Councils net greater flexibility on spending revenues from sale of surplus assets

Local authorities are to be allowed – for a three-year period from 1 April – to spend any revenues they generate from selling surplus assets, such as property or shares and bonds, to fund the costs of improvements in areas like housing and children’s services, the Department for Communities and Local Government has said.

The changes are contained in updated guidance published this week. They follow the Chancellor of the Exchequer’s announcement in the Autumn Statement of changes to the rules for use of ‘capital receipts’.

The DCLG suggested that capital receipts could be used on improving, amongst others:

• shared back office, restructuring and administrative work with other councils;
• counter fraud programmes;
• public facing services which straddle more than one body, like children’s services or trading standards.

However, it added that “to ensure that this decision is taken responsibly” the guidance set 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,” the Department said.

“From 2017 to 2018 strategies will also be required to review whether planned savings outlined in previous years are being achieved.”

Communities Minister Marcus Jones said: “The devolution revolution and historic four-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.”