Updated guidance published today (11 March 2016) by Communities Minister Marcus Jones, shows how councils can use a radical shake-up of spending rules to make improvements to local services.
In the Autumn Statement, the Chancellor announced changes to the rules for use of ‘capital receipts’. Now for a 3-year period from the 1 April, local authorities will be able to spend any revenues they generate from selling surplus assets – like property or shares and bonds - to fund the costs of improvements to things like housing and children’s services .
Ministers say the new rules – which run for a 3-year period - will incentivise local authorities to sell assets that could be made surplus and to invest the proceeds and make their services more efficient.
Communities Minister Marcus Jones said:
The devolution revolution and historic 4-year local government finance settlement means that councils can now plan budgets with security. These new rules will further incentivise local authorities to plan out the best financial future.
They will be able to sell off their surplus assets in order to make additional resources available and make efficiencies to improve services that really matter to local people.
Flexibility to improve services
The 4-year financial settlement transformed the relationship between central and local government. By the end of this decade, councils will now be funded from revenues they raise locally, rather than central government grants.
The flexibility for councils to use revenues from surplus assets to invest in projects that will save money in the future builds on that. It also gives councils the flexibility to decide how best to use their income.
Capital receipts could be used on improving, amongst others:
- shared back office, restructuring and admin work with other councils
- counter fraud programmes
- public facing services which straddle more than one body, like children’s services or trading standards
But to ensure that this decision is taken responsibly today’s guidance sets out how councils should develop a dedicated strategy document to go alongside or as part of their annual budget.
As a minimum, strategies should list each project that plans to use revenues from capital receipts to improve and state details of the expected savings or service transformation.
From 2017 to 2018 strategies will also be required to review whether planned savings outlined in previous years are being achieved.
This updated guidance builds on that published in December and was updated following informal consultation with councils.
Government has listened to feedback from local authorities and streamlined the requirements, while maintaining transparency for local residents.
In the Autumn Statement the Chancellor announced changes to the rules for use of capital receipts.