Councils to spend all proceeds from selling assets in financial shake-up
All assets sale proceeds can be spent by councils for three years from 1 April, the Department for Communities and Local Government (DCLG) announced today.
The move is a bid to reduce the financial pressures on local councils, many of whom are now introducing the greatest council tax increase in eight years as well as cutting services, increasing charges and using up reserves.
The new rules allow councils to spend revenues from selling assets, including property, shares and bonds, on services, in a move the government says is designed to encourage efficiency and the sale of surplus assets.
Marcus Jones, the under secretary for local government, 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.”
The government is also offering 100% business rates devolution by 2020 to improve council funding, but finance leaders warned the House of Commons’ Communities and Local Government Committee this week that they have concerns about the problems the changes will cause.
The decision is accompanied by guidance requiring councils to develop a dedicated strategy document to go alongside their annual budget, which should include details of each project that would be improved through the use of capital receipts and details of the expected savings or service transformation.
From 2017 to 2018 strategies will also be required to review whether planned savings outlined in previous years are being achieved.
The UK government has also set a target of reducing its offices by 75% before 2023.