3 March 2011
The government is providing a further £100m of capital funding to help councils deal with early budget cuts, it was announced today.
Local government minister Bob Neill said the extra amount, for use during the coming financial year, came on top of £200m announced in the Comprehensive Spending Review. It takes the total capitalisation fund for councils to £300m.
The timetable for capitalisation, which permits councils in certain circumstances to treat revenue cost as capital costs, has also been brought forward to help with financial planning.
The deadline for applying for capital funding is May 12, with decisions about allocations expected in July. This is six months earlier than in previous years, reflecting the difficult financial position councils are currently in.
Neill said: ‘Every council knew they would have tough decisions to make to play their part in cutting the deficit because councils account for around a quarter of all public expenditure.
‘The majority of councils are planning sensibly for leaner budgets and this round of capitalisation will give councils more flexibility in the coming year, whilst keeping costs within wider public spending plans.
‘Prudent use of their £10bn of reserves can help councils to
manage transformational change whilst protecting frontline services.’
'It is very encouraging that the government has listened to our concerns and agreed with the LGA’s request to increase the amount that councils can spend from their own capital resources to help pay for redundancy costs.
'Giving councils greater flexibility over their own capital resources is a common sense approach to helping them give taxpayers the best possible value for money.
'It means they will not have to dip so far into their revenue budgets to pay for redundancy costs, potentially saving jobs and limiting the impact on frontline services.'
But Sir Robin Wales, Mayor of the London Borough of Newham, said the today's announcement was 'a recognition of the totally unfair way in which councils have been forced to deal with unnecessarily deep and savage cuts'.
'The front-loaded element means that Newham alone is facing a £44m funding cut from central Government in 2011/12. Mr Neill's intervention would not have been necessary if his department had implemented spending reductions in a more considered and even-handed way,' he added.
New guidance on applying for capitalisation was also published today by the government.
