• Home
  • About
  • 151 IMPACT AWARDS
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

Impact Awards –>
  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Peterborough plans £7m repeat of controversial capital receipts treatment

0
  • by Jim Dunton
  • in 151 News · Resources · Technical
  • — 26 Feb, 2020

Peterborough City Council has revealed plans to use £7m of capital receipts to help balance its in-year revenue budget and 2020/21 spending proposals – despite controversy surrounding similar moves in previous years.

Last year MHCLG investigated Peterborough’s use of capital receipts to offset its minimum revenue position (MRP) charge after questions were raised about the lawfulness of the practice.

In 2017/18 the authority used the methodology to pay off loan debt with £4.1m of capital receipts; in 2018/19 it used £12.7m of capital receipts to pay off debt. Its 2019/20 budget proposed £10.6m in capital receipts for the same purpose. 

Room 151 subsequently reported that MHCLG and the Chartered Institute of Public Finance and Accountancy (CIPFA) were considering a review of the wording of the prudential framework to ensure clarity on the acceptable use of capital receipts.

But MHCLG said it would take no further action against Peterborough.

A report to a joint meeting of the authority’s scrutiny committees this week indicates that Peterborough is planning to use a further £3.1m of capital receipts to balance its current-year budget and £3.9m for its 2020/21 budget. 

Author Peter Carpenter, who is Peterborough’s acting head of corporate resource, said the proposals to use capital-receipts to pay down debt reflected the need to “ensure there is resilience with level of reserves the council holds” from the sale of further assets.

Carpenter referenced last year’s challenge over Peterborough’s use of the practice, but said it had been “agreed with government” that the authority did not act outside of the law.

“Whilst it is clear that MHCLG do not agree that this use is within the spirit of the legislation, there [have] been no updates or changes in legislation so far which prevents the council from continuing this practice in future financial years if capital receipts are available,” he said.

Defending its stance last year, the authority cited statutory guidance on MRP, revised in 2018, which covers the annuity method of calculating MRP provision.

The guidance states: “Adjustments to the calculation to take account of repayment by other methods during repayment period (e.g. by the application of capital receipts) should be made as necessary.”

Room 151 understands that MHCLG and CIPFA have discussed the potential for clarifying the prudential framework in relation to councils use of capital receipts. However, as Carpenter noted, there have been no recent updates.

The authority has also sought a capitalisation direction from the Ministry of Housing, Communities and Local Government (MHCLG) that would permit it to use almost £9m in capital funding to pay for “one-off redundancy and transformation costs” across the two financial years.

Peterborough’s request for an MHCLG direction to borrow almost £9m to fund its HR transformation programme was submitted last month, the report to this week’s joint scrutiny committees meeting said.

It said the move followed January’s launch of a voluntary-redundancy programme that would incur “significant one-off redundancy and transformation costs”. The report said that if the request were granted, £7.7m of the funding would been used in the current year and the remaining £1.2m in 2020/21.

Announcing Peterborough’s draft budget proposals last week cabinet member for finance David Seaton acknowledged that many of the savings and income measures were “one-offs and won’t deliver ongoing benefits”.

Council leader John Holdich said he had met with local government minister Luke Hall last week to discuss the borough’s financial situation, with the help of MPs Paul Bristow and Shailesh Vara.

“We were given more than an hour, much longer than is usually allowed, to explain our city, its challenges, how well our services perform and to put a strong case forward for fairer funding,” Holdich said.

“We also gained some knowledge about how government will approach fairer funding and how we should pitch our case.”

Share

You may also like...

  • Shetland diversifies pension fund, Police raid on Liverpool/BT offices, Wandsworth development payout… Shetland diversifies pension fund, Police raid on Liverpool/BT offices, Wandsworth development payout… 20 Mar, 2014
  • Peter Worth: Streamlining year-end financial reporting  Peter Worth: Streamlining year-end financial reporting  25 Sep, 2017
  • Ending PFI contracts: Top tips for managing the process 23 Jun, 2020
  • Trend for longer term cash holdings to impact treasury investment strategies Trend for longer term cash holdings to impact treasury investment strategies 20 Sep, 2017

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    Impact Awards: Cheltenham’s tech hub and Hackney’s recovery from cyber attack: The CCLA/Room151 Impact Awards spotlight  finance teams with a direct impact on their local communities and the environment. This week we explore Cheltenham Borough Council’s… dlvr.it/Rxg53h pic.twitter.com/iH8oGKOfSs

    Room151 3 days ago

    Collaboration the key to district recovery post-pandemic: Regeneration and economic growth will depend on districts’ ability to secure funding and work with public and private partners, argues Sanjiv Kohli. Covid hit us in March 2020 and immediately[...] dlvr.it/Rxb4VK pic.twitter.com/FiMynEQVPU

    Room151 1 week ago

    Impact Awards: Liverpool’s cafe culture and Warrington’s investment in homes: The CCLA/Room151 Impact Awards showcase  finance teams with a direct impact on their local communities and the environment. This week we spotlight Liverpool City Council’s… dlvr.it/RxJsKb pic.twitter.com/dEYpaz6HP0

    Room151 1 week ago

    Doing something in #localgov #finance for housing or regeneration? Check out the 'Place Shaping' category room151.co.uk/impact-awards/… sponsored by @31tenConsulting in the CCLA/Room151 Impact Awards. #timetoenter !! pic.twitter.com/dU99vE6Wws

    Room151 1 week ago

    Doing something in #localgov #finance for Adult Social Care & Health? Check out the ASC&H category room151.co.uk/impact-awards/… sponsored by Fundamentum Social Housing REIT in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 1 week ago

    Doing something in #localgov #finance for the environment? Check out the 'carbon management' category room151.co.uk/impact-awards/… sponsored by @ACSLLP in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 1 week ago

    So what are the seven categories for the CCLA/Room151 Impact Awards? Here they are room151.co.uk/impact-awards/… #localgov #finance #outcomes

    Room151 1 week ago

    Why should LGPS be concerned about rising inflation?: The impact of the coronavirus pandemic, lockdown and wider economic uncertainty created  deflationary pressures which raise important considerations for the Local Government Pension Scheme writes… dlvr.it/RxF7Fs pic.twitter.com/JlcjROBIpz

    Room151 1 week ago

    JOB ALERT: LPFA Finance Director vacancy: London Pensions Fund Authority Finance Director and s151 Officer Competitive salary and benefits The largest Local Government Pension (LGPS) provider in London with around £6.5 billion of assets and 135[...] dlvr.it/RxBdJP

    Room151 1 week ago

    Richard Harbord: Further signs that local government finance is failing: The crisis in Liverpool and a fix for education budgets are further indication that local government finance is in need of a root and branch review. Even for those students[...] dlvr.it/Rx9PSV pic.twitter.com/sAanC2gEyu

    Room151 2 weeks ago

    Impact Awards: Finance helps launch school meals company and support business during lockdown: The CCLA/Room151 Impact Awards will showcase the way finance teams have a direct impact on their local communities and the environment. This week we spotlight… dlvr.it/RwnlF4 pic.twitter.com/AJhne1MVG4

    Room151 2 weeks ago

    "This work has made a vital, practical contribution to ensuring people have been supported through the pandemic." #impact #151awards #covid #s151 room151.co.uk/treasury/impac… #impactcasestudies #councilfinancemakesadifference

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story And here is the LGPS news: It’s better than you read in the press
  • Next story LGPS board holds off on ‘fiduciary duty’ guidance

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.