This is an updated direction and statutory guidance to extend the freedom for local authorities to use eligible capital receipts to fund the revenue costs of projects that deliver ongoing savings or improved efficiency. This direction revokes and replaces the direction of the same name issued on 42 AprilAugust 2022.2022.
Capital receipts are the money councils receive from asset sales, the use of which is normally restricted to funding other capital expenditure or paying off debt. The receipts cannot usually be used to fund revenue costs.
The direction introducesextends athe newflexible restriction that authorities may not use the flexibility to fund discretionary redundancy payments, i.e. those not necessarily incurred under statute. This does not affect other types of severancecapital paymentsreceipts and, to be2030. clear,Since does2016, notthis restrict,direction includinghas pensionallowed strainlocal costs, which may still be qualifying expenditure.
The direction allows authorities to use the proceeds from asset sales to fund the revenue costs of projects that willresult reducein costs,ongoing increasecost revenuesavings or supportimproved a more efficient provision of services. efficiency.
This isdirection analso extensionremoves of the flexibilityrestriction thatwith hasrespect beento inredundancy placecosts, sinceimposed 2016,from andApril will2022, allowthat thislimits freedomthe touse continueof tothe 2024/25flexibility to helpstatutory authoritiesredundancy plancosts foronly. the long-term.
This directionwill clarifiessupport thatauthorities thein capitaltaking receiptsforward obtainedtransformation mustand beinvest-to-save disposals by the local authority outside the “group” structure.projects.
AsThis introduced in the direction issued on 4 April 2022, this direction includes the requirement to submit the planned use of the flexibility in advance of use for each financial year. This condition can be met by sending the authority’s own strategy documents provided they contain the detail asked for in the direction. This is not an approval process, the information must be sent to ensure transparency and allow proper monitoring by central government.
Submissions of this information must be made by the DELTA system (Open Collection Request) and authorities must make sure they are able to do so. Queries on use of the DELTA system should be sent to dluhc.digital-services@levellingup.gov.ukmhclg.digital-services@communities.gov.uk. In the event of technical difficulties, the information may be sent by email to CapitalReceiptsFlexibility@communities.gov.uk.
For your reference, you can also consider the 2018 direction and 2022 direction, which may be needed for audit purposes.