Tag Archives: FINANCE

New life for old homes: the potential of retrofitting social housing

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by Ian Babelon

How can social housing retrofits help tackle the cost-of-living and climate crises that are currently exercising the minds of landlords, householders, tenants and governments? In this, blog post, Ian Babelon looks at the potential of retrofits for making homes more energy efficient and for futureproofing the built environment.

The benefits and costs of retrofitting

Around 38% of all homes in the UK were built before 1946. As a result, the UK’s housing stock is not only the oldest, but among the most poorly insulated in Europe, leading to higher energy bills and a lower quality of life. At the same time, UK homes account for over 66m tonnes of direct carbon emissions, undermining government decarbonisation efforts.

On many different levels, making Britain’s housing more energy efficient makes sense. Estimates by the UK’s Department for Energy Security and Net Zero (DESNZ) suggest households could save £220-400 in energy bills per year. In addition, retrofitting homes can address fuel poverty, provide decent homes, reduce public health costs, and help deliver decarbonisation targets.

But energy efficiency requires investment. Insight shared by the Greener Futures Partnership shows that it could cost between £13,000 and £25,000 to bring a social home to EPC (energy performance certificate) band C. This does not take into account training and skills requirements to retrofit homes, nor the significant variations in property condition, fabric type, fluctuating costs of construction materials, retrofit design choices, scheduling of renovation works, and availability of construction labour with the right skills. Retrofitting social homes at scale therefore requires working on multiple fronts at the same time.

The cost of not retrofitting

The 2022 Cost of Living Crisis in Scotland report by the Scottish Government shows that as many as 35% of households in Scotland may be fuel poor. In England, figures for 2022 by DENSZ indicate that fuel poverty affects 13.4% of households.

The consequences of fuel poverty are wide-ranging. The annual cost of treating health conditions associated with cold, damp homes in England amounts to £1.3 billion. Poor housing also affects mental health, can impair children’s learning opportunities, and puts older people at greater risk of strokes and other severe health conditions.

A 2021 National Housing Federation report showed that the UK’s social rented sector has made great progress in tackling fuel poverty (64.3% of housing association homes already have an EPC rating of C or above). But the study also underlined how much more needs to be done. An additional £36bn of investment is required, said the report, to bring the remaining 39% of housing association homes up to a C rating, as well as installing heat pumps and other clean heat technologies in all 2.7 million homes.

Financing challenges and solutions

Social landlords also face significant costs for remediation and building safety improvements that hamper their efforts to retrofit homes and meet national energy efficiency targets. As DESNZ rolls out the second wave of the Social Housing Decarbonisation Fund, the NHF has called for long-term funding certainty so retrofits can pick up the pace.

Fortunately, more financing opportunities are becoming available for social landlords looking to make their properties more energy efficient, as reported in a report by the Green Finance Institute. These include local climate bonds, leaseholder finance and insurance-backed ‘comfort plans’, such as the Energiesprong approach, which can pay for insulation measures with energy and maintenance savings.

Fabric first…

It pays to insulate homes before investing in complementary measures such as renewable energy generation or smart technologies. This ‘fabric-first’ approach is an attractive alternative to the large up-front investment costs for deep, ‘whole-house’ retrofits that may be prohibitive for social housing landlords.

Incremental retrofit approaches can combine initial fabric improvement with scheduled upgrades, such as replacing gas with energy-efficient electric heating and hot water, installing air-source heat pumps (ASHP) or introducing smart home devices.

Strategic planning is essential to avoid piecemeal interventions that might prove more costly and less effective over time. The Social Housing Retrofits for the Future report commissioned by the Greener Futures Partnership highlights the need for cross-sectoral collaboration to tackle technical, financial, legal and customer engagement requirements simultaneously by providing extensive evidence from across Europe and the UK.

LETI, a volunteer network of over 1,000 built environment professionals, has published a Climate Emergency Retrofit Guide for use by social housing landlords, designers and contractors. The guide provides an engaging infographic overview as well as guidance for a range of home archetypes.

… Or building from scratch

Are all poorly performing homes worth retrofitting? So-called ‘hard-to-treat’ and ‘hard-to-decarbonise’ homes (about 2% of all social homes) can be very costly to upgrade. LETI provides a decision aid to determine whether one should retrofit or build anew, to be used in conjunction with other guidance.

A key aspect of this decision is to differentiate between embodied carbon (carbon emitted in making construction materials and during actual construction) and operational carbon (emissions produced during occupancy). All things considered, it is usually more worthwhile to renovate and reuse homes than to knock them down and redevelop them.

Beyond retrofitting

As performance increases to meet sector-wide energy-efficiency targets, designing for and monitoring air tightness will become increasingly important to help achieve decarbonisation.

High-performance standards such as Passivhaus ENERPHit are premised on sound air tightness and ventilation to guarantee thermal comfort while reducing energy costs. The Passivhaus Trust provides resources and case studies to help councils, ALMOs and housing associations deliver energy-efficient retrofits and new builds, along with a recent evidence-based research report that makes the case for whole-house, low-carbon retrofits.

The next frontier for retrofitting social housing at scale lies in neighbourhood-wide retrofits that could appeal even more to green finance but would require commensurate public-private partnerships and coordination.

Final thoughts

Overall, retrofitting social housing is a win-win for everyone involved. It is good for the environment, the economy, and the people who live in social housing. The up-front costs can be substantial, but the long-term benefits should make these investments cost-effective.

The social housing sector has clearly been taking action to deliver more energy efficient homes, and it’s working with residents, contractors, local authorities and other stakeholders to ensure that the Social Housing Decarbonisation Fund succeeds.

Challenges remain, notably concerns about skills shortages. But the prize of warmer homes, affordable energy, a better quality of life and a cleaner planet is well worth the effort of overcoming these obstacles.

Ian Babelon, UX Researcher, Idox

A longer version of this article is available for subscribers to The Knowledge Exchange Information Service. To retrieve it from our online database, use the reference number: B67199.

Photo by Erik Mclean on Unsplash

Further reading: more on energy efficient housing from The Knowledge Exchange blog

Spinout success: commercialising academic research

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Research and teaching in UK universities is widely recognised to be among the best in the world.  In fact, the University of Oxford has topped the Times Higher Education World University Rankings 2020 for the fourth year in a row.

However, in November last year, venture capital firm Octopus Ventures published a new measure of UK universities’ success – the Entrepreneurial Impact Ranking.

Instead of focusing on traditional measures of success, such as research, teaching and citation impact, Octopus Ventures’ new index measures UK universities’ effectiveness at translating this research into commercial success via the creation of “quality, investor-ready spinout companies”.

The results are a little surprising – with Queen’s University Belfast reaching the top spot, ahead of big players such as the University of Cambridge and the University of Oxford.

In this blog post, we consider these findings in more detail, and discuss the potential to further capitalise on the potential of spinouts in the UK, and the key factors that underpin their success.

A brief history of spinouts

A university spinout has been defined by Octopus Ventures as “a registered company set up to exploit intellectual property (IP) that has originated from within a university”.

In other words, it is a company that has been established based on ideas derived from a university’s research.  Often, former or current researchers are directly involved in the management team, and start-up funding is provided by the university (or one of its connected venture funds).

UK universities have been allowed to commercialise the results of their research since the mid-1980s. Between 2003 and 2018, approximately 3000 IP-based spinouts were created by UK universities.

Since 2010, there has been a notable increase in investment into university spinouts – both in terms of the number of deals achieved and the amount of money invested in university spinouts, from both private and public investment sources.

High rates of success

There is good reason for this increased investment – the survival rates of spinouts are high compared to other types of start up enterprise.  Research published in 2018 by law firm Anderson Law found that nine out of ten spinouts survive beyond five years.  By way of comparison, only two out of ten new enterprises survive beyond five years in the wider start-up environment.

Indeed, many spinouts not only survive, but thrive.  The UK has produced a large number of very successful spinouts – for example, Oxford Nanopore Technologies, a University of Oxford spin-out company that has gone on to reach a £1.5 billion valuation.  ARM Holdings is another example – a designer of smartphone chips, established by the University of Cambridge, and acquired by Japanese firm Softbank for £24 billion in 2018.

Unrealised opportunities

However, while the UK has seen a number of high profile spinout success stories, Octopus Ventures, argue that there is yet more untapped potential to be realised:

“The UK has produced a host of successful university spinouts, but there are many unrealised opportunities that have been left in labs or got lost on their funding journey. These could be worth trillions of pounds to the UK economy.”

This potential is perhaps best illustrated by looking at the unrivalled success of many universities in the United States.  Take, for example, Massachusetts Institute of Technology (MIT).  MIT has been the genesis for around 26,000 spinout companies, with a combined annual company turnover of US$2 trillion.  This is a huge amount from one university – and is equivalent to around 65% of the UK’s entire annual GDP!  The resultant spinouts have also created in the region of 3.3 million jobs. MIT clearly illustrates the huge potential that exists to capitalise on universities’ research.

Index results

Back in the UK, this massive potential has yet to be realised.  Indeed, one of the key aims of the new Entrepreneurial Impact Ranking is to identify where this potential exists, and which universities are making notable progress towards capitalising on it.

The key data points included are:

  • total funding per university;
  • total spinouts created per university;
  • total disclosures per university;
  • total patents per university;
  • total sales from spinouts per university.

An interesting element of the index is that it is also adjusted to account for the total funding that a university receives.  This means that it is not dominated by Russell Group universities simply on the basis of them receiving the most funding.

Indeed, Queen’s University Belfast was ranked first – putting it ahead of both the University of Cambridge (2nd place) and the University of Oxford (9th place) in terms of its production of spinout companies and successful exits, relative to the total funding received.

Queen’s University Belfast, through QUBIS Ltd, the university’s commercialisation arm, has had a number of spinout successes, including Kainos, Andor Technology, and Fusion Antibodies, all of which have been listed on the London Stock Exchange.

In Scotland, the highest ranking university was the University of Dundee (6th), which has had a number of successful spinouts, including Platinum Informatics, which specialises in the provision of software to analyse ‘big data’.

What makes a successful spinout company?

As well as identifying the most effective universities in terms of spinouts, the Octopus Ventures report also looks at the shared success factors that have contributed to their effectiveness.

There are three key factors:

  • Funding – Access to early funding is essential to success. Universities that ranked highly in the index were ones that raised funds to help get ideas off the drawing board. As Simon King, a partner in Octopus Ventures states: “Universities that enable early-stage proof of concepts and prototyping by making early-stage funds available, either internally through their own funds or through collaborative schemes with other funds are more successful at creating spinouts.  That’s a key takeaway.”
  • Talent – the issue of talent is considered a ‘consistently challenging’ issue for spinouts.  There is a huge demand for the right skills, and spinouts are often viewed as being high-risk propositions compared to more established enterprises.  Other challenges include a lack of academics’ understanding of the business world, and limited incentives for them to engage in the commercial world in light of the pressure to ‘publish or perish’.
  • Collaboration – As well as university-industry collaboration, collaboration between different universities was a key factor in the creation of successful spinouts. Collaboration helps to increase both scale and capacity, whilst also helping to attract and retain top talent.

Future support for spinouts

Measuring the relative effectiveness of UK universities’ ability to commercialise their research provides a number of signposts for the future in regards to how best to support and further develop this potential.

This is increasingly important given the economic uncertainties surrounding Brexit and the availability of a number of European funding streams once the UK leaves the European Union.

The UK’s Industrial Strategy places a clear emphasis on academic entrepreneurialism as a driver of economic growth.  And in 2018, the UK Government launched the £100m Connecting Capability Fund to support university collaboration in research commercialisation.

Commercialising academic research is far more complex, risky and expensive than establishing a typical start-up.  But their potential contribution to the economy, and wider society, is huge.

Further reading: our blog posts on higher education

Follow us on Twitter to see what topics are interesting our research team.

“The great British sell-off” – losing community assets to balance budgets

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Since 2016, local authorities have been allowed to invest the proceeds of assets sold by April 2019 (now extended to 2021-22) into transforming frontline services, something they were previously prohibited from doing.  Following years of austerity and the extent of recent government funding cuts, it is not surprising that councils have used such money in this way.

However, the rate at which such assets are being sold has raised concerns over the potential loss of publicly-owned buildings and spaces.  Earlier this year, coinciding with the launch of their Save our Spaces campaign, Locality highlighted that on average more than 4,000 publicly owned buildings and spaces in England are being sold off every year – “more than four times the number of Starbucks in the UK.”

‘Financial predicament’

This year’s National Audit Office (NAO) report on the financial sustainability of councils highlights the financial predicament facing councils across the country. While it notes that the sector has done well to manage substantial funding cuts since 2010-11, financial pressure has increased markedly since 2014. In real terms, there has been a reduction in government funding of 49.1% since 2010, representing a reduction in local government spending power of 28.6%.

These cuts are coupled with rising demand for services and other cost pressures. For example, demand has increased for homelessness services and adult and children’s social care. The NAO highlights that from 2010-11 to 2016-17:

  • the number of households assessed as homeless and entitled to temporary accommodation under the statutory homeless duty increased by 33.9%;
  • the number of looked-after children grew by 10.9%; and
  • the estimated number of people in need of care aged 65 and over increased by 14.3%.

Other cost pressures have included higher national insurance contributions, the apprenticeship levy and the National Living Wage.

It is perhaps no shock that Northamptonshire county council became the first local authority since 1998 to be issued with a section 114 notice earlier this year, indicating it was unable to balance its books and at risk of being unable to set a legal budget for 2018/19. Nor is it indeed a shock that the NAO have identified other councils that are in danger of following suit in the next three years.

Despite this dire financial situation, it seems worse is to come. It has been recently announced that local services are to face a further £1.3bn cut in government funding in 2019/20. The revenue support grant, the main source of government funding for local services, will be cut by 36% next year – “the largest annual deduction in almost a decade”.

While the 2018 Budget has made provision for extra funding for adult social care, recent analysis suggests this falls short of what is needed to plug the projected funding gap.

Plugging the gap

In a desperate bid to raise finances, councils have been trying to find alternative income streams. A growing reliance on the use of reserves to offset funding reductions is an approach highlighted as unsustainable by the NAO. Most councils plan to increase or introduce charges for various services and many have also been making use of the government’s flexibility offer of using capital receipts to make improvements to services.

According to the NAO, in the year to April 2017, £118.5m of such capital receipts were used in this way. Locality has reported that the rate of asset sales has been consistently high for the last five years, with an average of 4,131 publicly owned buildings and spaces being sold off each year. Many councils are hoping to sell off their historic town halls to save much needed money. But it’s not just buildings that are under threat; council-owned parks and other land are also at risk. A recent parks survey, published by the Association for Public Service Excellence (APSE), found that 85% of councils surveyed expect a cut in parks and green space funding in the next year. In January, Knowsley council voted to go ahead with proposals to sell 10% of its parkland to fund the running of its remaining parks, since funding for its green spaces is to end in March 2019.

Locality warns that selling such assets on the open market could result in them being lost to the community forever as they have no real influence over what they will be used for; and could potentially lead to social, economic and environmental decline.

Indeed, concerns have been raised over the programme of disposing of council assets by Norfolk County Council, which has recently been reported to be looking to save £10m by selling its assets.

Locality suggests that community ownership is the answer to saving such assets under threat. Community Asset Transfer, set up in 2003, enables councils to sell assets to community organisations at below market rates in return for demonstrable community benefit.

In a bid to increase affordable housing supply, for example, Leicester City Council has sold council land worth more than £5m for less than £10 as part of deals with housing associations. However, the Locality report shows that less than half of councils have a Community Asset Transfer policy. It also notes that while community ownership is a ‘powerful alternative’ to losing public buildings and spaces, it is not straight forward, and community organisations face a number of barriers, including:

  • funding;
  • lack of expertise;
  • limited time; and
  • a lack of clear process.

With 95% of councils surveyed expecting the sell-off of publicly owned buildings and spaces to play an increasingly important role in the next five years, it is surely paramount that something is done to protect important community assets from being lost.

Way forward

Locality has called for the government to create a Community Ownership Fund and for a change in legislation to make it easier for community organisations to gain control of such assets.

Or perhaps councils could follow the example of others who, instead of selling their assets, are using them to generate revenue. Lewisham Council for example, is planning to raise £500k through hosting large commercial events in its parks.

Whatever route local authorities take, it remains to be seen if others will follow in the  footsteps of Northamptonshire or succeed in counteracting continuing cuts to maintain services and balance budgets; and indeed protect important community assets.

If you enjoyed reading this you may also like our previous blogs on the civic use of heritage assets and the value of green spaces.

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What will councils and community groups do for funding after Brexit?

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With a recent study indicating that the majority of local authorities have made no provision for Brexit in their medium-term budgets, there is now a real risk for councils if a ‘no deal’ scenario goes ahead after 29 March 2019. So what does a potential black hole in funding mean for local authorities already beleaguered by austerity?

A recent paper from GRANTfinder, the leading authority on grants and funding in the UK, examines this question and why councils need to be preparing now.

The extent to which the public sector is failing to prepare for Brexit is alarming given that local areas were meant to receive over £8bn in EU funding from 2014 to 2020 from sources such as the European Regional Development Fund and the European Social Fund, and the UK Government has not yet provided detail on replacement funding streams.

What many people may not be aware of however, is that funding applications under EU schemes can be submitted up until the date that the UK leaves the European Union on 29 March 2019. So, there are still nearly eight months left in which councils and local groups can apply for, and benefit from, EU funding.

The full paper considers how local authorities may best attract funding to their local areas through applying to EU funding whilst the current arrangements still apply, as well as considering alternative funding sources beyond the EU. Usefully, it also identifies key types of local authority projects which commonly attract support.

Although it’s clear that councils are facing considerable financial uncertainty, and many are creating their own risk and Brexit impact assessments as a result, there is still funding support available. Given the short timescale and tight resources within councils however, it makes sense to turn to expert help and tools to identify where funding for local areas and community groups could be sourced. In this respect, GRANTfinder is relied upon by councils across the country to help secure investment.

Read the full guide via the GRANTfinder website. Our GRANTfinder colleagues work across the UK and in Europe to help councils, community groups, businesses and universities to source funding. They also provide training and consultancy in grant application processes and bid writing.

Universal basic income: too good to be true?

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“I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Martin Luther King, 1967

It may come as a surprise to learn that the current ‘hot topic’ of universal basic income (UBI) – also known as basic income or income guarantee – is actually over 500 years old.

It was first developed by radicals such as philosopher Sir Thomas More in the 16th century, drawing upon humanist philosophy.  It was mooted by Thomas Paine in the 18th century, and then again in the mid-20th century, by economists such as James Tobin and Milton Friedman.  In 1967, Martin Luther King called for a ‘guaranteed income’ to abolish poverty, and in the 1970s, a basic income experiment ‘Mincome’ was conducted in Canada.

However, only in recent years has debate on universal basic income (UBI) moved into the mainstream.

From the threat of job losses from automation and artificial intelligence, an overly complex and bureaucratic welfare system that has been branded ‘unfit for purpose’, to the failure of conventional means to successfully tackle unemployment over the last decade – basic income has been hailed as a key way to reduce inequality and provide a basic level of financial security upon which individuals can build their lives.

It has many current supporters – including billionaires Elon Musk, Mark Zuckerberg, and Richard Branson.  There is support among the general public too, with a recent poll reporting that nearly half of all adults aged 18-75 in the UK (49%) would support the UK Government introducing UBI at the level to cover basic needs in principle.

 

How does it work? 

In essence, UBI offers every citizen a regular payment without means testing or requirement for work.

Trials of different models of basic income have been conducted around the globe, including Kenya, Finland, and Canada.  There are also UBI trials planned in the district of Besós in Barcelona, Utrecht in the Netherlands and the Finnish city of Helsinki.  Closer to home, four areas in Scotland are also currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire.

While there have been many different models of basic income trialled and assessed over the years, in general, basic income schemes share five key characteristics:

  • Periodic: it is paid at regular intervals, not as a one-off grant.
  • Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not paid in kind (such as food or services) or in vouchers with a specific use
  • Individual: it is paid on an individual basis—and not, for instance, to households.
  • Universal: it is paid to all, without means test
  • Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work

 

Anticipated benefits

The key anticipated benefits of the introduction of UBI is a reduction in inequality and poverty. However, advocates claim that it would also have many other benefits.  These include:

  • simplifying the existing welfare system (including efficiency gains)
  • reducing the psychological burden and stigma associated with welfare benefits
  • achieving more comprehensive coverage – no one ‘slipping through the net’
  • fixing the threshold and ‘poverty trap’ effects induced by means-tested schemes
  • enabling individuals to continue education and training, or retrain, without financial constraint dictating choices
  • making childcare arrangements easier
  • rewarding unpaid contributions such as caring and volunteer work
  • improving gender equality and help women in abusive situations
  • improving working conditions
  • addressing predicted future mass unemployment as a result of automation

 

Criticism

The key argument against the introduction of UBI is its cost – essentially that “an affordable UBI would be inadequate, and an adequate UBI would be unaffordable”.

Critics argue that if UBI were set at a level that enabled a modest, but decent standard of living on its own, then it would be unaffordable – either requiring much higher taxes, and/or the redistribution of funds from other areas, such as education or health.

However, if UBI was set too low, it would not provide an adequate income to live on, and it may be exploited as a subsidy for low wages by unscrupulous employers.

Others, such as economist John Kay, have argued that UBI simply would not have the redistributive effects intended.  Rather than improving the lives of those most in need, who would receive more or less the same as they do under existing welfare systems, it would instead provide more for the middle classes.

There is also some concern that UBI may undermine the incentive to work, and lead to the large-scale withdrawal of women from the labour market.

 

What does the evidence say?

Certainly, there is a beauty in the simplicity of UBI – and no one can argue against the goals of reducing inequality and poverty.  However, in truth, there just isn’t enough evidence available yet to judge whether or not the full-scale introduction of UBI would be successful.

While many pilots have demonstrated positive results, most have been of limited size and scope, and it is difficult to extrapolate these findings to the wider population.

Analyses by a wide range of organisations – including the RSA, the Joseph Rowntree Foundation, the OECD, and the International Monetary Fund, have drawn mixed results.

For example, a review conducted by Bath University in 2017 concluded that:

“The unavoidable reality is that such schemes either have unacceptable distributional consequences or they simply cost too much. The alternative – to retain the existing structure of means-tested benefits – ensures a more favourable compromise between the goals of meeting need and controlling cost, but does so at the cost of administrative complexity and adverse work incentive effects.”

Similarly, the IMF conclude that in the UK and France, UBI would be inferior to existing systems in targeting poverty and inequality. However, there are some aspects of UBI that are difficult to model, such as the behavioural impacts of having economic security.  Trials and experimentation are important sources of such information.

Thus, the planned trials of UBI in Scotland and elsewhere may well help to provide further answers.  And we – along with others around the world – will be watching with interest.

As First Minister, Nicola Sturgeon aptly puts it:

“It might turn out not to be the answer, it might turn out not to be feasible. But as work and employment changes as rapidly as it is doing, I think it’s really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy.”

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

Universal Credit – “forcing many into debt”

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Jul 07 Dealing With Debt - Magnifying Glass

By Heather Cameron

“The biggest change ever made to the benefits system… is currently failing too many people and forcing many into debt.”

This is the conclusion of a new report from Citizens Advice on Universal Credit (UC). It warns that the roll-out should be paused to allow ‘significant problems’ to be fixed.

What is Universal Credit?

UC was introduced in 2013, with the aim of simplifying the benefits system, making transitions into work easier and making every hour of work pay. UC replaces six means-tested benefits and tax credits with one benefit, to be paid in arrears, as a single household payment, on a monthly basis.

The objective of UC is to help people on low incomes or not in work to meet their living costs. It affects a range of people, both employed and unemployed, disabled people with health conditions, single people, families, homeowners and renters.

Roll-out so far has been gradual but the process is to speed up considerably from October. By the end of roll-out in 2022, it is expected around 7.2 million households will receive UC, over half of which will be in work.

With such a significant number of people affected, it is imperative that the system works in their interests. But evidence from Citizens Advice suggests the system has a number of flaws that need addressing to prevent 7 million households from facing serious financial risk.

And this isn’t the first time similar conclusions have been reached.

Flaws

Back in February, a Guardian investigation found that policy design flaws in UC are pushing thousands of benefit claimants into debt. Former welfare minister Lord Freud also admitted to MPs that administrative problems and design issues with UC are causing around one in four low-income tenants to run up rent arrears, putting them at risk of eviction.

In 2016, an inquiry into UC and its implementation by the Public Accounts Committee highlighted the inflexibility of the payment systems which may cause financial hardship for some claimants.

Citizens Advice highlight three “significant problems” with UC:

  • people are waiting up to 12 weeks for their first payment without any income;
  • UC is too complicated and people are struggling to use it; and
  • people aren’t getting help when the system fails them.

The data shows that:

  • more than one in three people helped on UC by Citizens Advice are waiting more than six weeks to receive any income, with 11% waiting over 10 weeks;
  • nearly a third of people helped have to make more than 10 calls to the helpline to sort out their claim;
  • 40% of people helped said they were not aware they could get an advance payment to help with the initial waiting period for their first payment;
  • over half of the people helped borrowed money while waiting for their first payment; and
  • UC clients are nearly one-and-a-half times as likely to seek advice on debt issues as those on other benefits.

A recent report from the Joseph Rowntree Foundation similarly highlighted the issue of waiting time, arguing that it required immediate action.

While Citizens Advice support the principles of UC, it argues that pushing ahead with roll-out while these problems remain will only put thousands more families at financial risk.

Recommendations

In response to these findings, a number of short and longer term considerations were highlighted where action will be needed to help secure the aims of UC by the end of roll-out. These include reducing the six week wait for initial payment, improving the support available for those moving onto UC, and helping people achieve financial stability on UC.

The charity recommends that the roll-out is paused while the government addresses the significant issues that have been highlighted. If improvements are not made, it is argued that both UC claimants and the government will face significant financial risks, which will increase rapidly if thousands more households move onto the benefit later this year.

If you enjoyed reading this, you may also like our previous article on in-work poverty.

Follow us on Twitter to see what developments health, social and community care are interesting our research team.

The 5G arms race: the UK’s strategy to become a global leader in 5G technology

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By Steven McGinty

On 8 March, the UK Government published their strategy for developing 5G – the next generation of wireless communication technologies.

Released on the same day as the Spring Budget, the strategy builds on the government’s Digital Strategy and Industrial Strategy, and sets out the government’s ambition to become a global leader in 5G.

Accelerating the deployment of 5G networks, maximising the productivity and efficiency benefits to the UK from 5G, creating new opportunities for UK businesses, and encouraging inward investment, are the strategy’s main objectives.

If the UK makes progress in these areas, the strategy argues, 5G infrastructure has the potential to become an enabler of smart city technologies, such as autonomous vehicles and advanced manufacturing, and to support the expansion of the Internet of Things – the interconnection of people, places, and everyday objects.

5G Innovation Network

Although the strategy highlights the enormous potential of 5G, it makes clear that 5G technologies are still in development, and that the majority of funding will need to come from the private sector.

To support the growth of a commercial market, the strategy explains, a new 5G trials and testbed programme will be introduced – through a national 5G Innovation Network – to coordinate the development of 5G services and applications. This programme will help government and private sector partners understand the economics of deploying 5G networks, ensuring that technologies can he delivered in a cost-effective way, and enabling best practice to be captured and knowledge disseminated.

The government is investing an initial £16m into the programme (involving partners such as UK Research and Innovation and the Government Digital Service), and has targeted a trial of end-to-end 5G (high speed connectivity without the need for intermediary services) by 2018. In February, Ericsson announced that they had a successful end-to-end 5G trial in Sweden, alongside partners SK Telecom Korea.

Improving regulations

To support the development of 5G, the strategy suggests that there may need to be regulatory changes, particularly in the planning system. As such, the government has committed to reviewing current regulations before the end of 2017, and then to conduct regular reviews, as partners learn more from their 5G trials.

Local connectivity plans

The strategy highlights the important role local regions play in the deployment of mobile technologies, and explains that the government will be consulting with councils on how planning policies can be used to provide high quality digital infrastructure.

However, it also suggests that there may be a case for introducing ‘local connectivity plans’, which would outline how local areas intend to meet their digital connectivity needs. Interestingly, the strategy highlights that evidence, such as local plans, may be taken into account when the government is making funding decisions for local infrastructure projects.

Coverage and capacity, infrastructure sharing, and spectrum

The strategy accepts that the move towards 5G won’t be as straightforward as the move from 3G to 4G. Instead, 5G technology will be developed alongside the expansion of the 4G network.

In addition, the government has accepted the recommendations of the National Infrastructure Commission (NIC)’s ‘Connected Future’ report, which states that unnecessary barriers to infrastructure sharing between telecommunications companies must be tackled. The strategy states that it will explore options for providing a clearer and more robust framework for sharing.

Increasing the available radio spectrum was also highlighted as key to developing 5G technology. The strategy notes that the government will work with Ofcom to review the spectrum licensing regime to help facilitate the development of 4G and 5G networks.

5G strategy’s reception

Natalie Trainor, technology projects expert at law firm Pinsent Masons, has welcomed the new 5G strategy, explaining that:

“…technology and major infrastructure projects will become much more interlinked in future and that the plans outlined can help the UK take forward the opportunities this will present.”

In particular, Ms Trainor sees the establishment of the Digital Infrastructure Officials Group – which will bring together senior staff from across departments – as a way of providing greater awareness and co-ordination of major public projects that involve digital infrastructure. Ms Trainor also hopes that the new group will encourage the Department for Transport and the Department for Culture, Media & Sport (DCMS) to work with industry to develop digital connectivity on the UK’s road and rail networks.

Professor Will Stewart, Vice President of the Institution of Engineering and Technology, similarly welcomes the new strategy but highlights that the funding announced will ‘not come anywhere close’ to the investment required to deliver 5G across the UK. In addition, he also makes it clear that coverage and regulatory change will be vital, stating that:

“The biggest challenge for government will be improving coverage for all, as 5G cannot transform what it doesn’t cover. And achieving universal coverage for the UK, outside high-capacity urban areas, will not be affordable or achievable without regulatory change.”

Former Ofcom director and author of The 5G Myth, Professor William Webb, has also applauded the government’s plans, even though he is an outspoken critic of the 5G industry. For Professor Webb, the strategy recognises that we are in the early stages of 5G technology, and that there is still a need to develop 4G networks.

Final thoughts

5G technology provides the UK with the opportunity to become a genuinely smart society. Yet, as the strategy acknowledges, 5G is still in its infancy and the idea of a 5G network across the UK is a long way down the road.

The new 5G strategy includes a number of positive steps, such as listening to the recommendations of the NIC report, and exploring the realities of deploying 5G networks. This cautious approach is unlikely to show any significant progress in the short term, but does provide a focal point for academia, government, and industry to rally around.

Follow us on Twitter to see what developments in public and social policy are interesting our research team. If you found this article interesting, you may also like to read our other smart city articles.

The power of personal budgets

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Image by Tristan Martin via Creative Commons

Image by Tristan Martin via Creative Commons

Described by supporters as having revolutionised the way the social care system in England is organised, personal budgets have developed to become the norm in social care commissioning in England.

One of the ideas underpinning personal budgets is the development of a new relationship between people who use care services and the organisations who provide them. The new approach was designed to move away from previous prescriptive services towards more bespoke, personalised models of care, where service users are directly involved in planning and deciding what care they receive, and how they receive it.

Within the personal budgets model an allocation of money is given to a specific person from their local authority, following an assessment of need. Money is allocated to the individual, who then works with a professional to work out the most appropriate support. The idea is based on the ideas of transparency, empowerment and personalisation of care.

There are 4 options for service delivery which recipients can chose from to best suit their care needs:

  1. Managed council budgets – where councils arrange the care that is needed following an assessment and an agreed set of outcomes to go alongside a pre-agreed care plan;
  2. Individual service funds – marketed as a more flexible option than local authority led management, this allows recipients to select an alternate organisation to manage an individual’s care budget, and deliver the required services;
  3. Direct payments – this option sees the money paid directly into the account of the person in need of support and allows them to buy care services from an agency or to employ their own carer, or a mixture of both;
  4. Mixed package – a combination of any of the options above, where recipients of support may give some of their budgets to a care provider (either a charity or local authority) but may get a portion of the budget paid directly to them so they can pay, for example, for additional carers to visit during the night.

Seniorin mit Pflegerin

Those in favour of personal budgets point out that the model promotes the personalisation agenda within health and social care in a way that no other policy does. It gives control of spending directly to the person in receipt of the support and has been heralded as a new age for transparency, increasing choice and control, reducing bureaucracy and cutting costs. Personal budgets have also become a key part of the health and social care integration agenda, as well as being highlighted within the recent reform of SEND (special educational needs and disability) care and provision.

Supporters also argue that one of the best and biggest changes between personal budgets and the original direct payment pilots are that personal budgets are designed to produce outcomes, not pay for a service. They are co-produced with the person in receipt of care, as well as professionals from a number of sectors, care providers and family, if appropriate, to ensure that care plans and agreed outcomes are established when the budget is allocated and that the payments achieve those outcomes.

pregnant carer giving pills and medication to her elderly pacient

However, studies have shown that there are big variations in service provision, choice can be limited and poor practice and processes can have a big impact on personal budget delivery and effectiveness. There has also been criticism of the high level of support within government for the model, despite the limited number of pilot roll outs and reviews into outcomes.

In 2016 a National Audit Office report was critical of the way that public services have monitored the impact of personalisation through personal budgets, as very little evaluation of their long term benefits and efficacy have been completed. The report stated that the Department of Health needed to “gain a better understanding of the different ways to commission personalised services for users and how these lead to improvements in user outcomes.” It is clear that there is a lack of evidence as monitoring does not allow service providers to understand how personal budgets improve outcomes.

Critics also argue that personal budgets are ineffective and cannot provide suitable care for everyone in need. They argue that there has never been, and never will be adequate funding to implement personal budgets properly. The principle is only effective, they argue, if there is an unlimited supply of both funds to pay for services and service providers delivering high quality service, which under current conditions of austerity there is not. Supporters counter however, that the concept of “self-directed support” is fundamentally a good one, but admit that poor delivery can deter some people.

Conclusion

Personal budgets can empower people in receipt of care, allowing them to take control of how their care is delivered. This recognition that care should be individualised is a big step forward for people who rely on care services on a daily basis.

However, reduced budgets, inconsistent service provision, and a lack of information for recipients has meant that some people have missed out on the benefits of personal budgets. In practice, services are patchy and evidence of actual benefits, in terms of improved outcomes, is lacking due to the limited number of research studies.

In order to fully realise the power of personal budgets for everyone in receipt of care, the provision, implementation and understanding of the model must be improved. Support for people to help them make the most informed decisions about planning their care packages should also be increased.

The economy and Brexit – what’s next?

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By Heather Cameron

‘Uncertainty and volatility’ – these were two key terms highlighted at a recent event focusing on the impact of Brexit on the economy, hosted by STEP Stirling.

Following the historic decision of the UK to leave the European Union and all the press that has ensued, it was interesting to hear from experts in the field on what they believe the true impact will be.

Speaker: David Bell, Professor of Economics, University of Stirling

Professor David Bell from Stirling University delivered the first presentation, providing an overview of the key economic implications of Brexit.

David suggested that the negative impacts from a leave vote have not materialised as predicted, noting that “the economics of Brexit has moved at a slower pace than the politics.” Many predicted that there would be an immediate impact on the economy and on consumer confidence, but this hasn’t happened. Retail sales have shown no signs of collapse, with recent research actually showing growth.

Nevertheless, David noted that things were different for businesses, which are experiencing a lot of uncertainty. He indicated that this business uncertainty has dragged UK business output and optimism to a three year low.

What is clear, is that there has been a significant depreciation in Sterling which is unlikely to be reversed in the short to medium term. David considered the implications of this, including that we are poorer, more time will be spent working to benefit smaller businesses, there is lower borrowing costs and it is bad news for pensions.

David also highlighted the issues around the UK’s deficit in goods and surplus in services and trade agreements, which are particularly complicated. To conclude, David acknowledged that negotiations will be difficult and that we will be in the same position for some time to come – with a lot of uncertainty.

Speaker: Craig Wilson, Senior Director Treasury Solutions North England & Scotland at Clydesdale Bank

Following David, was Craig Wilson from the Clydesdale Bank. He considered the impact of Brexit from a financial markets perspective.

To begin, Craig highlighted that what was surprising about the Brexit vote was that ‘the bookies were wrong’, with odds as much as 2/9 suggesting an 82% probability of a remain victory. He noted that the immediate reaction, as similarly highlighted by David, was a drop in Sterling. He said:

“We had a reaction to a recession without the recession taking place.”

Craig also highlighted what has happened since the vote in terms of GBP/Euro stats, interest rate cuts and the price of Brent oil. Interestingly, Brexit hasn’t been shown to have affected commodities as oil prices only dropped slightly and have now increased again.

In agreement with David, Craig argued that there will be a negative impact on the economy in the short to medium term. Economists have cut UK GDP growth going forward to just 1%. Craig suggested that house prices will be important because if they hold up, consumer confidence is likely to remain.

The future, however, was also emphasised as uncertain by Craig. He highlighted that there are lots of variables, both within the UK and abroad, including:

  • UK data
  • Public perception and consumer sentiment
  • Recession?
  • Bank of England monetary policy – will there be more cuts?
  • Negotiations – timing of these, will they be positive or negative?
  • House of Commons/Lords may ignore the vote
  • The US presidential elections
  • US interest rate increases?
  • The Italian debt crisis
  • Emerging markets

In conclusion, Craig suggested the one thing to take away is that so many factors will make the markets volatile.

If you enjoyed reading this, you may also be interested in our other recent blogs on the impact of Brexit:

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Local Enterprise Partnerships – the story so far

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Business strategyBy Heather Cameron

Following the abolition of the Regional Development Agencies in 2010, 39 local enterprise partnerships (LEPs) were established in England by 2012. Each was designed to represent a functional economic area and steer growth strategically in local communities. These business-led partnerships between the private sector and local authorities are central to government plans for local economic growth.

According to a new report from the National Audit Office (NAO), the role and remit of LEPs has expanded both significantly and rapidly but there are concerns over whether they have the capacity and capability to deliver.

Rapid growth

Since their inception, LEPs have rapidly developed from new start-up organisations to bidders and delivery managers for substantial amounts of national and European funding initiatives to strategic leaders of their local economies.

Between 2010 and 2015 total central government funding directed through LEPs was approximately £1.5 billion. Through the Local Growth Fund, £12 billion will be available from 2015-16 to 2020-21. Growth Deals were agreed with each of the 39 LEPs in 2014, through which £6.3 billion of the Local Growth Fund was allocated. With a further £1 billion allocated in January 2015, the total to date is £7.3 billion. LEPs estimate that the Growth Deals combined will create up to 419,500 jobs and 224,300 housing units.

On the whole, LEPs have been perceived positively and are well established as the main agencies for promoting local growth.

Development has been anything but uniform, however, with a varied pace of evolution. Considering the differing levels of size, urbanisation, population, and existing infrastructure within the LEPs, this is no surprise.

The most advanced LEPs have been identified as those with a history of collaborative working. Greater Manchester leads the way, having already been given powers over skills, welfare and transport, and to be given new powers over the criminal justice system as announced in the 2016 Budget. Greater Manchester has been working in partnership since the 1980s through its local government association, and formally through its Combined Authority since 2011.

And according to a recent Localis report, including London, there are at least a third of LEPs based in and around urban areas which are or could soon be in a position to take on greater powers, with 2017/18 a feasible timeline for them to assume greater powers.

Uncertainty

Despite their rapid development and increased responsibility for substantial amounts of government funding, concerns have been raised over LEPs’ power, resources and accountability.

The NAO report found that only 5% of LEPs agreed that resources available to them are enough to meet government expectations. Additionally, 69% of LEPs reported that they did not have sufficient staff and 28% did not think that they had sufficiently skilled staff.

A survey by the Federation of Small Businesses in 2014 found that: there is a disparity in the levels of funding and capacity across LEPs; a lack of clarity on the remit, purpose and function of LEPs from government has resulted in widespread misunderstanding and friction in practice; and inconsistencies in performance monitoring across LEPs is hampering accountability to local stakeholders and hindering assessment of LEP performance nationally.

Further recent analysis argues that their role and influence are being compromised by a fragmented and changing landscape of economic development governance and the absence of any longer term vision and plan for their evolution.

Given this lack of long term vision and strategy, the fundamental tensions yet to be resolved and their institutional shortfalls and limitations in authority, accountability, capability and resources, the analysis concludes that many LEPs will struggle to exercise substantive influence on economic development at the local level.

Indeed, LEPs reported to the NAO that they were uncertain about their place in the wider devolved landscape. LEPs were also concerned that the government had not made clear their role in economic planning and development as devolution progresses.

Further concerns were raised over funding in terms of pressure to spend their allocation within the year at the risk of not receiving future funding, which could potentially lead to LEPs not funding projects most suited to long-term economic development. And the sustainability of reliance on local authority support at a time of reduced local government funding was another worry.

Future direction

Going forward, the NAO report recommends that the government:

  • clarifies how LEPs fit with other bodies to which it is devolving power and spending
  • distributes Local Growth Funding to LEPs in a form that will give them medium to long-term funding flexibility, subject to performance, to reduce risk of funds being spent on projects that LEPs do not regard as offering the best value for money
  • sets out specific quantifiable objectives and performance indicators for the success of Growth Deals
  • ensures that there is sufficient local capacity within LEPs to deliver Growth Deals by taking a more explicit and consistent account of the financial sustainability of local authority partners
  • uses its approach to monitoring Growth Deals as an opportunity to standardise output metrics for future local growth initiatives, allowing for comparative performance assessment and reducing reporting burdens
  • tests the implementation of local assurance frameworks before confirming future funding allocations, and works with LEPs to ensure that the required standards of governance and transparency are being met.

Only time will tell whether the government expectation of LEPs to deliver Growth Deals effectively and sustainably will become a reality.

If you liked this blog post, you might also want to read our previous post on innovation districts and sustainable growth

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