Oral Answers to Questions

Simon Hughes Excerpts

Thursday 25th November 2010 Commons Chamber

[Mr Speaker]

Order. We are talking about redundancy costs, so we must get on with it.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I gather that in the comprehensive spending review the Government allocated £200 million for the capitalisation cost of redundancy payments. I also gather that local authority chief executives and treasurers suggest that the costs might be between £1.5 billion and £3 billion. If they are correct and the Government estimate is much lower than the actual sums involved, what are the Government going to do about it?

[Robert Neill]

Capitalisation, which enables local authorities to treat revenue expenditure as capital and borrow for it is an exception to the accounting rules, so there has always been a need for some control, and capitalisation for a number of streams has never run at 100%. It is also worth bearing in mind that local authorities have been aware for some time that reductions in expenditure were inevitable—they were planned by the previous Government. A shrewd authority will therefore have planned to deal with the problem in advance.