• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • EAPF criticised for water company investments

    August 10, 2022

  • Welsh pension fund confirms £50m investment in clean energy

    August 10, 2022

  • Inflation ‘disastrous’ for local services, warns LGA

    August 10, 2022

  • Consultation opens into care charging reforms

    August 9, 2022

  • ADASS survey: ‘worst fears confirmed for adult social care’

    August 5, 2022

  • GMCA to unlock funds for home energy-efficiency upgrades

    August 4, 2022

  • 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
  • Briefs

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...

  • IFRS 16: A lot of effort, but a great opportunity too 25th Jan, 2022
  • WECA mayor fails in bid to force LGPS fund to divest entirely from fossil fuels 6th Jul, 2022
  • Jackie Weaver calls for more ‘hyper-localism’ to revitalise local government 9th Feb, 2022
  • Cornwall’s housing crisis: planning and tax reforms ‘urgently required’ 12th Apr, 2022

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • 151 BRIEFS – WHAT’s NEW?

    • Inflation ‘disastrous’ for local services, warns LGA
    • Consultation opens into care charging reforms
    • ADASS survey: ‘worst fears confirmed for adult social care’
    • GMCA to unlock funds for home energy-efficiency upgrades
    • Levelling up committee calls for urgent boost to social care funding
  • Room151’s LGPS Roundtables

    Biodiversity
    Valuations & Risk
    LGPS Women

  • Room151’s LGPS Roundtables

    Biodiversity
    LGPS Women
    Valuations & Risk
  • Latest tweets

    Room151 7 hours ago

    Which LGPS pools and funds are attending the LGPS Investment Forum on Nov 2 & the LGPS Private Markets Forum on Nov 1st? Answer here: lnkd.in/eDHU8tuy pic.twitter.com/D3gd63Rh7F

    Room151 23 hours ago

    LGPS and levelling up: nothing to fear but fear itself: There have been a number of objections to government plans for LGPS funds to invest 5% of their assets in local projects. But George Graham says these objections can be[...] dlvr.it/SWL7vt pic.twitter.com/ebwBEkZTy4

    Room151 1 day ago

    George Graham @SYpensions @bordertocoast channels his inner FDR in a call for local government pension funds to avoid the fear factor and embrace levelling up #LGPS #localgov room151.co.uk/local-governme…

    Room151 2 days ago

    Changes to rules on capital receipts raise wider questions: Stephen Kitching argues that DLUHC’s latest rule changes are part of a series following on from revisions to MRP guidance and the purchase of commercial property. He questions whether… dlvr.it/SWGqKC pic.twitter.com/Ycr5hWZDPk

    Room151 5 days ago

    ‘No ifs, no buts’: the Bank of England continues its battle with inflation: Partner Content: CCLA Investment Management’s Robert Evans discusses the MPC’s 0.5% increase in the Official Bank Rate and its ongoing commitment to the 2% inflation target… dlvr.it/SW7SNC pic.twitter.com/ryOzYRSNA9

    Room151 6 days ago

    DLUHC changes rules on flexible use of capital receipts: The levelling up secretary has written to all council leaders to amend the rules concerning the flexible use of capital receipts to fund transformation projects. In his letter, Greg Clark[...] dlvr.it/SW3jyX pic.twitter.com/KEhSSaMITl

    Room151 7 days ago

    Local audit and financial reporting: let’s take back control: Mazars’ Suresh Patel suggests three steps that auditors and council finance teams should take to help get financial reporting and local audit back on track. Following my recent appearance… dlvr.it/SW0PfV pic.twitter.com/miL7pjukce

    Room151 1 week ago

    The case for residential investment: income, impact and resilience: Partner Content: Emma Gullifer from Columbia Threadneedle discusses the options for pension funds looking to invest in residential property including the Build-to-Rent market.… dlvr.it/SVzKwN pic.twitter.com/hdgZ4zKt4H

    Room151 1 week ago

    Draft accounts: delays continue despite deadline dash: Dan Bates discusses the latest data on the publication of local authority accounts and examines why so many councils missed the 31 July deadline. Sunday 31 July 2022 was the[...] dlvr.it/SVx2ZT pic.twitter.com/gdELhD3Yis

  • Register to become a Room151 user

  • 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 2022 Room 151. Typegrid Theme by WPBandit.

0 shares
We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK