Government finances at 'significant risk' from debt-laden councils due to Covid
January 22, 2021, 12:29 pm

Government finances at 'significant risk' from debt-laden councils due to Covid

Croydon Town Hall. The council declared itself effectively bankrupt in November.

Commons committee says Treasury has ‘worryingly laissez-faire attitude’ to issue

Local authorities who are taking on risky levels of debt to shore up dwindling resources during the pandemic present a “significant risk” to the government’s finances, MPs have warned.

The Commons’ public accounts committee urged the Treasury on Friday to detail how it will manage the risk to the nation’s finances as the extra pressures of dealing with coronavirus adds to the pressure on councils.

Meg Hillier, the committee’s chair, criticised the department as having a “worryingly laissez-faire attitude” to the issue as the MPs predicted more authorities will soon be unable to balance their books.

In its government accounts report, the committee urged the Treasury to ensure it has sufficient oversight of local finances as the “funder of last resort” if they go bust.

Hillier said that “some local authorities have taken on extremely risky levels of debt in recent years in an effort to shore up dwindling finances”, particularly in commercial property investments such as office blocks, industrial sites or retail premises.

“The pandemic has doubly exposed that risk – in the huge extra demands and duties it is placing on local authorities, and in the hit to returns on commercial investments.

“The Treasury has a worryingly laissez-faire attitude to what now presents a significant risk to the whole of government.

“It must step firmly back into the driving seat, demonstrating that it has a clear handle on significant risks in our public finances and is managing them – and that it’s ready to take on the unprecedented additional impact of Covid-19 and EU exit,” she said.

Over the past decade, Westminster has cut a fifth – £15bn – of central funding to councils without designing effective means for them to raise equivalent sums locally.

A Guardian analysis of finances in July indicated that councils were set to shed thousands of jobs and cut services following a collapse in income.

The committee also highlighted an “apparent lack of ownership” by the Treasury of analysis and scenario planning to manage the impact of coronavirus on Government finances.

The MPs said the Treasury has not explained how the disease will impact investments and projects nor has it set out which programmes would be priorities if some need delaying or cancelling.

Croydon council in south London imposed emergency spending restrictions in November – the first council to declare a Section 114 order, effectively saying it was bankrupt, since Northamptonshire council in 2018.

A Treasury spokesperson said: “We provided a significant funding uplift for councils at the spending review last year to support local services, on top of funding to ensure they can continue to deliver essential local services as we tackle the impacts of the pandemic.”

source: Rajeev Syal

Levant

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BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).

Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.