Question to the Department for Levelling Up, Housing & Communities:

To ask the Secretary of State for Levelling Up, Housing and Communities, whether his Department's policy on the flexible use of capital receipts by local authorities in England includes using the receipts from the sale of capital assets to a local authority controlled company for the purpose of funding current revenue expenditure; and if he will make a statement.

The current statutory guidance on Flexible Use of Capital Receipts which is applicable until 31 March 2022 details that qualifying expenditure is expenditure on any project that is designed to generate ongoing revenue savings in the delivery of public services, transform service delivery to reduce costs, or transform service delivery in a way that reduces costs or demand for services in future years for any of the public sector delivery partners. Within this definition, it is for individual local authorities to decide whether a project qualifies for the flexibility as they are best placed to decide which projects will be most effective for their areas. Government is not able to provide advice.

Each local authority’s Section 151 officer has statutory responsibility for proper administration of financial affairs; and authorities using the flexibility will need to satisfy their auditors that they have complied with the Direction and supporting Statutory Code in the normal way. The Code requires local authorities to prepare a strategy setting out the amounts spent on allowable projects on a project by project basis and to get this approved by full Council or the equivalent. This can be done as part of the annual budget setting process.

It was announced as part of the local government finance settlement in February 2021 that the Department would extend the flexibility to use capital receipts for further three years and at the time we said we would follow up with the details of the flexibility. Information on the parameters beyond 31 March 2022 are still in the process of being finalised. We understand that local authorities need time to plan for their spending over the years and will publish these details shortly.