  

Back in 2017, the Conservative Party’s Manifesto referenced how ‘we will use the structural fund money that comes back to the UK following Brexit to create a United Kingdom Shared Prosperity Fund, specifically designed to reduce inequalities between communities across our four nations. The money that is spent will help deliver sustainable, inclusive growth based on our modern industrial strategy. We will consult widely on the design of the fund…and [it] will be cheap to administer, low in bureaucracy and targeted where it is needed most’.  

In July 2018, James Brokenshire [then Secretary of State for Housing, Communities and Local Government] made a written statement on local growth setting out headline details: 

  • The purpose of the Fund is to reduce inequalities between communities across the four nations. 
  • The method for doing this is by strengthening the foundations of productivity [as set out in the Industrial Strategy] to support people to benefit from economic prosperity. 
  • The Government will respect the devolution settlements in Scotland, Wales and Northern Ireland so that the Fund works across the UK. 

The November 2020 Spending Review contained ‘heads of terms’ for the SPF. This suggested: 

  • The Fund will cover the main areas of ERDF and ESF. The first part will cover investment in people and skills, communities and place and local businesses. The second part will be targeted at employment and skills programmes for those facing barriers to participating in the labour market. 
  • The first part of the Fund will be allocated based on achieving specific outcomes and agreeing investment proposals. 
  • Some of the Fund will be targeted at places ‘most in need’ across the UK. 
  • The total amount of funding made available will ‘ramp up’ until it matches current EU receipts. 
  • To bridge the gap until the introduction of the Fund, separate funding [known as the UK Community Renewal Fund] has been provided to pilot programmes and new approaches.  

In May 2021, the Government published a prospectus for the UK Community Renewal Fund (CRF). This set out a list of 100 ‘priority places’ and £220 million of funding to help local areas prepare for the SPF. These places were selected based on an ‘index of economic resilience’ developed by the then Ministry of Housing, Communities and Local Government. The index took account of broader aspects of economic development than the GDP per capita used by the EU to classify regions. This means the places prioritised for the CRF differ from those that received high levels of EU funding. In November 2021 the Government published a list of successful bids. While recognising how the CRF is distinct from the SPF in its design, eligibility and duration; the CRF is intended to inform the design of the SPF, and that feedback will be provided to all bidders to assist them in preparing bids for the SPF.  

In the Autumn 2021 Budget and Spending Review £0.4 billion was allocated to the SPF, with a further £0.7 billion for 2023-2024 and £1.5 billion for 2024-2025. The Review described the SPF as a ‘new UK-wide programme to equip hundreds of thousands of adults with functional numeracy skills to improve their employment prospects; ‘support a range of skills and employment focused programmes’; and how the funding will ‘at a minimum match the size of EU funds in each nation’.

How has the SPF money be allocated? 

In February 2022 pre-launch guidance for the SPF was published alongside the Levelling Up White Paper. This described how SPF monies would be allocated mostly through Local Authorities. A formula would be used to allocate funding rather than areas competing for a share of the funding. The funding would be conditional on each area creating an Investment Plan setting out measurable outcomes that Local Authorities are hoping to achieve – and which take account of other funding streams in being clear what the SPF investment would concentrate on. The pre-launch guidance contained three investment priorities aligned to the Levelling Up White Paper: 

  1. Communities and place: initiatives aimed at improving community infrastructure and investing in neighbourhoods. 
  2. Local businesses: improving the number of jobs and the productivity of existing businesses. 
  3. People and skills: promote adult learning and skills provision. The largest part of this strand will be the Multiply Programme, a new UK-wide initiative to equip adults with the functional numeracy skills to improve their employment prospects.  

It is intended that the first two investment priorities and the Multiply programme will be the main focus of the SPF in its first few years. However, in England, places will be able to select people and skills interventions earlier where they meet specific voluntary sector considerations. 

Building on the pre-launch guidance, in April 2022 the Government published a prospectus. This confirmed the funding allocation places will receive, how it will be delivered, and the investment plan process.   

The SPF will be a mix of revenue and capital funding which can be used to support a wide range of interventions under the three themes in ways that build pride in place and improve life chances. Confirming the requirements set out in the pre-launch guidance, the prospectus set out how all places across the UK will receive a conditional allocation from the Fund, but to access the money they will be required to submit an investment plan to Government for approval. Investment plans will need to include three key sections: 

  1. Local context: an opportunity for places to set out their local evidence of opportunities and challenges through the lens of the three investment priorities. 
  2. Selection of outcomes and interventions: a list of interventions places wish to prioritise under each investment priority, from a menu of options. Interventions should be linked to local opportunities and challenges. Where bespoke interventions are included [i.e., those not on the Government’s menu of options] a clear justification will be required. Funding can be used to support interventions through a grant to a public or private organisation, commissioning third party organisations, procuring service provision and/or through in-house provision. 
  3. Delivery: the governance structures and delivery processes that will support the implementation of interventions; a spend profile with outputs and outcomes figures; and information on capability and previous experience of delivering similar funds. 

In England, local government has been tasked with responsibility for developing the investment plans, and for the delivery of the funding thereafter. Where the SPF operates over a strategic geography (i.e., mayoral combined authorities) all allocations will be made at the strategic geography level, including the 4% available for administration. The SPF will operate over District Councils or Unitary Authorities elsewhere. The Multiply Programme will be delivered at the upper-tier or unitary level in England. The prospectus asks lead Local Authorities for either multiply or core SPF to work closely together to ensure that each element of funding works coherently and is aligned. Lead Local Authorities are also required to take account of the Adult Education Budget and remaining European Social Fund investments.

The Government is making £20,000 available per Lead Local Authority, or £40,000 for each Mayoral Combined Authority and the Greater London Authority, in England to undertake initial preparatory work for the Fund, including developing their Local Investment Plans. 

Each place will be required to have a Local Partnership Group to support the development of the investment plan and to oversee how the funding is administered locally. The prospectus outlines the types of groups that should be represented on the Local Partnership Group. These include local businesses and investors, community and faith organisations, voluntary and community sector organisations, social enterprises, strategic bodies, education and skill providers, public health representatives and rural representatives unless there are no rural communities within the area. In addition to a national evaluation, Lead Local Authorities are being strongly encouraged to conduct their own evaluation to demonstrate the effectiveness of the interventions pursued.  

The investment plan submission window is due to open on 30 June and close on 1 August 2022, with first payments expected from October 2022 and final payments in March 2025. Local Authorities are required to complete a pre-registration form before they can access the investment plan platform. 

How does the SPF compare to ESIF?  

The prospectus confirmed the SPF is worth £2.6 billion over the period 2022-2025, including Multiply. Funding has therefore been confirmed for three financial years: £400 million for 2022-2023, £700 million for 2023-2024, and £1.5 billion for 2024-2025. While the Multiply Programme funding will be 100% revenue, the core SPF money has been divided between revenue and capital over this period. In England, for 2022-2023, this will comprise 90% revenue and 10% capital; for 2023-2024 87% revenue and 13% capital; and for 2024-2025 80% revenue and 20% capital. 

The £1.5 billion allocated for 2024-2025 is less than the average amount that the UK received from the structural funds in 2014-2020 (approximately £2 billion). However, the SPF is currently intended to cover ERDF and ESF which together averaged £1.3 billion per year. Replacement funding for farming and fisheries is being developed outside of the scope of the SPF. 

The funding is being staggered across the three investment priorities, with most funding for the ‘people and skills’ priority expected to start in 2024-2025 apart from the Multiply Programme. In practice, this could mean some interventions that would have been eligible for ESF will remain unfunded in the initial years of the operation of the SPF. 

As of August 2021, ERDF and ESF funding to England since 2014 covered 52% of the total cost of projects, requiring projects to find the remaining investment through match funding. While the souring of match funding/leverage will not be required to unlock an area’s SPF allocation (so as to ‘provide flexibility, reduce bureaucracy and tailor interventions to local circumstances’); information on any known or anticipated match or leveraged funding will need to be provided in the investment plan if available at the time of submission. Lead Local Authorities will be required to consider match funding when designing interventions and to provide regular updates on match funding achieved throughout the lifetime of the SPF as part of their reporting responsibilities. 

The 7-year financial framework used by the EU provides areas with certainty over the funding they have to work with; and those in receipt of the funding have a 3-year period at the end of each framework in which to make their last funding claims.    Around half of all public spending in England is allocated as part of Spending Reviews. This is where the Government sets departmental spending totals for the next few years. Reviews may take place every 2-4 years, with the resultant spending plans covering 1-4 financial years. The recent postponement of reviews, and resultant shorter timescale they cover, means that while the SPF will operate over multiple years, the current allocation is only confirmed until 2024-2025. Will these timescales support places to take a longer-term strategic approach to their investment plans?  

What does the SPF mean for rural communities? 

Back in June 2021, the Rural Services Network (RSN) developed a prioritisation framework to support the levelling up of rural communities. This highlighted how the metrics used to prioritise fund allocations often fail to reflect the reality for sparsely population areas and remote communities. For example, the income domain within the Indices of Deprivation (IMD) is commonly used as an indicator of poverty. The data is based on benefit claimant counts rather than employment incomes resulting in a lack of consideration of the sometimes low-income, insecure, part-time and seasonal occupations many rural residents rely upon. Instead, the RSN recommended assessing the standards of living achievable in different locations given local labour market conditions [real incomes] as a basis for the SPF. 

In February 2022, the RSN published its rural lens review into the SPF pre-launch guidance. While welcoming the announcement that all areas would receive an allocation through a funding formula rather than a competitive process, it queried the construction of the formula – will it reflect delivery costs in rural settings? Will the SPF be rural-proofed? They also queried how the SPF could complement other funding streams as many of these already bypass rural areas.  

For allocations in England, the SPF prospectus confirmed that 70% was allocated on a per capita basis, based on Local Authority population size; and 30% using the same needs-based index used to identify the Community Renewal Fund priority places (i.e., data on productivity, household income, skills, and productivity places with lower population density). The full methodology note setting out how allocations have been made is due to be published in May 2022.  

More recently, in April 2022, the All-Party Parliamentary Group for Rural Business and Rural Powerhouse published its inquiry into the rural economy. In indicating how improving skills is critical to addressing the productivity gap, the APPG urged the Government to ensure the ring-fenced funding for rural communities previously provided under the EU Rural Development Programme continues under the SPF. They have also called for Wheels to Work and community transport initiatives to be delivered under the SPF. 

When part of the EU, a wide range of programmes enabled farmers, businesses, local organisations, Local Authorities, voluntary groups and communities across rural England to access funding to support their projects and initiatives. Back in October 2021, the Prime Minister committed to ensuring that Cornwall would get at least the same level of funding it would have received if the UK had remained in the EU. Indeed, Cornwall Council submitted a bid to Government in July 2020 for £700 million over 7-years to match the funding it would have received from Europe. Cornwall has been allocated £132 million from the SPF over the next 3-years, and while welcomed by some commentators – indeed the total allocation for Cornwall and the Isles of Scilly represents the highest amount allocated to any unitary authority in England [£129,549,117 core SPF + £2,452,414 Multiply = £132,001,531]; others have queried if the funding streams becoming available from central Government will lead to the total amount of investment expected.  

While the SPF is part of Government’s attempt to unlock potential across all parts of the UK, will it substantively reach rural areas? How will investment plans developed to access the SPF recognise the opportunities, challenges and interventions needed in rural places? At the same time, it would be a mistake to view the SPF – and Levelling Up more widely – solely through the lens of public monies and public policy priorities. Its success depends upon voluntary and community sector organisations, the private sector, local leaders and residents. How, therefore, can we ensure rural representation and a voice on Local Partnership Groups? 

Government anticipates approving the first investment plans from October 2022 onwards, with the 3-year funding period scheduled to close in March 2025. Will the SPF level up opportunity and prosperity and overcome deep seated [rural] geographical inequalities? Watch this space…

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently supporting a CRF funded project; helping public sector bodies to measure their social value; and evaluating employability schemes and a veteran programmes. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

fuel poverty

 How can we get the measure of rural fuel poverty? 

Some households need to spend a high proportion of their income to keep their home at a reasonable temperature. While there are national and local policies and initiatives which seek to support these households to alleviate their fuel poverty, some commentators have suggested that the COVID-19 pandemic and the tragedy unfolding in Ukraine is worsening fuel poverty and more now needs to be done. While here in the UK there are immediate concerns about customer’s ability to pay their energy bills, fuel poverty is a significant and long-standing issue for all too many people, and its impact is felt across many areas of life. How much of an [increasing] issue is fuel poverty in rural areas, and what more can be done about it? Jessica Sellick investigates. 

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What is fuel poverty? In general, it relates to households that have to spend a high proportion of their household income to keep their home at a reasonable temperature. 

The Warm Homes and Energy Conservation Act 2000 committed Government to publishing a strategy ‘to ensure that so far as reasonably practicable persons do not live in fuel poverty’. This adopted a measure that a household was fuel poor if, by modelling the energy efficiency of the home, more than 10% of net income would have to be spent on fuel to reach particular temperature standards and meet other needs. The 2010 Autumn Statement announced an independent review of the fuel poverty definition and measure. 

This  Review, commissioned in 2011, highlighted three key ways in which fuel poverty is a serious national problem: 

  • From a poverty perspective: households with high energy costs living in poverty or on its margins face extra costs to keep warm above those for typical households with much higher incomes. 
  • From a health perspective: living at low temperatures as a result of fuel poverty is a significant contributor to both excess winter deaths and a number of incidents of ill-health, placing additional demands on the health and social care systems. 
  • From a carbon reduction perspective: the energy inefficiency of homes affects the ability to reduce carbon emissions, with fuel poverty providing a further barrier in terms of the implementation of policies to mitigate climate change since those on low incomes are often least able to afford any increases in prices that may result from them. 

The report emphasised the overlap between low income and the energy inefficiency of the homes people live in. The authors recommended using a definition and measurement focused on ‘individuals in households living on a lower income in a home that cannot be kept warm at reasonable cost’. The review further suggested fuel poverty should be measured by looking at low income households facing high energy costs. 

In 2013 the Government published a consultation and its response, accepting many of the review’s recommendations including measurement of income after housing costs adjusted for family size; and adopting a Low Income High Costs (LIHC) framework as a new indicator of fuel poverty and a means of assessing it. Under the LIHC measure, a household was considered to be fuel poor if they had required fuel costs that were above average [the national median level]; and if they were required to spend that amount they would be left with a residual income below the official poverty line.  

In 2021 the Government introduced a new definition of fuel poverty. Called the ‘Low Income Low Energy Efficiency’ (LILEE) indicator, a household is considered to be fuel poor if: (a) they are living in a property with an energy efficiency rating in bands D, E, F or G; and (b) their disposable income – income after housing costs and energy needs – would be below the poverty line. 

Non-governmental organisations use other definitions and measures for fuel poor households. The National Energy Action (NEA), for example, define a household as being in fuel poverty if ‘it needs to spend more than 10% of its income on energy in order to maintain a satisfactory heating regime’. Fuel poverty is a devolved policy area and defined differently in the other UK nations. The Welsh Government definition aligns with the NEA in defining a household as being in fuel poverty if ‘they would have to spend more than 10% of their income on maintaining a satisfactory heating regime’. The Northern Ireland Assembly’s definition is more specific, defining a household as fuel poor if ‘in order to maintain a satisfactory level of heating (21 °C in the main living room and 18 °C in other occupied rooms), it is required to spend more than 10% of its household income on all fuel use’. The Scottish Government introduced a two-part definition in 2019 and has a broader interpretation, defining fuel poor households where (1) after housing costs have been deducted, more than 10% [20% for extreme fuel poverty] of their net income is required to pay for their reasonable fuel needs; and (2) after further adjustments are made to deduct childcare costs and any other benefits received for a disability or care need, their remaining income is insufficient to maintain an acceptable standard of living [defined as being at least 90% of the UK Minimum Income Standard].   

Regardless of which definition is applied, the causes of fuel poverty are underpinned by three key factors: (i) a household’s income, (ii) fuel prices, and (iii) energy consumption – which can be affected by the energy-efficiency of the household’s dwelling. In a rural context, fuel poverty is often driven by rising fuel prices, an ageing housing stock that is not thermally efficient, a lack of access to natural gas supplies, and/or the costs of delivering fuel to more sparsely populated areas. 

How many people are living in fuel poverty? 2020 is the latest year for which statistics are available in England – with the Department for Business, Energy & Industrial Strategy (BEIS) publishing its fuel poverty statistics report in February 2022. In 2020 it was estimated that 3.16 million households (or 13.2% of all households) in England were fuel poor under the LILEE definition. The data shows the proportion of households in fuel poverty declined by 34% between 2010 and 2019 (equating to some 1.6 million households). The depth of fuel poverty, known as the fuel poverty gap, has also declined in England. This measures the amount by which the energy costs of a fuel poor household exceed the high costs threshold (i.e., the cut in energy costs that would lift a household out of fuel poverty). The data reveals how the mean average fuel poverty gap reduced from £339 in 2010 to £223 in 2020.  

The Statistical Digest of Rural England identified 12% of households in rural areas to be in fuel poverty. While historically fuel poverty was seen to be more prevalent in rural areas, since 2017 urban areas have had the greater proportion of fuel poor households (with 13.8% of urban households and 11.6% of rural households fuel poor in 2019). However, the fuel poverty gap is larger in rural areas compared to urban areas – with the average fuel poverty gap for fuel poor households in rural villages, hamlets and isolated dwellings £585 in 2019 compared to an average fuel poverty gap of £216 for all fuel poor households. Similarly, using the LIHC measure, the average fuel poverty gap for urban households decreased between 2011 and 2019 whereas in rural areas this gap widened over the same period.  

The Government has projected fuel poverty levels in England in 2021 and 2022 under the LILEE definition. The forecasts reveal how the proportion of households defined as fuel poor are expected to fall from 13.2% in 2020 to 12.8% in 2021 and 12.5% in 2022. This fall is attributed to improvements in the energy efficiency of homes between 2020 and 2022, expected growth in low income deciles, and a support package for energy bills announced in February 2022. However, the depth of fuel poverty is projected to increase over this period, from £223 in 2020 to £233 in 2021 and £258 in 2022. This is being attributed to the default tariff price cap announced for summer 2022 resulting in higher energy prices in real terms. The energy price cap increased by 12% in October 2021 and by 54% in April 2022, an increase of some £700 for ‘typical levels of dual fuel consumption paid by direct debit’. Many observers are predicting a further increase in October 2022, possibly by a further 50%. Will the depth of fuel poverty in rural households also increase over this period? 

There is a 2-year lag in many of the statistics presented here, with some of these figures based on actual data from 2018. This makes understanding the levels and depth of fuel poor households in real time difficult. Furthermore, what would applying a rural lens through the data we already collect reveal (e.g., analysing the figures using the Rural Urban Classification and/or providing rural projections?) 

What is Government doing? In England, the Government has set a statutory fuel poverty target. This is based on Energy Performance Certificates (EPCs) for fuel poor homes and was produced as part of a fuel poverty strategy back in 2015: ‘the fuel poverty target is to ensure that as many fuel poor homes as is reasonably practicable achieve a minimum energy efficiency rating of band C by 2030’. The Government also set interim targets of EPC band E by 2020 and band D by 2025. 

The latest published fuel poverty statistics (for 2020) show an estimated 97.2% of low income households were in properties with an energy efficiency rating of band E or higher; 90.1% were in band D or higher; and 52.1% were in band C or higher. 

In July 2021, the Committee on Fuel Poverty (CFP), a Non-Departmental Public Body sponsored by BEIS, assessed progress towards delivering the 2025 and 2030 targets. Using the LILEE measure, they found the number of fuel poor households living in bands E, F or G had not materially changed, and that the number of households living in bands B and D homes considered fuel poor had increased to 1.14 million. The CFP described how the 2020 band E milestone had been missed – with only half of the 293,000 bands F and G fuel poor homes at the start of 2015 upgraded to band E or above by 2020. Although there were more than sufficient funds available to deliver the 2020 milestone, the CFP cited how only 10-30% of programme budgets were received by fuel poor households; and only a very small percentage of the funds were aimed at those in the deepest levels of fuel poverty. The CFP further highlighted how the Government is just over 50% towards achieving the 2025 band D milestone and that future progress with current programmes is forecast to be slow. 

The Government published an updated fuel poverty strategy in 2021. This set out several policies to improve fuel poverty, including: 

  • £60 million of additional investment to retrofit social housing and £150 million for the Home Upgrade Grant. 
  • An expansion of the Energy Company Obligation (ECO) requiring larger domestic energy suppliers to install heating, insulation, or energy efficiency measures into the homes of people on low incomes, vulnerable or fuel poor. 
  • An extension of the Warm Home Discount, a requirement for energy companies to provide a £140 rebate on the energy bill of low income older people and other low income households with high energy bills. 
  • Drive over £10 billion of investment in energy efficiency through regulatory obligations in the Private Rented Sector. 

These policies are intended to sit alongside other, existing measures to alleviate fuel poverty, including but not limited to: 

  • Winter Fuel Payment: a tax-free annual payment made to assist older people  in meeting the costs of their winter fuel bills. 
  • Cold Weather Payment: payments made during very cold periods of weather to some recipients of welfare benefits (e.g. income support, universal credit, pension credit). 
  • The Green Deal Finance Company (GDFC) which provides loans for home efficiency improvements. 
  • Social Housing Decarbonisation Fund (SHDF): there are currently 19 demonstrator projects in 17 Local Authorities in receipt of £62 million to learn lessons and gather innovation in retrofitting. 
  • Default Tariff Cap: a limit set on the amount that suppliers can charge certain consumers for a unit of energy. The cap is reviewed twice yearly, most recently in February 2022 where Ofgem increased the level of the cap to respond to rising wholesale prices and additional costs for suppliers during COVID-19. The current level runs from 1 April 2022 to 30 September 2022 and is due to be reviewed again by Ofgem in August.     

In February 2022, the Government announced further support to help households with higher bills. This includes a £150 Council Tax rebate in April 2022, and a £200 upfront discount off bills in October 2022 which will have to be repaid through energy bills over the following 5-years. 

As indicated in the 2011 Review, Government policy on fuel poverty impacts upon a number of policy areas. I offer three examples. 

The first example is energy efficiency which is seen as one of the key ways of alleviating fuel poverty. The Fuel Poverty Energy Efficiency Rating (FPEER) is a measure of the energy efficiency of a property. According to the Statistical Digest for Rural England; rural village, hamlet and isolated dwelling households with the poorest FPEER rating of F or G had an average fuel poverty gap of £1,213 compared with an average fuel poverty gap of £856 for urban households with the same energy rating. The Climate Change Committee (CCC) has emphasised how energy efficiency is key to decarbonisation as it reduces energy consumption and furthermore how it is important to address fuel poverty to ensure a ‘just transition’. 

The second example is health and wellbeing – with cold homes having negative impacts on a person’s physical and mental health. The Cold Weather Plan for England published by the UK Health Security Agency and NHS in October 2021, for example, describes how the health impacts of cold homes include increased risk of heart attack or stroke, respiratory illnesses, poor diet [heat or eat choices], and worsening or slow recovery from existing conditions. The Plan calls for a strategic approach to reduce excess winter deaths across local health and social care economies.  

The third example is the economy where energy efficiency can lead to job creation and provide greater energy security. Back in 2019, the House of Commons BEIS Committee estimated that energy efficiency measures could sustain between 66,000 and 86,000 jobs across the UK; prevent expensive investments in infrastructure; and increase the UK’s prominence as an exporter of insulation and retrofit goods and services.   

For the most part, these interventions and schemes take broad approaches: incorporating improved insulation, replacing old or inefficient heating systems, and/or reducing home energy bills for householders. How do these measures to alleviate fuel poverty affect rural residents? For example, how do these measures work for 4 million UK households who are ‘off grid’, meaning they do not receive mains gas and rely upon heating oil or liquid petroleum gas (LPG)? It is estimated that a typical household heated by oil will use 1,500-2,500 litres a year. According to BoilerJuice, the price per litre increased from £46.50 in September 2021 to £156.51 in March 2022. While gas and electricity prices are capped, heating oil prices are not. Moreover, data from Savills suggests that rural dwellings are often less energy efficient – with EPC ratings of E and D in hamlets compared to ratings of C and D in towns and cities. 

Taken as a collective, and in light of the CFP’s assessment, how do we know how successful these initiatives are [in rural communities and places] and what their return on investment is? How do, or can, these interventions consider the vulnerability of certain people living in cold conditions – especially when the evidence suggests rural households are more likely to suffer negative impacts as a result of their fuel poverty? And how can the approach taken join up policies and initiatives from across Government departments (e.g. with health, environment, and economy)?    

What impact has COVID-19 had? Analysis from Uswitch back in March 2020 suggested that some consumers would need to spend an extra £52 million a week on household energy bills as 16.8 million people stayed at home due to the pandemic – equating to an extra £16 for some households a month and £195 a year for those on Standard Variable Tariffs. The calculations were based on estimates that people working from home would use an additional 25% more electricity and 17% more gas each every day.  

The NEA’ fuel poverty monitor report 2019-2020 analysed how COVID-19 had impacted on vulnerable energy consumers and the organisations that support them. Five main impacts on fuel poor households were identified: (i) an increase in energy use due to more people spending time at home; (ii) a reduction in income as jobs were lost or placed on furlough; (iii) increased affordability issues and debt leading to energy rationing; (iv) reduction in smart metre/ECO installations; and (v) difficulties accessing support, especially for digitally excluded households or those with English as an additional language. 

During the pandemic the Government launched a range of measures to support vulnerable customers. These included new measures to ensure prepayment and pay-as-you-go customers remained supplied with energy; and new protections for customers struggling with their energy bills over winter.  

Citizens Advice highlighted three major risks facing consumers over the winter months in the period 2020-2021: (1) many people are struggling financially – with an estimated 2.8 million people behind on their energy bills due to COVID-19; (2) as people were forced to spend more time at home their energy usage would be higher than normal – and those unable to top up their energy or reduce their usage for fear of higher bills could face negative impacts to their physical and mental health; and (3) energy companies are also facing financial pressures and having to adapt their services. Citizens Advice called on the Government to do more to top up existing support schemes. 

What more can be done, and needs to be done, to tackle fuel poverty?In January 2022, Rural England and the Countryside and Community Research Institute (CCRI) published the results of their study on the lived experiences of customers in vulnerable situations in rural England. The researchers identified rural specific vulnerability factors associated with the age, isolation and basic service infrastructure (e.g., transport, communications).Many utility companies identify vulnerable users – and some have a ‘hierarchy of vulnerability’ with older people with disabilities or suffering chronic illness a priority. It was suggested that more needs to be done to promote the Priority Services Register (PSR) so as to both increase the number of people registering and also raise awareness of the support available to householders already on the register.  

From an international perspective, an evidence review of rural fuel poverty compiled in 2018 suggests locally delivered projects targeted at localised needs can reach significant numbers of households in fuel poverty, and that partnership working can leverage in additional funding and benefits. While some of the schemes collated by the researchers reduced household energy consumption through quick and cheap measures, the evidence also suggests that alleviating fuel poverty requires long-term measures that focus on improvements in housing stock. 

There are a plethora of examples from across rural England that seek to tackle fuel poverty. At a national level there are initiatives such as Fuel Bank, a collaboration between npower and the Trussell Trust which works from selected foodbanks and advice agencies to help customers who have problems with prepayment meters. Local Authorities have leveraged in additional funding for small schemes tailored to local needs (e.g. Warm Homes Eden). Back in 2013, Plymouth City Council recognised the role of community energy in addressing fuel poverty and carbon emissions and set up Plymouth Energy Community – making the link between communities, housing and renewables. For those off-grid, charities and voluntary and community sector organisations often run bulk oil buying schemes, although some of these schemes have been temporarily suspended because of unpredictable prices. 

A volatile energy market and poorly insulated housing stock means it is unlikely that fuel poverty will be eliminated in the near-future in rural areas. Therefore, do we need to prioritise support, perhaps focusing on those residents that are most vulnerable and/or facing the highest costs and/or geographic areas with household above average needs and costs? Or should we avoid a ‘worst first’ approach to ensure all fuel poor households are able to receive some form of support?  

What does the future hold? Will more rural residents face choosing between heating or eating or indeed be left struggling to be able to do either? What more can be done be done to tackle fuel poverty and prevent rural residents from being left out of the cold? In the short term, how can we ensure ‘rural’ features more prominently in Government support and in its annual debate on fuel poverty? And, in the longer-term, how can we invest in the housing stock in rural areas, and look at rural resident’s incomes?   

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently working with young farmers to gather their views on future land use; helping public sector bodies to measure their social value; and evaluating employability schemes and a veteran programmes. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Ageing in place: how can we ensure rural residents have choice, control and support to lead healthy, independent lives?

Ageing in place: how can we ensure rural residents have choice, control and support to lead healthy, independent lives?

By 2040, over 40% of the UK population will be aged 50 years and over. Yet we are not ageing evenly – with one in three Local Authorities in rural and coastal Districts already having populations fitting this profile. On the one hand, ageing is a life-long process and older people are key contributors to our workplaces, communities and society at large. On the other hand, an ageing population has significant implications for public services; with older people (in general) more likely to access services such as health, care, and pensions than their younger counterparts. COVID-19 has seen urgent problems in social care become more acute. As part of pandemic recovery and future planning, Government is now paying increasing attention to improving services for older people. This includes the publication of the ‘People at the Heart of Care’ White Paper. What does ageing mean for rural communities – and what can be done to fix social care in rural places? Jessica Sellick investigates. 

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How old is an older person? This is not easy to define because expectations, capacities, needs, aspirations and biological ageing can take place at different rates for people of the same age. Typically, the term ‘older people’ can be used to describe people anywhere from aged over 50 years, over the age of 65 years and/or from your 60s. The poet Dante believed “old age” started at 45 years. Other descriptors include ‘elderly’, ‘aged’ and/or ‘senior’ – and there has been much debate about whether this language leads to discrimination. Rather than a specific age or age-range, sometimes older age is used to refer to people in later life, or who have reached retirement. Commentators also describe ageing as a gradual and continuous process of natural change that begins in early adulthood. Term such as the ‘grey brigade or army’ or ‘grey pound’  have also been used to describe the societal influence or purchasing power of older people. Again, there has been much discussion around whether these phrases lead to discrimination and/or whether brands and businesses overlook the spending power of older people.     

While the productivity, creativity and participation of older adults in the workplace, family life and communities is recognised, research from the Centre for Ageing Better highlights the often negative and harmful stereotypes about ageing and older age across many parts of society. The Centre for Ageing Better is working with partners to ‘reframe’ ageing and present a more positive and realistic narrative about older age. Here ageing is viewed as a life-long process where structural issues that can affect how an individual ages (e.g. policies, funding, housing) need to be tackled. The researchers found public attitudes to ageing to be more complex and nuanced – with people increasingly seeing it in a positive light.

Instead of simply looking at age (i.e., number of years), or viewing getting older as a time of decline, other measures such as frailty are now used to identify how healthy a person is and to identify whether they require care and support.  

How have public policy and decision makers seen older people? Since the 1990s Government has introduced many policy initiatives aimed at supporting older people. All of this has helped to increase the profile of older people’s issues: from the establishment of the Inter-Ministerial Group for Older People in 1998 to coordinate policy making, to the establishment of an Older People’s Advisory Group in 1999; and from a New Deal 50+ to assist older people to find employment in 2000 to the establishment of the Pension Service in 2002 and introduction of Pension Credit in 2003. 

Between 2010 and 2015 Government viewed retirement as an increasingly active phase of life where people have opportunities to continue contributing to society by working longer or volunteering in their communities; and take personal responsibility for their own wellbeing by working, saving and looking after their health. Fuller Working Lives: a framework for action, published in June 2014, explained how working longer benefits individuals, businesses, society and the economy. In March 2015 the Government published its report ‘A new vision for older workers: retain, retrain, recruit’ for improving the working lives of Britain’s over 50s.They also published guidance about employing older workers and working past 50. The Department for Work and Pensions (DWP) set out how it would provide digital services to ensure older people were not left behind and would be able to benefit from the increased independence that comes with digital competence. The Government also allocated £1 million to fund help to older people at most risk of long-term loneliness and social isolation. 

In 2017, the Government identified ‘ageing society’ as one of the Industrial Strategy’s four Grand Challenges. This included a mission to ‘ensure that people can enjoy at least five extra healthy, independent years of life by 2035, while narrowing the gap between the experience of the richest and poorest’. 

Since then, Government focus has remained on helping people live more independently and healthily in older age. In January 2021 the House of Lords Science and Technology Select Committee published its report on ageing, science, technology and healthy living. The Committee assessed the feasibility of the Industrial Strategy’s mission and concluded concerted action is required in order to increase the number of years spent in good health in old age. In response, health services should be coordinated to better treat people with multiple age-related illnesses; and technology and services should be deployed more widely to support independent living in old age. Recent scientific discoveries reveal underlying processes of ageing, and the UK could play a leading role in developing treatments to address the root causes of age-related illnesses. The Government has since transitioned the Industrial Strategy into its Plan for Growth and its related strategies. 

More recently, the Government has committed to ‘levelling up’ across the UK to ensure no community is left behind in responding to, and recovering from, COVID-19. The Government has launched new investment programmes to support communities to regenerate town centres and high streets, support to get people into employment, improve local transport links and invest in local culture. In September 2021, the Government announced the Ministry of Housing, Communities and Local Government (MHCLG) was to be renamed the Department for Levelling Up, Housing and Communities (DLUHC). The Department’s current work includes growing a thriving older person’s housing sector. 

How do we care ‘about’ and ‘for’ older people? The term ‘adult social care’ can refer to all kinds of personal and practical assistance given to an individual which may take place in a range of settings. It can also cover assistance for those who care for others. Indeed, much care is delivered by informal, unpaid carers who may be family members, friends or neighbours of the recipient. In 2019-2020, for example, the Family Resources Survey (FRS) estimated that approximately 7% of the UK population were providing unpaid care. Unlike NHS health care, adult social care in England is not free at the point of use. Local Authorities play a key role in assessing the need for formal support. They are required to apply criteria to assess whether a person is eligible for formal social care. An individual may have to undergo means-testing, where depending upon their financial circumstances they may be liable for meeting a proportion or all of their social care costs. To meet the eligibility criteria in England, an individual will need to show that (i) their need for care and support arise from certain health problems, (ii) as a result they are unable to do certain things, and (iii) there is a significant impact on their wellbeing. 

On 7 September 2021, the Government published a paper setting out details of a proposed levy, based on national insurance contributions, to raise additional funding for health and social care. The Government has indicated that most of the proceeds of the levy would be directed towards the NHS first to tackle backlogs over the first three-years of the levy’s operation, with £5.4 billion of the expected £36 billion to be raised set aside for adult social care. 

The paper contains information about how people would pay for adult social care in England. Building on earlier proposals put forward by the Dilnot Commission, this includes proposals for a cap on personal care costs of £86,000 from October 2023; increasing the upper capital limit from £23,250 to £100,000 from October 2023; and increasing the lower capital limit from £14,250 to £20,000. If an individual has capital between £20,000 and £100,000 the Local Authority may fund some of their care but they may also have to contribute up to 20% of their chargeable assets per year in addition to their income. 

While many organisations and care providers have welcomed the extra funding that would be raised by the levy, they have queried how the Government will ensure the share allocated to social care will increase over time. Other bodies have questioned why the proposals only apply to the cost of care and not living expenses, that it fails to address geographical inequalities, and if the proposed £5.4 billion over three-years will be enough to achieve genuine transformation. 

More recently, on 1 December 2021, the Government published a White Paper setting out its 10-year vision for adult social care, and providing more information on funded proposals that will be implemented over the next three-years. The key proposal contained in the White Paper is the cap on how much individuals in England will contribute to their care costs from October 2023, and how care costs will be predictable and limited. Under the heading ‘People at the Heart of Care’, the Paper sets out three objectives to deliver person centred care: (i) people have choice, control and support to live independent lives; (ii) people can access outstanding quality and tailored care and support; and (iii) people find adult social care fair and accessible. The policies and proposed investment set out in the Paper include: 

  • At least £500 million so the social care workforce have the right training and qualifications – and where they also have their wellbeing prioritised. 
  • At least £300 million to integrate housing into local health and care strategies and to increase the range of new supported housing options available. 
  • At least £150 million to drive greater adoption of technology and digitisation across social care. 
  • More than £70  million to increase the support offer across adult social care – including assisting Local Authorities to better plan and develop the support and care options available. 
  • £30 million to help local areas innovate around the support and care they provide in new and different ways. 
  • Up to £25 million to work with the sector to kick-start a change in services provided to support unpaid carers.   
  • At least £5 million to pilot new ways to help people understand and access the care and support available – including a new national website to explain the upcoming changes. 
  • A new practical support service to make minor repairs and changes to people’s home to help them remain independent and safe. 

In response to the ten-year timescale, the Government notes how ‘we know that some of the challenges in social care cannot be quickly fixed. Therefore…we will continue working with a range of voices from across the care and support landscape to deliver the changes that we all want to see. This will include working closely with local authorities and supporting them so they have the right tools and capability to deliver the right care and support that puts wellbeing and personalised support front and centre. We will also engage with a diverse range of organisations and people, including those who draw on care and support or provide unpaid care’ (page 8). Overall the Government’s vision is one of offering people choice and control over the care they receive, promotes their independence and enables them to live well, and values an exemplary and committed workforce. 

According to The King’s Fund, the White Paper doesn’t take us very far forward in the right direction, and lack of money lies at the heart of the problem: ‘social care is getting just a small slice (£5.4 billion over three years) of the £30.3 billion raised by the Health and Social Care Levy, with the majority of the money going to the NHS. The cap has been reconfigured to be less generous to people with low and moderate assets. Once you have taken off the extra costs that the policy document creates for local authorities, the spending power increase in the Spending Review is only 1.8% at a time when social care costs – especially around workforce – and demand for services are surging…Though the vision includes a major focus on personalisation – choice and control – there are no measures to do that, despite an acknowledgement that current approaches are faltering. 

The Nuffield Trust has also called on the Government to back up its words with cash and taking bold and urgent action to pull social care back from the brink and deliver its vision: ‘there is a question about how thinly the funding committed to these proposals will be stretched…it also heavily banks on the actions of future governments and the assumptions that funding raised can be diverted from the NHS to social care. The sector is in the grasp of a deepening workforce crisis, losing as many as 42,000 staff in the last six months, but with no proposals to significantly address low pay…There are already long waiting lists for care and councils are already struggling to meet growing needs. Reform has been dodged for so long that we now find ourselves in a tough starting position’. The Rural Services Network (RSN) described how ‘Local Authorities in rural areas are suffering from years of historic underfunding compared to urban areas. They will be looking for financial reform to bridge the funding gap for Social Care budgets to ensure that they can meet growing demands on the service and current levels of unmet need’. 

Pre-pandemic some people were already unable to get help from their Local Authority and others found themselves in and out of the acute sector as they were discharged without proper care in place. Some people had to sell their family home and possessions to pay for their care – with the Office for National Statistics (ONS) starting to collect data on how many people fund their own care. The Government is now putting choice and investment (e.g. workforce, housing, technology) at the centre of helping those who need care, caregivers and their families. 

What impact has COVID-19 had on older people so far? The pandemic has tragically shown how poor health makes people more vulnerable to further health risks. The social care sector has borne the brunt of the pandemic in so many different ways. In 2020 care home providers notified the ONS and Care Quality Commission (CQC) of 19,248 provisional deaths involving COVID-19 occurring in care homes. In 2021 this figure was 11,229 (to 10 December). According to ONS data, in 2020 more than 800 social care workers lost their lives to COVID-19 since March 2020 – with their loss felt profoundly by their loved ones and staff. Families have been unable to visit their relatives – with data showing that around 97% of care homes closed to visitors during the first wave – with some losing touch with loved ones with dementia who will never recognise them again.  

In February 2021, Baroness Hodgson of Abinger asked the Government what assessment they had made of the impact of COVID-19 on those aged over 75 years. In his response, Lord Bethell described how “… it is a sad fact that this horrible virus targets over-75s more than any other group. We should all be proud of the country’s determination to protect the lives of the elderly and the infirm and give thanks for the vaccines that save so many lives. I assure my noble friend that the NHS has remained open to all and will catch up on the backlog for all those who need medical intervention, irrespective of age”. 

In September 2021, the House of Commons Health and Social Care, and Science and Technology Committees published their report on ‘Coronavirus: lessons learned to date’. This described how the resulting requirement to abandon testing people in the community during the early period of the pandemic cost many lives for a number of reasons, including many older people being admitted to care homes either from the community or hospitals in ignorance of their COVID status or that of staff working in care homes (page 80); and that care homes for older people regularly used bank or agency staff or employed staff regularly working elsewhere which led to a higher risk of infection (page 88). 

Age UK has published research showing how the pandemic has affected older people. It found: 

  • 27% (around 4.3 million older people) said they couldn’t walk as far. 
  • 25% (around 4 million) reported they were living in more physical pain.  
  • 17% (around 2.7 million) said they were less steady on their feet. 

Since the pandemic began many older people have relied, often for the first time, on the internet and digital devices to access services and support. ONS data pre-COVID found that 32% of those who had never or not recently used the internet were between 50 and 69 years of age (over 1 million individuals). Research commissioned by the Centre for Ageing Better sought to understand more about the effects of COVID-19 on digital skills and usage. The research highlights the importance of providing people with a small number of skills building sessions to build their confidence and use of being online; yet they found a lack of awareness amongst older adults of the digital support available. They recommended that small, local organisations be given more funding and resources to support digital inclusion; whilst recognising how non-digital channels still need to be supported. 

Throughout COVID-19 family, friends, neighbours and other informal carers have been expected to step-in or step-up the practical elements of care they were providing. Being a carer while rewarding and uplifting can also be incredibly challenging without the right support in place.  

The King’s Fund has noted how COVID-19 was magnifying the key challenges facing formal social care services, including: 

  • Means testing: adult social care is not free at the point of use like the NHS. 
  • Catastrophic costs: some people end up selling their homes to pay for their care.
  • Unmet need: many people go without the care and support they need. 
  • Quality of care: lack of choice and control. 
  • Workforce pay and conditions: many social care staff are underpaid and undervalued leading to high vacancy rates and high staff turnover. 
  • Market fragility: providers can hand back contracts or go out of business. 
  • Disjointed care: health and social care are not integrated around the individual and this causes issues such as delayed discharge from hospital.  
  • Postcode lottery: there is unwarranted variation between places in terms of access to care and the quality of care being provided.

Some of these points are echoed in a National Audit Office (NAO) report on the challenges facing the social care market in England in the context of the pandemic. This emphasised significant gaps in the Department for Health and Social Care’s (DHSC) understanding of the market. While the NAO acknowledged work underway by the DHSC to address data gaps, increase the capacity of local government and care providers, and strengthen system accountability and assurance; it also recommended that the Government develop a workforce strategy; develop a strategy for the range of accommodation/housing needed by people with care needs; assess the performance and cost data it needs to gain assurance on performance; and explore with the CQC how best to increase the visibility and transparency of provider’s financial sustainability. 

Workforce recruitment and retention were also flagged in a report from the Public Accounts Committee (PAC) on the impact of the pandemic on the care sector. The PAC called on the Government to set out a comprehensive, cross-Government reform plan for care and also emphasised the need for a workforce strategy for the care sector.  Other bodies commenting on the challenges affecting the adult social care sector during the pandemic include the Health Foundation, ADASS, and Carers UK. Similarly, Care England, which represents social care providers, has called for investment and policy support for providers and workers; with bodies such as Skills for Care, the Royal College of Nursing and trade unions all highlighting sector-wide staff shortages. 

In more recent work, the King’s Fund has suggested six things need to happen as part of a long-term wide-ranging reform programme for adult social care: (i) more money is needed to fund the current system; (ii) eligibility needs to be improved; (iii) workforce reform is essential; (iv) personalisation needs re-invigoration; (v) prevention needs to take centre stage; and (vi) carer support needs urgent attention. Will the Government’s social care levy and 10-year vision for social care address these issues? 

How can we support older people to age in rural places? Rural areas have a higher proportion of older people compared with urban areas. According to the Department for Environment, Food and Rural Affairs (Defra) Statistical Digest of Rural England (December 2021 edition): 

  • In 2020, the most prominent age groups in rural areas were 50-54 years and 55-59 years (comprising 7.7% and 8% of the rural population respectively). In urban areas the most prominent age groups are 25-29 years and 30-34 years (7.2% for both age cohorts respectively). 
  • The rural population has a higher proportion of those aged 65 years and over (at 25.4%) compared to the urban population (where 17.1% are aged 65 years and over). 
  • Rural areas in a sparse setting have the highest proportion of those aged 65 years and over – particularly settlements that are rural village and dispersed in a sparse setting (which have 30.7% of the population aged 65 years and over). 
  • Both rural and urban areas have seen an increase in overall population between 2011 and 2020. In rural areas the population increased by 6% and in urban areas by 6.6%.

In April 2021, the Centre for Ageing Better published its commentary on ageing in a rural place. This highlights how the geography of rural areas can prove problematic for the delivery of, and access to health and care services. For example, the lack of or distance from services coupled with poor transport infrastructure makes attending regular appointments difficult. Structures can also operate differently in rural areas – with Town and Parish Councils and District Councils providing housing, leisure and environmental services; County Councils delivering adult social care; Local Enterprise Partnerships supporting the business community; and NHS/ICS structures underpinning the health system. The commentary contains a number of practical solutions to help older people remain independent and be involved in their local community – from increasing levels of physical activity (e.g. promoting walking and cycling) and an increasing prevalence of remote working; through to the diverse, nimble and accessible VCS in reaching the people and places which other services cannot. Rural places are heterogeneous not homogeneous. 

In July 2021 Age UK and Public Health England published a joint report on ageing in rural and coastal communities. This identified five issues which need action: 

  • Loneliness and isolation: particularly for some groups of older men, carers, older LGBTQ+ people and older people from ethnic minorities who often struggle to identify peers in their local area. 
  • The digital divide: the rapid digitisation of services as a potential driver of inequalities. 
  • A lack of support networks among people who move to rural and coastal communities: people may need additional support to identify appropriate services and build peer networks in new communities. 
  • Gaps in public transport provision: this does not always take people to the places they want to go meaning people rely heavily on their cars. 
  • Gaps in support for carers and people with dementia. 

Echoing the Centre for Ageing Better research, the report contained a number of approaches to address these issues – from improving data collection and working with the Voluntary and Community Sector (VCS) through to supporting the development of peer-led services and making accessing services easier (e.g., reaching people through workplaces, community hubs, faith organisations).  

In 2020 Lincolnshire became the Centre for Ageing Better’s Rural Strategic Partner, complementing similar relationships with Greater Manchester and Leeds. Initial programmes of work are exploring healthy ageing (i.e., improving lifestyle choices and promoting physical activity), housing (improving accessibility and digital connectivity), and employment (developing age-friendly employment practices). Lincolnshire now joins a UK Network of Age-friendly Communities. 

In September 2021, the RSN and County Councils Network (CCN) published a joint report describing the quantifying the current state of care in rural areas. This analysed NHS England activity and financial data, and funding estimates and cost projections for adult social care in England. For example, county and rural unitary councils received 49% of all service requests in 2019-2020, up by 5.6% since 2017-2018. Nationally, those aged 65 years and over accounted for 71% of all service requests but in county and rural areas the share of requests received from this age group is disproportionately higher (at 75%). 

Between 2015-2016 and 2019-2020 county and rural unitary councils having absorbed substantially larger reductions to their core funding for adult social care than any other type of council (42.3%). Decreases in funding have been offset to a large extent since 2017-2018 by an increase in temporary grant funding. As a result of temporary grants, all council types except county and rural unitary councils have seen a rise in total grant funding in nominal terms, albeit small. By contrast county and rural unitary councils have seen an overall reduction of £128 million. The report identified the following unique issues facing rural areas when delivering social care: 

  • Resource – Government funded adult social care service costs are significantly lower in rural areas. 
  • Workforce – recruiting adult social care staff to work in rural areas is more difficult than in urban areas. 
  • Demographics – the higher average age and ageing population within rural areas places a higher burden on rural Local Authorities. 
  • Self-funders – the proportion of adults paying for their care is higher in rural areas. 
  • Care homes – the proportion of residential care homes in rural locations is higher than in metropolitan areas, encouraging service user inflow to counties. 
  • Sparsity – the time and costs involved in delivering personal care over large distances in rural and remote areas. 

Alongside demonstrating the severe strain the adult social care system is under, the report suggests that funding alone will not address these challenges: “investment needs to go hand in hand with the opportunities for service improvement and transformation which drive down long-term care costs through better demand management, integration with health and new approaches to service delivery” (page 3) and “reform must also set out a vision for social care based on a value and belief system that is focussed on promoting people’s independence” (page 37). In its rural lens review of People at the Heart of Care, the RSN drew attention to ‘fairness’ in expecting people in rural areas who draw on social care and support to be able to say: 

  • I and my carers can access good social care support regardless of where I live. 
  • I can access good social care regardless of my age. 
  • I can access good social care regardless of my financial means. 
  • I can access good digital care.
  • I can access preventative health initiatives regardless of where I live. 

Some of these unique issues were also identified in the Chief Medical Officer’s (CMO) annual report 2021. Focussing on health in coastal communities, the report highlights how “attracting NHS and social care staff to peripheral areas is harder, catchment areas for services are artificially foreshortened and transport is often limited, in turn limiting job opportunities” (page 2). 

For the past 2-years the National Centre for Rural Health and Care (NCRHC) has been providing the secretariat for a Parliamentary Inquiry into Rural Health and Care. Evidence provided to the Inquiry highlights how the costs of funding adult social care are an issue nationally, but rural Local Authorities are often spending a disproportionately high part of their budget on these services. Rural residents often face less choice and higher care costs than their urban counterparts. Recruiting and retaining social care staff in rural areas where demand for social care is high yet wages and career progression low and access to transport is poor leads to staff shortages. Ensuring parity of esteem between clinical and social care settings (e.g., hospital discharges are a key interface in linking clinical health and social care staff) is vital and social care roles should not be seen or treated as the poor relation to other health roles. The Inquiry is due to launch its findings and recommendations in 2022.

For me, what all of this research shows is that if we want older people to live independent, healthy, and fulfilling lives in rural areas we need to ensure they get the care they need, in ways that are personalised, financially sustainable, delivered in high quality settings by staff who are well trained, paid and valued, and that recognises and supports unpaid carers. We also need to recognise the role of the VCS in driving prevention and wellbeing. Successive Governments have promised but so far always struggled to deliver social care reform. There are no simple, one size fits all solutions, particularly for rural areas. While the current Government is committed to reform, it now needs to put in place the resources needed to deliver its ambitions and vision. Will investment and innovation right across the social care sector deliver for rural communities? Watch this space. 

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). Her current work includes supporting health commissioners and providers to measure their response to COVID-19 and with future planning; and evaluating two employability programmes helping people furthest from the labour market. Jessica also sits on the board of a Housing Association that supports older and vulnerable people. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Commercial Property

Local Authority investments in commercial property – are they cash generators or debt burdens?

Since the mid-2010s some Local Authorities have been building up portfolios of commercial property – from hotels and farms to shopping malls and leisure complexes – putting the profits that are generated into their revenue budgets. With Government now consulting on the lending terms of the Public Works Loan Board – a lending facility used by many Local Authorities to build up their portfolios – and the coronavirus pandemic leading many tenants to close and forgo rent payments; will Local Authority property portfolios go from cash generators to cash draggers and what impact might this have on public services? Jessica Sellick investigates.

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Local Authorities have long owned buildings that could serve a commercial purpose. Indeed they often use commercial structures to advance their core activities of delivering public services, housing and regeneration for the benefit of their citizens. However, recent reports suggest some Local Authorities have started to use low-cost loans from the Public Works Loan Board (PWLB) to buy investment property for rental income. The Government is now consulting on ‘debt-for-yield’ activity – recommending that Local Authorities wishing to buy investments primarily for yield should remain free to do so but not be able to take out new loans from the PWLB to do it. What decisions over capital projects are some Local Authorities pursuing – and how are they financing them? 

How much can a Local Authority borrow? Local Authorities are required to distinguish between capital and revenue funding in their accounting. Borrowing and investment are matters of Local Government Capital Finance, with practice in this area governed by The Chartered Institute of Public Finance & Accounting’s (CIFPA) Prudential Code for Local Authority Finance. In addition, Local Authorities must take account of CIFPA’s Treasury Management Guidance for Local Authority funds and the Ministry of Housing, Communities & Local Government (MHCLG) guidance on Local Authority investments and on Minimum Revenue Provision (MRP). 

‘Capital expenditure’ is defined in the Local Government Act (2003) as “expenditure of the authority which falls to be capitalised in accordance with proper practices”. Government provides an annual allocation of capital funding to Local Authorities alongside the annual distribution of revenue funding set out in the Local Government Finance Settlement. While Local Authorities can access finance for infrastructure from a number of sources, the quantity of expenditure that is often required for capital projects means that most Local Authority capital finance is obtained through borrowing. 

Under part 1, chapter 1, of the Local Government Act (2003) a Local Authority may borrow for any purpose relevant to its functions or for “the prudent management of its financial affairs”. Every Local Authority must set a total borrowing limit for itself in accordance with the principles of the Prudential Code. This borrowing limit is related to the revenue streams available to a given Local Authority, and the extent to which it can repay debt. Local Authorities are prevented (by law) from using their property as collateral for loans. However, there is some flexibility in exactly how individual Local Authorities set their borrowing limits. The Prudential Code, for example, does not contain a formula for Councils to make an exact calculation of prudential limits; with Local Authorities relying instead on the judgement of their chief finance officers and on ‘generally accepted accounting practices’. 

The Prudential Code requires all Local Authorities to draw up rolling three-year plans for capital expenditure. These plans typically cover all capital spending apart from housing. While Local Authorities may borrow money from a number of different sources, they cannot breach the overall borrowing limit they have set. 

Under section 32 of the Local Government Finance Act (1992) Local Authorities are required to maintain an appropriate level of reserve funding. As per the Prudential Code, the judgement as to an appropriate level of reserve lies with individual Local Authorities – there is no standard formula for identifying the correct level.  

Guidance on Local Government investments issued by the MHCLG in 2018 requires Local Authorities to prepare an investment strategy annually (or include the required details in their treasury management strategy). Each strategy must explain how their investments (including commercial property portfolios) relate to their core purposes; and quantitative indicators to allow Elected Members and the public to assess a Local Authority’s risk exposure as a result of its investment decisions. Importantly, the guidance requires an explicit statement to be included in each strategy about the degree to which commercial income underpins the delivery of services – and that each Local Authority must set annual limits for the proportion of gross debt compared to net service expenditure as well as the percentage of net service expenditure that comes from commercial income. This follows up on the findings of a Public Accounts Committee (PAC) Inquiry in 2016 which found Local Authorities were investing less in physical assets such as libraries, museums and parks; and spending more on commercial investments such as property. The PAC called on the Department for Communities and Local Government [now MHCLG] to strengthen its understanding of the capital issues faced by Local Authorities, and to develop a cumulative picture of risks and pressures across the sector. This formed part of a call to change key aspects of the codes and governance in line with a view that Local Authorities should not borrow to invest solely for yield.  

Who can a Local Authority borrow from – and how much are they borrowing? Local Authorities seeking to develop property portfolios do so using Statutory Powers that relate to their wider purposes – such as regeneration or economic development. 

Section 4 of the Localism Act requires anything done for a purely commercial purpose must be carried out by a Limited Company. However, if a Local Authority is using powers related to regeneration or economic development to buy a local shopping centre, for example, it is not acting purely in a commercial purpose and can own it directly. 

The Local Government Act 2003 permits Local Authorities to pursue certain forms of commercial activity through a company structure. The General Power of Competence, introduced in the Localism Act, permits a Local Authority exercising it with the (a) power to do it anywhere in the United Kingdom or elsewhere; (b) power to do it for a commercial purpose or otherwise for a charge or without charge; and (c) power to do it for the benefit of the authority, its area or persons resident or present in its area. Again, as Local Authorities are looking to manage commercial property as an adjunct to other functions rather than purely for financial gain a company is not required.  

Local Authorities can fund commercial property acquisitions using money from capital receipts, by using revenue funding, or through borrowing and meet debt servicing costs from revenue funding. Local Authorities are able to choose between different sources of external borrowing.  

In recent years the majority of loans taken out by Local Authorities have been supplied by the Public Works Loan Board (PWLB). The PWLB is located within the Government’s Debt Management Office (DMO), part of HM Treasury, and its funds are available at lower rates than the market. The PWLB publishes data listing borrowers, with the amounts advanced, the rate of interest, the term of the loan and length of time before the loan will be fully expended. 

Alternative borrowing mechanisms include:  

  • Tax Increment Financing (TIF) which permits Local Authorities to borrow money for infrastructure projects against the anticipated increase in tax receipts resulting from the infrastructure – for example, Local Authorities might borrow against their income within the Business Rate Retention Scheme or against the rate within a specific geographical area such as an Enterprise Zone. 
  • New Development Deals (NDD) where a geographical area is not subject to future levies and resets thereby creating an area and stream of revenue outside of the Business Rate Retention Scheme. 
  • An ‘earn-back scheme’ which has been enacted in some City Deals whereby Local Authorities can make investment up-front if additional GVA is created relative to a baseline. 
  • Through bonds, which allow Local Authorities to raise substantial sums of capital immediately, and repay it at a specified point in the future. Some Local Authorities have obtained credit agency ratings, allowing them to borrow on the open market; and for smaller Local Authorities through the UK Municipal Bonds Agency which is owned by 56 shareholding Local Authorities and has offered to obtain a competitive price for bonds at a lower rate of interest than the Public Works Loan Board. 

The MHCLG publishes statistics annually on Local Authority capital expenditure and receipts. The latest statistical release covers the financial year April 2018 to March 2019. This shows capital expenditure by Local Authorities in England totalled £25.9 billion in 2018-2019; an increase of £202 million (or 1%) in real terms compared to 2017-2018. When this figure is broken down by economic sector, acquisition of land and existing buildings totalled £4.4 billion, up from £326 million (or 8%) in real terms when compared to 2017-2018. The data also reveals how Local Authorities are financing a greater proportion of their capital expenditure from prudential borrowing and capital receipts rather than from capital grants and revenue resources. For example, the proportion of capital expenditure financed by prudential borrowing has increased from 22% in 2014-2015 to 38% in 2018-2019. Over the same period, the proportion of capital expenditure financed by capital grants has fallen from 45% to 35%.  Actual debt held by local authorities was recorded at £104.46 billion at the end of June 2019. At the beginning of 2017-2018 Local Authority external debt stood at £110.1 billion – but at the end of 2017-2018 Local Authority external debt stood at £118.3 billion (an increase of 7.4%). 

The data does not provide a clear indication of the type of acquisition made. Similarly, the PLWB does not currently keep defined records of the purpose of each of the loans it makes to Local Authorities.  

In February 2020 the National Audit Office (NAO) published a report on ‘Local Authority Investment in Commercial Property’. This estimated that Local Authorities spent £6.6 billion on buying commercial property between 2016-2017 and 2018-2019 – this figure is 14 times more than in the preceding three years. 40%-90% of spending between 2016-2017 and 2018-2019 was financed by borrowing. Local Authorities spent an estimated £3.1 billion on offices, £2.3 billion on retail property [including £759 million on shopping centres or units within them], and £957 million on industrial property. 38% of all spending between 2016-2017 and 2018-2019 was outside of the local area. The NAO found the increase in commercial property investment to be concentrated in the South East, and also amongst District Councils (comprising 51% of commercial property spending between 2016-2017 and 2018-2019). For example, 49 out of 352 Local Authorities accounted for 80% of commercial property spending between 2016-2017 and 2018-2019. 17.5% of all commercial property acquisitions by value in the South East between 2016-2017 and 2018-2019 were made by Local Authorities. 

Why are some Local Authorities investing in commercial property? Since the mid-2010s some Local Authorities have sought to build up portfolios of commercial property. Various reasons may account for this, including (but not limited to): 

  • A reduction in Government funding provided to Local Authorities. The National Audit Office (NAO) estimates a real-terms reduction in Local Authorities’ spending power [from Government funding and Council Tax] of 28.7% between 2010-2011 and 2019-2020. Analysis from the Local Government Association (LGA) found in one year, between 2016-2017 and 2017-2018, Local Authorities had to absorb a funding shortfall of £2.4 billion – with further analysis showing a potential funding gap of £7.8 billion by 2025. Government provides a Revenue Support Grant (RSG) to Local Authorities to finance revenue expenditure on services. According to MHCLG, while the RSG has declined since 2015-2016 this should be viewed in the context of increased funding from business rates retention and other grants such as the Better Care Fund. 
  • Changing approaches to asset management whereby some Local Authorities have shifted away from disposing surplus land and buildings towards using them as assets and as ongoing sources of revenue – with this approach facilitated through the Government’s One Public Estate programme and in some devolution deals.  
  • As Local Authorities have been given more flexibility and freedoms (e.g. through the Localism Act) this has fostered a more commercial culture amongst officers and Elected Members, leading  some Councils to be innovative and entrepreneurial in obtaining more money from commercial activities rather than relying on ‘traditional’ sources such as council tax and business rates. Interestingly a report on insourcing by APSE in 2019 suggested that a rise in insourcing was being driven by a desire to improve service quality and flexibility amid the need for greater control over allocating resources, including commercialisation in order to raise revenue.  
  • Local Authorities have purchased commercial property to support local regeneration and economic growth – bringing unused or underused property back into use for the benefit of their citizens.  

What are the benefits – and the risks? Some commentators highlight how Local Authorities have long held large property holdings which they have used for social, economic and commercial purposes; and that the annual return rates on commercial property, and the spread between the loan rate and the return rate on letting out the property, generates profit for Local Authorities to use for the benefit of their citizens. For example, a report by the Audit Commission back in 2000 described how “typical non-operational properties include high street retail outlets, markets, industrial estates and shops on housing estates, held primarily to generate income or to stimulate economic or social development” (page 7). Some Local Authorities have bought commercial property to use the returns to deliver new homes and infrastructure, to respond to private sector withdrawal or market failure (e.g. high streets), to support social enterprise and community business and/or for wider place-making. In many instances it is the spread between the loan rate and the return rate on letting out the property that enables the Local Authority to make a profit to reinvest in local services and activities.  

In 2017 the Local Government Association (LGA) published practical guidance on how Local Authorities could turn their commercial plans into reality. The guidance described trading and commercial property activity as “a particularly specialist activity where advice should be sought, if necessary, from a range of experts such as lawyers, property experts and accountants. Councils considering investment activity should be clear around long term risk and benefit modelling, governance and what specialist capabilities may be required to support the activity. They should be aware of the accumulated effect of every decision they take as well as the risks of each individual decision” (page 36).

More recently, the NAO in its report referred to ‘specific risks’ associated with each individual property [such as the length of the lease or the financial strength of the tenant] and ‘systematic risks’ [such as movements in markets e.g. people shopping online leading to growth in vacancy and void rates of retail units]. 

Some of the key risks for Local Authorities using commercial property to generate revenue are around: 

  • A downturn in the property market – leading to falling rents, higher vacancies, falling property values and causing financial pressures. 
  • Any Government intervention setting limits on the commercialisation strategies available to Local Authorities. 
  • A lack of skills and expertise (commercial awareness) within Local Authorities about the market and making investments leading to poor acquisition decisions. 
  • Liquidity – if a Local Authority needed to meet immediate cash requirements, property cannot be as quickly realised in the same way as other financial instruments.
  • Local Authorities are legally required to set a balanced budget – if commercial income is underpinning the delivery of services does not yield the required return, how will they overcome these broader losses of revenue? 

On 9 October 2019 the Government announced it would raise the interest rate on new loans from the PWLB by 1% over gilts over and above the existing interest rates. This decision was explicitly linked to substantial borrowing for commercial investments: “Some local authorities have substantially increased their use of the PWLB in recent months, as the cost of borrowing has fallen to record lows”. For some Local Authorities the rate rise was seen as making some large-scale regeneration schemes costlier, unviable, or requiring more time to obtain a return on investment – with some commentators suggesting it may lead Local Authorities to seek alternative sources of finance (e.g. private sector lenders, Municipal Bonds Agency).  At the same time of the announcement Government increased the cap on the total amount Local Authorities can borrow from the PWLB from £85 billion to £95 billion.

Are we reaching a tipping point?The NAO has highlighted how some Local Authorities would be badly exposed in the event of an economic recession or property crash, describing how “in the last recession UK commercial property values and market rental values both fell. More recently, systematic risk is perhaps apparent in the performance of the retail sector with the shift to online sales, among other factors, leading to growth in vacancy and void rates” (page 41).  

Analysts point to past examples of Local Authorities suffering financial difficulties – the interest rate swaps in the late 1980s/1990s, investments in Icelandic banks in the late 2000s, and LOBO loans in the mid-2010s. However, these episodes affected a small number of Local Authorities and none generated long-term financial strain or losses even though they led to serious concerns in the short term. Nor did they require Local Authorities to raise Council Tax substantially to offset a lack of funds. 

Yet all of these episodes are very different from the novel coronavirus (COVID-19).  Emerging evidence highlights the impact of the pandemic on bricks and mortar.  Coutts reveals how the retail sector was already heading into recession before the pandemic due to the rapid adoption of online shopping and the change in shopping habits. They predict this downward trend in retail property is likely to continue with only retail-to-residential conversions and specialist event venues surviving; warehouses and logistical centres will continue to expand; and the period of people working from home may lead companies to change working practices and reduce office space. The real estate developer Hammerson revealed that it had only received 35% of second quarter rent from its outlets – and it had also received requests from tenants for rent deferrals, monthly payments and waivers. Coronavirus is expected to create a hole in Local Authority income as a result of lost revenues from commercial property. This is further compounded by the loss of other revenue streams (e.g. planning fees, car parking). 

In March 2020 the Government announced £1.6 billion package for Local Authorities to respond to service pressures including increasing support for adult social care and services that support the most vulnerable; a £500 million Council Tax Hardship Fund of discretionary support to help economically vulnerable people and households; £3.2 million of initial emergency funding to reimburse Local Authorities for the cost of providing accommodation and services to rough sleepers; the deferral of £2.6 billion in Local Authority payments of the Central Share of retained business rates; and brought forward £850 million of social care grants. In April 2020 the Government announced a further £1.6 billion of additional (and un-ring fenced) funding to support Local Authorities to meet additional pressures arising from the pandemic and to help them to continue to deliver frontline services. 

While the impact of coronavirus on Local Authorities – including those with substantial commercial property portfolios – depends on how long the lockdown last for and the gradual steps to a ‘new normal’ that the Government will implement; scale really matters here. The bigger the spend, the bigger the borrowing, the greater the risk. And these risks become even greater where Local Authorities are dependent on income from commercial property portfolios to repay debt or fund services. They may also be tying up Local Authority money and resources that could be diverted elsewhere. 

Because we do not have a clear picture of the scale of investment of public funds in commercial property, where it is concentrated and how it is being financed, considering the implications for rural residents and businesses is difficult.  According to the Rural Services Network urban authorities in 2016-201717 received 40% more (£116) per head in the Government’s Settlement Funding Assessment compared to rural authorities. We also know that it costs more to deliver services in rural areas. What we do not know is whether this leads rural Local Authorities to borrow more than their urban counterparts, if and how much they are investing in commercial property,  what the income from this investment has been used for, and what impact COVID-19 will have on these portfolios and Local Authorities now and into the future. The longer the pandemic persists, the greater the chance of a more prolonged impact on the economy including commercial property markets. In the meantime, we need to improve the data and evidence base: what are the trends in capital strategies, buying out of area, the contribution of commercial income to service expenditure, the scale of contingency, and which Local Authorities are vulnerable and what can we do to manage the risks?  

When making any investment we are reminded that past performance should not be taken as a guide to future performance. The value of investments, and the income that we get from them, can go down as well as up and we may not recover the amount of our original investment. 

Affordability is a key duty underpinning the borrowing arrangements contained in the Prudential Framework. In practice, some Local Authorities have taken on general fund debt in high multiples of core spending power and viewed it as affordable because of the income their commercial property investments generate. The experiences of coronavirus, seen within the context of already sustained financial pressure, may mean that some Local Authorities (inadvertently) test the limits of compliance. 

As Local Authorities have built up their commercial property portfolios there has perhaps been a lag in governance and oversight from Government.  In March 2020 HM Treasury launched a consultation containing proposals to (a) require local Authorities that wish to access the PWLB to confirm that they do not plan to buy investment assets primarily for yield; (b) publish guidance defining activities that the PWLB will no longer support; and (c) standardise the information currently gathered through the application process for the PWLB Certainty Rate to confirm with Local Authorities that their plans conform with the guidance. The consultation runs until 4 June 2020 and you can submit responses here.  

As we have to get used to a ‘new normal’ Local Authority repayments to the PWLB and other borrowers may start to hurt. Will this lead some Local Authorities to increase taxes or reduce public services? Watch this space. 

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Jessica is a researcher/project manager at Rose Regeneration. Her current work includes helping public sector bodies to measure social value; evaluating an employability programme; and working with 8 farming organisations across England on a Defra funded project on farmer resilience. She is also a senior research fellow at The National Centre for Rural Health and Care (NCRHC) and sits on the board of a Housing Association that supports older and vulnerable people. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

hospital

What does integrated care mean for rural communities?

Public spending on health care is driven by the needs of the population, the resources available and national priorities. Health services are facing unprecedented financial and operational pressures, with many NHS organisations in deficit and key performance standards missed. At the same time, some people require support from both health and social care services and there are longstanding calls for them to be integrated – putting patients at the centre of how their care is organised and saving money by cutting down on emergency hospital admissions and delayed discharges. Integrated Care Systems (ICSs) are bringing together NHS organisations and Local Authorities to work in partnership to improve health and care in their area. NHS England has acknowledged that transitioning to ICSs is ‘complex’, requires a ‘staged implementation’ and they make take several years to fully form. What are ICSs, how are they developing, and what do they mean for rural residents? Jessica Sellick investigates.  ………………………………………………………………………………………………..

Health and social care services in England have traditionally been funded, administered and accessed separately – with health provided for free at the point of use through the National Health Service (NHS) and social care through means-testing carried out by Local Authorities. Successive Governments have sought to better integrate health and social care by focusing on providing care as close to the patient as possible (i.e., in their home or community rather than in hospital). This move towards integration has led to the creation of Health and Wellbeing Boards, the Better Care Fund and Sustainability and Transformation Partnerships (STPs). 

Integration is now a central goal of the NHS – referenced in both the Five Year Forward View (October 2014) and the Long Term Plan (January 2019). In September 2019 the NHS set out legislative proposals for a new NHS Bill to implement the Long Term Plan and enable parts of the NHS to work with partners more easily. The Bill would replace the current NHS procurement framework which is seen by some health commissioners and providers as a barrier to integrating care at scale. Integrated Care Systems (ICSs) are one of the emerging models of integrated health and social care. 

What is an Integrated Care System (ICS)? The NHS Long Term Plan contains an ambition that every part of the country should be an ICS by 2021. An ICS ‘brings together local organisations to redesign care and improve population health, creating shared leadership and action…They are a pragmatic and practical way of delivering the ‘triple integration’ of primary and specialist care, physical and mental health services, and health within social care’.  This emphasis on ‘working together’ is not new and the origins of ICSs can be traced back to 2016 and the establishment of Sustainability and Transformation Partnerships (STPs). STPs are five-year plans covering all aspects of NHS spending in England. STP leaders generally come from clinical commissioning groups (CCGs), NHS trusts or foundation trusts or local government. There are 42 STP areas – with their geographical footprints varying from 300,000 to 2.8 million people.  The Long Term Plan envisages that by April 2021 ICSs will cover the whole country, growing out of the current network of STPs. 

NHS England and NHS Improvement have highlighted three areas at which decisions will be made within ICSs: 

  1. Neighbourhoods (populations circa 30,000 to 50,000 people) – served by groups of GP practices working with NHS community services, social care and other providers to deliver more coordinated and proactive services, including through Primary Care Networks (PCNs). 
  2. Places (populations circa 250,000 to 500,000 people) – served by a set of health and care providers in a town or district, connecting PCNs to broader services, including those provided by Local Authorities, community hospitals and voluntary organisations. 
  3. Systems (populations circa 1 million to 3 million people) – all health and care partners in different sectors come together to set the strategic direction and to develop economies of scale. 

According to research by the King’s Fund, ICS leaders have suggested that 70-90% of work within an ICS should occur at the place and neighbourhood levels, with the remainder carried out at the system level. 

There are two other forms of integrated care: (a) Integrated Care Partnerships (ICPs)– these are alliances of NHS providers that work together to deliver care by agreeing to collaborate rather than compete; and (b) Accountable Care Organisations (ACOs) – these are established when commissioners award a long-term contract to a single organisation to provide a range of health services to a defined population following competitive procurement. There are a number of important differences between ICSs, ICPs and ACOs. For example, ICSs are characterised by ‘integration by collaboration’ whereas ICPs as ‘integration by contract’; ICSs involve an ‘alliance agreement’ by the bodies involved whereas ICPs require a single contract held by a single body.   

How many ICS are there? In line with STPs, the size and geographical footprint of ICSs is expected to vary from area to area. Since 2018, 14 areas have been designated as an ICS. They are: (1) South Yorkshire and Bassetlaw, (2) Frimley Health and Care, (3) Dorset, (4) Bedfordshire, Luton and Milton Keynes, (5) Nottinghamshire, (6) Lancashire and South Cumbria, (7) Buckinghamshire, Oxfordshire and Berkshire West, (8) Greater Manchester, (9) Surrey Heartlands, (10) Gloucestershire, (11) West Yorkshire and Harrogate, (12) Suffolk and North East Essex, (13) The North East and North Cumbria, and (14) South East London. These areas cover rural and urban geographies; different population sizes (ranging from 528,000 in Gloucestershire to 2.7 million in West Yorkshire and Harrogate); and different system complexities (with 2 areas having devolution agreements in place: Greater Manchester and Surrey). One-third of England’s population is now covered by a developing ICS. 

NHS England and NHS Improvement’s regional teams will work with ICSs to agree system-wide objectives and performance against these objectives. 

What will ICSs do? Every ICS will need to have: 

  • A partnership board, drawn from commissioners, trusts, PCNs, Local Authorities, voluntary and community sector organisations and other partners. 
  • A non-executive chair (locally appointed but subject to approval by NHS England and NHS Improvement) and arrangements for involving non-executive members of boards/governing bodies. 
  • Clinical and management capacity drawn from constituent organisations to enable them to implement system-wide changes. 
  • Full engagement with primary care – including through a named accountable clinical director for each PCN. 
  • A greater emphasis by the Care Quality Commission (CQC) on partnership working and system-wide quality in its regulatory activity. 
  • All providers within an ICS will be required to contribute to ICS goals and performance – including in relation to (a) population health and (b) system objectives. 
  • Clinical leadership aligned around ICSs to create clear accountability to the ICS – with cancer alliances, clinical senates and other clinical advisory bodies coterminous with one or more ICS. 

ICSs are expected to incorporate learning from existing initiatives including the 50 vanguards that tested and refined new care models. 

From a clinical perspective ICSs may reduce barriers between services and competition between providers leading to improved patient care. Clinical input is central to the development of ICSs and ensuring that the views of health and care staff and their representative bodies are actively sought as ICSs develop may help to address some of the barriers that the health and care systems face (e.g. recruitment and retention of staff, funding, resources etc.)  

From a local government perspective, ICSs will have a key role to play in working with Councils at ‘place’ level with commissioners making shared decisions with providers on how to use resources, design services and improve population health. This means every ICS is expected to have streamlined commissioning arrangements to enable a single set of decisions to be made at a system level. As part of this CCGs are expected to become leaner and more strategic and support providers to partner with local government and other bodies on population health, service redesign and Long Term Plan implementation. Ultimately ICSs are expected to replace STPs by 2021. 

 From a patient perspective, ICSs will have a new accountability and performance framework which will measure the extent to which the local health service and its partners are genuinely providing joined up, personalised and anticipatory care. 

In September 2018, the King’s Fund published a review of ICSs during their first year. They found most ICSs were making progress in developing their capabilities to work as systems, and organisations were working more collaboratively to manage finances and performance in a way that was not happening previously. There were some early signs of progress in delivering service changes, particularly in relation to strengthening primary care, developing integrated care teams and reviewing how specialist services are delivered. 

A British Medical Association (BMA) briefing on ICSs has also identified some common themes across the 14 ICSs established to date: 

  • ICSs have a specific focus on enhancing the role and scope of primary and community care services. This is revolving around the development of Primary Care Networks (PCNs) and Multi-Disciplinary Teams (MDTs) . NHS England sees PCNs are central to the provision of at-scale primary care – encompassing GP surgeries, community and mental health trusts, pharmacies and voluntary and community sector organisations. 
  • ICSs are prioritising improving the overall health of their population to prevent ill-health – this includes looking at the wider determinants of health and the use of social prescribing.  
  • The current and future workforce has been highlighted as a major issue – with some ICSs prioritising the use of new clinical roles to support their work. 
  • ICSs are focusing on better use of data, technology and innovation to improve care and support prevention – this is centred on improving IT interoperability and the sharing of patient records.
  • Several ICSs are exploring possible service reconfiguration – including centralising specialisms at certain sites and/or trust mergers. Any service reconfiguration should be led by clinicians, based on clinical evidence, rather than driven by financial pressures. 
  • Clinical Commissioning Groups (CCGs) are changing as ICSs are developing – with a single CCG covering an ICS, although in some areas ICSs are not coterminous with CCG boundaries. Commissioning is also changing, with providers increasingly taking responsibility for some day-to-day functions rather than CCGs. 
  • ICSs will be taking collective responsibility for the resources and financial performance for the whole system – this will include arrangements for risk sharing and decision making on how services will be paid for.  
  • The move to system-wide working is changing regulation – with NHS England suggesting ICSs will be subject to a new form of regulation that focuses less on the performance of individual organisations and more on the system. 

How will they develop? NHS England has produced a ‘maturity matrix’ [pages 9-11] for ICSs. This outlines the core characteristics of systems as they develop and is intended to provide a consistent framework for all regions and systems across the country. There are four stages a system is expected to follow: emerging, developing, maturing and thriving.  For a system to be formally named an ICS it is expected to meet the attributes of a maturing ICS. The matrix cover: (1) system leadership, partnerships and change capability; (2) system architecture and strong financial management and planning; (3)  integrated care models; (4) track record of delivery; (5) coherent and defined population; (6) oversight; (7) finance; (8) planning; and (9) support.  

NHS England describes the matrix as a ‘journey rather than a series of binary checklists’ in recognising that systems will not develop across all domains at the same pace. 

What do they mean for rural communities? Integrated health and care is pertinent to rural communities, which experience poorer access to services than their urban counterparts. The way the health system is currently organised and funded is based upon economies of scale. While ICSs aim to provide patients with equal access to its services at the same level of quality, how will they take account of different types of rural and coastal populations at a neighbourhood, place and system level?  

A briefing published by the Nuffield Trust in November 2019 looked at why the different models of integrated care that have emerged so far had not produced the expected results of reduced hospital admissions. They identified a number of reasons why this may be happening: 

  • The model may be poorly designed, targeting the wrong population, not listening to patient preferences and/or containing a large number of complex work streams. 
  • The model experiences difficulty when it reaches the real world i.e., getting multidisciplinary teams to work well, effectively involving primary care, and the likelihood of uncovering undiagnosed pathology are all issues that have caused problems.
  • The expectations of those designing the models about the outcomes that are likely, and the speed that they can be achieved, are sometimes higher than can be achieved in the often short periods allowed for evaluation. 

NHS England’s maturity matrix for the development of ICSs sets out how a thriving ICS should have a  meaningful geographic footprint that respects patient flows; be contiguous with local authority boundaries (or have clear arrangements for working across local authority boundaries; and cover an existing STP of sufficient scale (1 million population or more). With one-third of the population now covered by an ICS and 70-90% of the work expected to happen at place and neighbourhood levels, how will ICSs listen to, and act on, insights from rural residents and patients? Where will their voices be in the development of local plans and allocation of resources?

Currently there is no clear statutory basis for the development of ICSs leading to concerns around their accountability and oversight. Clinicians, local government officers, Elected Members and the public are unsure how to challenge the direction of travel or decisions taken within an ICS. In 2019, Luton Council withdrew its support from the Bedfordshire, Luton and Milton Keynes ICS; Nottingham City Council temporarily suspended its involvement in the Nottinghamshire ICS; and in Berkshire West neither the South Central Ambulance Trust nor Local Authorities were participating in their ICS. Concerns about a lack of transparency and democratic oversight in the ICS planning process were cited. Research conducted on delivering integrated mental health support for older people in South Australia, for example, identified three structural barriers to integration: (1) fragmentation of Governmental responsibility, (2) funding shortfalls, and (3) the centralisation and standardisation of service delivery. Where do the flexible, informal and self-sufficient relationships that typically underpin integration in rural communities fit within an ICS? 

To date, the experience of local government and the NHS working together has been variable. Legislation can remove obstacles to integration, but it does not necessarily lead people and organisations to collaborate more effectively. Should legislation specify the level of involvement of Local Authorities, or other non-NHS bodies, in ICS arrangements? What will be the future of existing forums for promoting joint working, such as Health and Wellbeing Boards? Greater sharing of responsibilities across health and care may mean that regulation needs to change. Some of this is already happening, with the Care Quality Commission now reviewing local systems, as well as individual providers. Legislation can help avoid legal uncertainty – for example, clarifying what might happen if the decision of an ICS conflicted with the statutory duties of its member organisations. However there is concern that while ICSs are intended to overcome and remove existing organisational barriers; the models that are developing often appear dominated by NHS Trusts – how can they ensure the plans they are drawing up involve primary care [GPs], public health and social care [Local Authorities]? Evidence from Switzerland and Italy, where local hospitals were converted into health centres [as part of attempts to coordinate health and social care resources within and closer to rural communities], highlighted the importance of (i) creating a new legal entity or specific organisational unit to focus managerial attention on the need to coordinate health; and (ii) having enough internal resources to support the professional development of staff.  

Cuts to Local Authority funding have already stretched budgets in the areas of public health and social care. At the same time many NHS Trusts are in deficit. How will ICSs deliver system-wide change when the capacity of services it seeks to integrate are already under so much pressure? For me this underlines the need to have a dialogue about how much it costs to meet health and social care needs in rural areas (for children, young people and adults) and how to pay for integration (before provision collapses).

In November 2019 the Local Government Association (LGA) and the Social Care Institute for Excellence (SCIE) published a joint resource to support local systems to integrate. The document prioritised 15 actions, drawn from the UK and what works from international research. A number of core principals underpin these actions – here integration is not an end goal but a means of achieving the goal of better, joined up care; and should support the building of community capacity for prevention, early intervention and place based care and support.  In Herefordshire and Worcestershire, for example, it is difficult to deliver acute care because of the rurality of the area and the distance patients have to travel. The STP is looking at how acute specialist clinicians can work with community teams outside of hospitals, including providing advice and guidance to neighbourhood teams. In designing neighbourhood teams in Worcestershire the STP/ICS went to see the Buurtzorg Nederland and the Norrtaelje model in Sweden to learn how they could empower clinicians to ensure care is patient centred. 

Many STPs are not yet in a position to become ICSs – and may not be for some time. For change cannot happen overnight– and needs to be married with some realism about the scale, complexity and resources needed to truly deliver integration. If ICSs are the future of the NHS – if they are intended to lead to stronger health and care systems across the country – how can we ensure systems think rurally? 

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Jessica is a senior research fellow at The National Centre for Rural Health and Care (NCRHC). The NCRHC is a Community Interest Company, national in scope with a Headquarters in Lincolnshire, that focuses on four principal activities: data, research, technology and workforce. 

Jessica is also a researcher/project manager at Rose Regeneration. Her current work includes helping public sector bodies to measure social value; evaluating an employability programme; and reviewing a project that supports parents committed to recovering from, drugs and/or alcohol addictions.

She can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ Blog: http://ruralwords.co.uk/ Twitter: @RoseRegen 

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