Statutory guidance

Flexible use of capital receipts: direction (accessible version)

Updated 2 August 2022

Applies to England

Sections 16(2)(b) and 20 of the Local Government Act 2003: Treatment of costs as capital expenditure

1. This direction revokes and replaces the direction of the same name issued on 4 April 2022. This direction commences from financial year beginning 1 April 2022. The direction issued on 6 February 2018, of the same names as this direction, will continue to apply to the financial years beginning 1 April 2016 to 1 April 2021 inclusive, without amendment.

2. In February 2021, the Secretary of State announced, alongside the local government finance settlement, the continuation of the capital receipts flexibility programme for a further 3 years, to give local authorities the continued freedom to use capital receipts from the sale of their own assets (excluding Right to Buy receipts) to help fund the revenue costs of transformation projects and release savings.

3. Accordingly, the Secretary of State directs, in exercise of his powers under sections 16(2)(b) and 20 of the Local Government Act 2003 (“the Act”), that the local authorities listed in Annex A (“the Authorities”) treat as capital expenditure, expenditure which:

• is incurred by the Authorities that is designed to generate ongoing revenue savings in the delivery of public services and/or transform service delivery to reduce costs and/or transform service delivery in a way that reduces costs or demand for services in future years for any of the public sector delivery partners; and

• is properly incurred by the Authorities for the financial years that begin on 1 April 2022, 1 April 2023 and 1 April 2024

• is not incurred with respect to redundancy payments, except where such redundancy costs are necessarily incurred and limited to the amounts available as statutory redundancy payments

4. In further exercise of the Secretary of State’s powers under section 20 of the Act, it is a condition of this direction that expenditure treated as capital expenditure in accordance with it only be met from capital receipts, within the meaning of section 9 of the Act and regulations made under that section (for current provisions see Part 4 of S.I. 2003/3146, as amended), which have been received in the years to which this direction and the previous direction (as referenced in paragraph 1) applies.

5. It is a condition that the disposal of assets by which the capital receipts, as per paragraph 4, are obtained must be disposals by the local authority outside the “group” structure. Here, “group” has the same meaning as defined in “group accounts” in the Code of Practice on Local Authority Accounting, as issued by Chartered Institute of Public Finance and Accountancy (CIPFA), whether or not these transactions are consolidated into group accounts and irrespective of whether the authority produces group accounts.

6. It is a further condition that local authorities applying this direction must send details of their planned use of the flexibility to the Secretary of State, for each financial year in which the direction is used. This should be sent as soon as is practicable after the council has determined and approved its strategy for the use of the direction, but must be sent before the flexibility is used. Where local authorities update their plans during the financial year, an updated plan reflecting the changes must be sent to the Secretary of State. This requirement can be met by providing to the Secretary of State a copy of the authority’s own planning documents. However, details provided to the Secretary of State must include as a minimum:

• the amount of planned capitalisation using the flexibility for the relevant financial year
• the purpose of the expenditure to be capitalised with a description of the associated projects
• the amount of expenditure that was capitalised using the flexibility for the prior financial year
• the efficiency savings that are directly attributable to the use of the flexibility that were achieved for the prior financial year

If any of this information is unavailable or unknown, the council must set this out with a description as to why it cannot be provided.

7. The value of expenditure capitalised must not exceed the amount set out in the plan, including any updated plans, provided to the Secretary of State as per paragraph 5.

8. By submitting the information set out in paragraph 5 to the Secretary of State the council will have met the condition; there is no further requirement to receive explicit consent in order to use the flexibility as set out in this direction. It is expected that authorities will evidence, as necessary, to their external auditors that they complied in full with this condition.

9. This direction is given for the purposes of Chapter 1 of Part 1 of the Act only. It does not grant any other consent that may be required or any view as to the propriety of the expenditure. It is for the Authority to be satisfied that any amount to which this direction is applied is properly incurred in the financial year concerned.

10. When applying the direction, the Authorities are required to have regard to the Guidance on flexible use of capital receipts issued by the Secretary of State under section 15(1)(a) of the Act.

11. If you have any queries in connection with the above, please do not hesitate to contact the Ministry of Housing, Communities and Local Government at the email address: CapitalReceiptsFlexibility@communities.gov.uk.

Annex A: List of authorities to which this direction applies

English councils

• Adur District Council
• Allerdale Borough Council
• Amber Valley Borough Council
• Arun District Council
• Ashfield District Council
• Ashford Borough Council
• Babergh District Council
• London Borough of Barking and Dagenham
• London Borough of Barnet
• Barnsley Metropolitan Borough Council
• Barrow-in-Furness Borough Council
• Basildon Borough Council
• Basingstoke and Deane Borough Council
• Bassetlaw District Council
• Bath and North East Somerset Council
• Bedford Borough Council
• London Borough of Bexley
• Birmingham City Council
• Blaby District Council
• Blackburn with Darwen Borough Council
• Blackpool Council
• Bolsover District Council
• Bolton Metropolitan Borough Council
• Boston Borough Council
• Bournemouth, Christchurch and Poole Council
• Bracknell Forest Council
• Bradford Metropolitan District Council
• Braintree District Council
• Breckland District Council
• London Borough of Brent
• Brentwood Borough Council
• Brighton and Hove City Council
• Bristol City Council
• Broadland District Council
• London Borough of Bromley
• Bromsgrove District Council
• Borough of Broxbourne
• Broxtowe Borough Council
• Buckinghamshire Council
• Burnley Borough Council
• Bury Metropolitan Borough Council
• Calderdale Metropolitan Borough Council
• Cambridge City Council
• Cambridgeshire County Council
• Cambridgeshire and Peterborough Combined Authority
• London Borough of Camden
• Cannock Chase District Council
• Canterbury City Council
• Carlisle City Council
• Castle Point Borough Council
• Central Bedfordshire Council
• Charnwood Borough Council
• Chelmsford City Council
• Cheltenham Borough Council
• Cherwell District Council
• Cheshire East Council
• Cheshire West and Chester Council
• Chesterfield Borough Council
• Chichester District Council
• Chorley Council
• City of London
• Colchester Borough Council
• Copeland Borough Council
• Cornwall Council
• Cotswold District Council
• Coventry City Council
• Craven District Council
• Crawley Borough Council
• London Borough of Croydon
• Cumbria County Council
• Dacorum Borough Council
• Darlington Borough Council
• Dartford Borough Council
• Derby City Council
• Derbyshire County Council
• Derbyshire Dales District Council
• Devon County Council
• Doncaster Metropolitan Borough Council
• Dorset Council
• Dover District Council
• Dudley Metropolitan Borough Council
• Durham County Council
• London Borough of Ealing
• East Cambridgeshire District Council
• East Devon District Council
• East Hampshire District Council
• East Hertfordshire District Council
• East Lindsey District Council
• East Riding of Yorkshire Council
• East Staffordshire Borough Council
• East Suffolk Council
• East Sussex County Council
• Eastbourne Borough Council
• Eastleigh Borough Council
• Eden District Council
• Elmbridge Borough Council
• London Borough of Enfield
• Epping Forest District Council
• Epsom and Ewell Borough Council
• Erewash Borough Council
• Essex County Council
• Exeter City Council
• Fareham Borough Council
• Fenland District Council
• Folkestone and Hythe District Council
• Forest of Dean District Council
• Fylde Borough Council
• Gateshead Metropolitan Borough Council
• Gedling Borough Council
• Gloucester City Council
• Gloucestershire County Council
• Gosport Borough Council
• Gravesham Borough Council
• Great Yarmouth Borough Council
• Greater London Authority
• Greater Manchester Combined Authority
• Royal Borough of Greenwich
• Guildford Borough Council
• London Borough of Hackney
• Halton Borough Council
• Hambleton District Council
• London Borough of Hammersmith & Fulham
• Hampshire County Council
• Harborough District Council
• London Borough of Haringey
• Harlow Council
• Harrogate Borough Council
• London Borough of Harrow
• Hart District Council
• Hartlepool Borough Council
• Hastings Borough Council
• Havant Borough Council
• London Borough of Havering
• Herefordshire Council
• Hertfordshire County Council
• Hertsmere Borough Council
• High Peak Borough Council
• London Borough of Hillingdon
• Hinckley and Bosworth Borough Council
• Horsham District Council
• London Borough of Hounslow
• Huntingdonshire District Council
• Hyndburn Borough Council
• Ipswich Borough Council
• Isle of Wight Council
• Council of the Isles of Scilly
• London Borough of Islington
• Royal Borough of Kensington and Chelsea
• Kent County Council
• King’s Lynn and West Norfolk Borough Council
• Kingston-upon-Hull City Council
• Royal Borough of Kingston upon Thames
• Kirklees Council
• Knowsley Metropolitan Borough Council
• London Borough of Lambeth
• Lancashire County Council
• Lancaster City Council
• Leeds City Council
• Leicester City Council
• Leicestershire County Council
• Lewes District Council
• London Borough of Lewisham
• Lichfield District Council
• City of Lincoln Council
• Lincolnshire County Council
• Liverpool City Council
• Liverpool City Region Combined Authority
• Luton Borough Council
• Maidstone Borough Council
• Maldon District Council
• Malvern Hills District Council
• Manchester City Council
• Mansfield District Council
• Medway Council
• Melton Borough Council
• Mendip District Council
• London Borough of Merton
• Mid Devon District Council
• Mid Suffolk District Council
• Mid Sussex District Council
• Middlesbrough Council
• Milton Keynes Council
• Mole Valley District Council
• New Forest District Council
• Newark and Sherwood District Council
• Newcastle City Council
• Newcastle-Under-Lyme Borough Council
• London Borough of Newham
• Norfolk County Council
• North Devon Council
• North East Combined Authority
• North East Derbyshire District Council
• North East Lincolnshire Council
• North Hertfordshire District Council
• North Kesteven District Council
• North Lincolnshire Council
• North Norfolk District Council
• North Northamptonshire Council
• North of Tyne Combined Authority
• North Somerset Council
• North Tyneside Metropolitan Borough Council
• North Warwickshire Borough Council
• North West Leicestershire District Council
• North Yorkshire County Council
• Northumberland County Council
• Norwich City Council
• Nottingham City Council
• Nottinghamshire County Council
• Nuneaton and Bedworth Borough Council
• Oadby and Wigston Borough Council
• Oldham Metropolitan Borough Council
• Oxford City Council
• Oxfordshire County Council
• Pendle Borough Council
• Peterborough City Council
• Plymouth City Council
• Portsmouth City Council
• Preston City Council
• Reading Borough Council
• London Borough of Redbridge
• Redcar & Cleveland Borough Council
• Redditch Borough Council
• Reigate and Banstead Borough Council
• Ribble Valley Borough Council
• London Borough of Richmond upon Thames
• Richmondshire District Council
• Rochdale Metropolitan Borough Council
• Rochford District Council
• Rossendale Borough Council
• Rother District Council
• Rotherham Metropolitan Borough Council
• Rugby Borough Council
• Runnymede Borough Council
• Rushcliffe Borough Council
• Rushmoor Borough Council
• Rutland County Council
• Ryedale District Council
• Salford City Council
• Sandwell Metropolitan Borough Council
• Scarborough Borough Council
• Sedgemoor District Council
• Sefton Metropolitan Borough Council
• Selby District Council
• Sevenoaks District Council
• Sheffield City Council
• Shropshire Council
• Slough Borough Council
• Solihull Metropolitan Borough Council
• Somerset County Council
• Somerset West and Taunton District Council
• South Cambridgeshire District Council
• South Derbyshire District Council
• South Gloucestershire Council
• South Hams District Council
• South Holland District Council
• South Kesteven District Council
• South Lakeland District Council
• South Norfolk District Council
• South Oxfordshire District Council
• South Ribble Borough Council
• South Somerset District Council
• South Staffordshire District Council
• South Tyneside Council
• South Yorkshire Combined Authority
• Southampton City Council
• Southend-on-Sea City Council
• London Borough of Southwark
• Spelthorne Borough Council
• St Albans City and District Council
• St Helens Metropolitan Borough Council
• Stafford Borough Council
• Staffordshire County Council
• Staffordshire Moorlands District Council
• Stevenage Borough Council
• Stockport Metropolitan Borough Council
• Stockton-on-Tees Borough Council
• Stoke-on-Trent City Council
• Stratford-on-Avon District Council
• Stroud District Council
• Suffolk County Council
• Sunderland City Council
• Surrey County Council
• Surrey Heath Borough Council
• London Borough of Sutton
• Swale Borough Council
• Swindon Borough Council
• Tameside Metropolitan Borough Council
• Tamworth Borough Council
• Tandridge District Council
• Tees Valley Combined Authority
• Teignbridge District Council
• Telford & Wrekin Council
• Tendring District Council
• Test Valley Borough Council
• Tewkesbury Borough Council
• Thanet District Council
• Three Rivers District Council
• Thurrock Council
• Tonbridge and Malling Borough Council
• Torbay Council
• Torridge District Council
• London Borough of Tower Hamlets
• Trafford Metropolitan Borough Council
• Tunbridge Wells Borough Council
• Uttlesford District Council
• Vale of White Horse District Council
• Wakefield Metropolitan District Council
• Walsall Metropolitan Borough Council
• London Borough of Waltham Forest
• London Borough of Wandsworth
• Warrington Borough Council
• Warwick District Council
• Warwickshire County Council
• Watford Borough Council
• Waverley Borough Council
• Wealden District Council
• Welwyn Hatfield Borough Council
• West Berkshire Council
• West Devon Borough Council
• West Lancashire Borough Council
• West Lindsey District Council
• West Midlands Combined Authority
• West Northamptonshire Council
• West of England Combined Authority
• West Oxfordshire District Council
• West Suffolk Council
• West Sussex County Council
• West Yorkshire Combined Authority
• City of Westminster
• Wigan Metropolitan Borough Council
• Wiltshire Council
• Winchester City Council
• Royal Borough of Windsor and Maidenhead
• Wirral Metropolitan Borough Council
• Woking Borough Council
• Wokingham Borough Council
• Wolverhampton City Council
• Worcester City Council
• Worcestershire County Council
• Worthing Borough Council
• Wychavon District Council
• Wyre Council
• Wyre Forest District Council
• City of York Council

Fire and Rescue Authorities and Police and Crime Commissioners

• Avon & Somerset Police and Crime Commissioner and Chief Constable
• Avon Combined Fire and Rescue Authority
• Bedfordshire Combined Fire and Rescue Authority
• Bedfordshire Police and Crime Commissioner and Chief Constable
• Berkshire Combined Fire and Rescue Authority
• Buckinghamshire Combined Fire and Rescue Authority
• Cambridgeshire Combined Fire and Rescue Authority
• Cambridgeshire Police and Crime Commissioner and Chief Constable
• Cheshire Combined Fire and Rescue Authority
• Cheshire Police and Crime Commissioner and Chief Constable
• Cleveland Combined Fire and Rescue Authority
• Cleveland Police and Crime Commissioner and Chief Constable
• Cumbria Police and Crime Commissioner and Chief Constable
• Derbyshire Combined Fire and Rescue Authority
• Derbyshire Police and Crime Commissioner and Chief Constable
• Devon & Cornwall Police and Crime Commissioner and Chief Constable
• Devon and Somerset Combined Fire and Rescue Authority
• Dorset and Wiltshire Fire and Rescue Authority
• Dorset Police and Crime Commissioner and Chief Constable
• Durham Combined Fire and Rescue Authority
• Durham Police and Crime Commissioner and Chief Constable
• East Sussex Combined Fire and Rescue Authority
• Essex Combined Fire and Rescue Authority
• Essex Police and Crime Commissioner and Chief Constable
• Gloucestershire Police and Crime Commissioner and Chief Constable
• Greater London Authority
• Hampshire and Isle of Wight Fire and Rescue Authority
• Hampshire Police and Crime Commissioner and Chief Constable
• Hereford & Worcester Combined Fire and Rescue Authority
• Hertfordshire Police and Crime Commissioner and Chief Constable
• Humberside Combined Fire and Rescue Authority
• Humberside Police and Crime Commissioner and Chief Constable
• Kent Combined Fire and Rescue Authority
• Kent Police and Crime Commissioner and Chief Constable
• Lancashire Combined Fire and Rescue Authority
• Lancashire Police and Crime Commissioner and Chief Constable
• Leicestershire Combined Fire and Rescue Authority
• Leicestershire Police and Crime Commissioner and Chief Constable
• Lincolnshire Police and Crime Commissioner and Chief Constable
• Merseyside Fire And Rescue Authority
• Merseyside Police and Crime Commissioner and Chief Constable
• Norfolk Police and Crime Commissioner and Chief Constable
• North Yorkshire Combined Fire and Rescue Authority
• North Yorkshire Police and Crime Commissioner and Chief Constable
• Northamptonshire Police and Crime Commissioner and Chief Constable
• Northamptonshire Police, Fire and Crime Commissioner Fire and Rescue Authority
• Northumbria Police and Crime Commissioner and Chief Constable
• Nottinghamshire Combined Fire and Rescue Authority
• Nottinghamshire Police and Crime Commissioner and Chief Constable
• Shropshire Combined Fire and Rescue Authority
• South Yorkshire Fire and Rescue Authority
• South Yorkshire Police and Crime Commissioner and Chief Constable
• Staffordshire Combined Fire and Rescue Authority
• Staffordshire Police and Crime Commissioner and Chief Constable
• Suffolk Police and Crime Commissioner and Chief Constable
• Surrey Police and Crime Commissioner and Chief Constable
• Sussex Police and Crime Commissioner and Chief Constable
• Thames Valley Police and Crime Commissioner and Chief Constable
• Tyne and Wear Fire and Rescue Authority
• Warwickshire Police and Crime Commissioner and Chief Constable
• West Mercia Police and Crime Commissioner and Chief Constable
• West Midlands Fire and Rescue Authority
• West Midlands Police and Crime Commissioner and Chief Constable
• West Yorkshire Fire and Rescue Authority
• West Yorkshire Police and Crime Commissioner and Chief Constable
• Wiltshire Police and Crime Commissioner and Chief Constable