£300m of flexibility through capitalisation to help councils deliver early efficiency savings

The government is providing £300m of flexibility through capitalisation to help councils deliver efficiency savings early through organisational restructuring.

Capitalisation is where the government permits councils, in special circumstances, to treat revenue costs as capital costs. This increases their flexibility, because they can then meet those costs using their existing borrowing powers or capital receipts, for example, from asset sales.

While capitalisation will provide important support, it will be for councils to assess how they best manage costs overall from their own resources, including sensible and appropriate use of their £10bn of reserves.

In order to provide authorities with clarity early in the financial year, the timetable for capitalisation is being brought forward, with decisions to be expected in July.

Guidance for how councils should apply has been issued, with 12th May the deadline for applications.

Local Government Minister Bob Neill said: "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."

Further information:
Department for Communities and Local Government