Accredited official statistics

Local authority capital expenditure and receipts, England: provisional outturn and forecast - Technical notes

Published 22 June 2023

Applies to England

1. National Statistics Status

National Statistics status means that our statistics meet the highest standards of trustworthiness, quality and public value as set out in the Code of Practice for Statistics. It is the Department for Levelling Up, Housing and Communities’ statisticians’ responsibility to maintain compliance with these standards.

The continued designation of these statistics as National Statistics was confirmed in April 2012 following an assessment by the UK Statistics Authority against the previous code. The assessment report can be found at: English Local Authority Capital Expenditure and Receipts, and Revenue Expenditure and Financing: Letter of Confirmation as National Statistics.

2. Note on provisional outturn 2022-23

The provisional statistics in this release are based on the capital expenditure and receipts data that local authorities in England supplied to DLUHC by mid-June 2023. Final outturn figures of local authority capital expenditure and receipts are due to be published in November 2023. Some figures will change between the two releases, these will be highlighted in November publication where relevant. See revision policy section for more information.

3. Coverage and response rate

DLUHC capital returns collect data from local authorities in England as defined by section 23 of the Local Government Act 2003.

The following authorities missed the deadline for submitting provisional returns and have not been included in the national totals: Bristol, Gloucester, Stratford-on-Avon, South Somerset, Halton.

3.1. Provisional outturn 2022-23

The 2022-23 provisional outturn data in this release are derived from valid Capital Payments and Receipts Q4 (CPR4) returns which had been submitted by 420 of 425 local authorities in England. The national totals include grossing for the 5 authorities that had not yet provided their data.

3.2. Forecast 2023-24

The 2023-24 forecast data are derived from valid Capital Estimates Returns submitted by 410 of 410 eligible local authorities in England.

The number of local authorities in England is lower than the 425 a year ago because of the following local government changes taking effect from 1 April 2023:

• North Yorkshire unitary authority was created, replacing North Yorkshire shire county, Craven, Hambleton, Harrogate, Richmondshire, Ryedale, Scarborough, and Selby.

• Somerset Council unitary authority was created, replacing Somerset shire county, Mendip, Sedgemoor, Somerset West and Taunton, and South Somerset.

• Cumberland unitary authority was created, replacing Cumbria, Allerdale, Carlisle, and Copeland.

• Westmorland unitary authority was created, replacing Cumbria, Barrow, Eden and South Lakeland.

• Cumbria Police and Crime Commissioner became Cumbria Police, Fire and Crime Commissioner.

4. Data quality

This Statistical Release contains National Statistics and as such has been produced to the high professional standards set out in the Code of Practice for Official statistics. National Statistics products undergo regular quality assurance reviews to ensure that they meet customer needs.

Figures are subjected to rigorous pre-defined validation tests both while they are being completed by local authorities and after they have been submitted to Department for Levelling Up, Housing and Communities (DLUHC). The CPR4 and CER forms from which these data are derived can be found at: Local government finance: forms to be completed by local authorities.

Service Reporting Code of Practice (SeRCOP) is a set of general guidance notes provided to local authorities with instructions on how to create accounts on their various elements of public service expenditure. For a summary of SERCOP please see the following web link including information on legislative requirements: Service Reporting Code of Practice (SeRCOP) 2021/22.

5. Grossing and imputation

5.1. Provisional outturn 2022-23

Only data for authorities that have completed a valid form is used in the computation of national figures for the statistical release.

5.2. Forecast 2023-24

Where a return is missing, the values from the most recent previous year’s figures are carried forward in order to derive valid England totals. We use a grossing methodology to compensate for missing returns in order to compute valid national figures. This method draws on the capital estimates (forecast) values for 2022-23 for those authorities which have not made a valid return for provisional outturn 2022-23. These figures are then multiplied by adjustment factors. The adjustment factors are calculated by comparing capital estimates (forecast) figures for 2022-23 with provisional outturn figures for 2022-23.

6. Adjustments

The England totals used in this release are adjusted by DLUHC in the ways outlined below. The unadjusted raw totals based on figures as provided by local authorities are included in the local authority data tables which are published alongside this release.

6.1. Adjustment for inflation

This release includes both real and cash terms series. Figures have been adjusted to real terms using the GDP Deflator, which is a general purpose and widely-used deflator, which is derived by the Office for National Statistics by combining volume and value measures of Gross Domestic Product. The exceptional circumstances arising from COVID-19 particularly affected these volume measures and resulted in extraordinary values for the implied deflator after 2019-20 to 2021-22. Having discussed options with the Office for National Statistics and HM Treasury, we are able to calculate real terms figures by averaging the annual increase in the deflator over the period from 2019-20 to 2021-22, giving an estimated increase of +2.73% in each of the years.

6.2. Double-counting adjustments

Since 2017-18 outturn and 2018-19 estimates (budget), all transfers between local authorities should be identified in DLUHC’s capital collections. These are all netted off to avoid double counting in the England (adjusted) figures.

This was previously the case for some combined authorities as well as among the functional bodies within the GLA. Details of the extent to which this was achieved in 2017-18 is described in Local authority capital expenditure and receipts in England: 2016 to 2017 provisional outturn and 2017 to 2018 forecast.

6.3. Forecasting adjustments

Forecast expenditure figures have been adjusted to take account of the overestimation of capital expenditure. This is calculated at the England level only.

Since the 2021-22 forecast, data for economic categories are examined separately for each of the twelve broad service categories.

To calculate adjustment factors for CER 2023-24, ratios of unadjusted forecast to subsequent outturn were calculated for 2021-22 and 2022-23. An adjustment factor was calculated for each combination of economic category and service grouping wherever there had been consistent over- or under-forecasting during 2021-22 and 2022-23. The adjustment factor is the weighted average of the two ratios, with the 2022-23 ratio given 2/3 weighting and the 2021-22 ratio given 1/3 weighting.

For CER 2023-24, adjustments were made to the following types of forecasted capital expenditure:

• Acquisition of land & existing buildings
• New construction, conversion & renovation
• Vehicles
• Plant machinery & equipment
• Intangible fixed assets
• Expenditure on grants
• Expenditure on loans & other financial assistance

Finally, we need to apportion the same net over-forecasting adjustment across the components of financing. Forecasted financing categories were adjusted down based on the weighted average of differences between unadjusted forecast and subsequent outturn during 2022-23 and 2021-22, with weightings of 2/3 and 1/3 respectively. The following ten financing categories were adjusted, as they were identified to have systematically lower outturn than unadjusted budget figures:

• Grants from central government departments
• Grants and contributions from private developers
• Grants and contributions from non-departmental public bodies
• Grants from the National Lottery
• Grants from Local Enterprise Partnerships
• Use of capital receipts
• Capital expenditure financed from Housing Revenue Account
• Capital expenditure financed by the Major Repairs Reserve (MRR)
• Total borrowing & credit arrangements not supported by central government (excluding PFI)
• Other borrowing and credit arrangements not supported by central government

6.4. Rounding

Where figures have been rounded, there may be a slight discrepancy between the total and the sum of constituent parts.

7. Definitions

A list of terms relating to local government finance is given in the glossary at Annex G of Local Government Financial Statistics England no.24, 2014. More recent Local Government Financial Statistics publications are accessible at Local Government Finance Statistics – England (compendium). The most relevant terms for this release are explained below.

Capital asset – (also known as a fixed asset) is an asset that is held for the long-term and cannot easily be turned into cash. These can be tangible assets, such as building or vehicles, or intangible, such as software licenses.

Capital expenditure – expenditure on the acquisition or maintenance of, fixed assets such as land, building, vehicles, machinery etc. that adds to and does not merely maintain the value of existing fixed assets.

Capital expenditure charged to revenue account (CERA) – a method of financing capital expenditure where the expenditure is financed direct from revenue account in the year it is incurred.

Capital receipts – income from the sale of capital assets. Such income may only be used to repay loan debt or to finance new capital expenditure.

Capital grant – a sum given by a government department to an organisation for capital investment.

Capital Infrastructure Levy (CIL) – a levy available to registered local authorities allowing them to choose to charge on new developments in their area to pay for new infrastructure developments.

Combined authority – a combined authority (CA) is a legal body set up using national legislation that enables a group of two or more councils to collaborate and take collective decisions across council boundaries.

Credit arrangements – forms of credit that do not involve the borrowing of money by a local authority. For example, leases of land (including buildings) or other property and contracts that provide for external credit (in the sense that there is more than a full financial year gap between the giving of value to the authority and the payment for that value).

Greater London Authority (GLA) – the local authority responsible for planning, transport, housing, policing, economic development and regeneration in the London region. Led by The Mayor of London and overseen by the London Assembly, the authority is responsible for five other functional bodies:

• The Mayor’s Office for Policing and Crime (MOPAC)

• London Fire and Emergency Planning Authority (LFEPA)

• Transport for London (TfL)

• London Legacy Development Corporation (LLDC)

• Old Oak and Park Royal Development Corporation (OPDC)

Capital expenditure and receipts are reported by the GLA and the five functional bodies as a group and individually. These are reported at the GLA group level in this release.

Intangible assets – assets that have no physical form but are considered valuable resources of the business, e.g. patents, trademarks, goodwill, brand names, licences, franchises, etc.

Tangible assets – assets that have physical form, such as plant and equipment.

Local authority – a statutory body created by Acts of Parliament, responsible for delivering services (in line with national objectives) to meet the diverse requirements of different neighbourhoods and communities.

London borough – 32 of the 33 Greater London Authorities are known as London boroughs, each of which has the same responsibilities as the common local authority.

Metropolitan district – metropolitan districts are responsible for all services in their area, although certain conurbation wide services such as fire and civil defence, police, waste disposal and passenger transport are provided through joint authorities (the districts acting jointly).

There are 36 metropolitan district councils which together cover 6 large urban areas: the counties of Greater Manchester, Merseyside, South Yorkshire, Tyne and Wear, West Midlands, and West Yorkshire.

Prudential capital finance system – this is the informal name for the system introduced on 1 April 2004 by Part1 of the Local Government Act 2003. It allows local authorities to borrow without Government consent, provided that they can afford to service the debt from their own resources.

The Prudential Code – a professional code of practice prepared by the Chartered Institute of Public Finance and Accountancy (CIPFA), for the prudential system introduced on 1 April 2004. Local authorities are required by legislation to follow this code.

Section 106 grants - financial contributions from developers to pay for additional infrastructure required to support a new development, as defined in section 106 of the Town and Country Planning Act 1990.

Unitary authority – authorities that are responsible for providing all local (government) services within their areas.

8. Revisions policy

This policy has been developed in accordance with the UK Statistics Authority’s Code of Practice for Statistics and the Department for Levelling Up, Housing and Communities revisions policy.

It covers two types of revisions that the policy covers, as follow:

8.1. Non-scheduled revisions

Where a substantial error has occurred as a result of the compilation, imputation or dissemination process, the statistical release, live tables and other accompanying releases will be updated with a correction notice as soon as is practical.

8.2. Scheduled revisions

This release contained provisional outturn figures for 2022-23. These will be superseded by the more detailed Capital (final) Outturn figures that are published each Autumn. At time of publication there are no scheduled revisions for this series.

9. Other information

9.1. Uses of the data

Data in this Statistical Release are essential for providing the Secretary of State for the Department for Levelling Up, Housing and Communities, other ministers, and HM Treasury with the most up to date and comprehensive information available on local authority capital spending for decision making.

Data are also used by the Office for National Statistics in compiling Public Sector Finances and National Accounts, which are used to set fiscal and monetary policy.

The data collected are an important source for the department to create evidence-based policy, make financial decisions and answer parliamentary questions. It is used by local authorities and their associations, regional bodies, other government departments, academics, research organisations, members of the business community and the general public.

The release allows for trends in funding for different local authority services and types to be identified over a period of years when compared with previous releases. Local authorities can also compare their own spending with the aggregated figures presented here or with the equivalent data for individual local authorities.

Comments and feedback from end users for further improvement or about your experiences with this product will be welcomed. Details of where to find direct feedback can be found in the first page of this release.

9.2. Background Notes

This Statistical Release can be found at: Local authority capital expenditure, receipts and financing.

Timings of future releases are regularly placed on the Department’s website and on the National Statistics website. Planned publication dates can be found at: Statistics at DLUHC.

For a fuller picture of recent trends in local government finance, readers are directed to Local Government Financial Statistics England 2022.

The CIPFA Finance and General Statistics publication also contains detailed information on local government finance.

CLIP Finance (CLIP-F) is a consultative group that considers the collection, presentation and analysis of data on local government finance. To ensure users are made aware of important changes and adjustments to Local Government Finance forms papers are tabled, discussed and published. Please visit the website for details of likely changes for future Revenue/Capital statistical releases (login required): Knowledge Hub - CLIP.

9.3. Devolved administration statistics

The statistics in this Release are for England only. The Scottish, Welsh and Northern Irish Governments also collect data from local government. Their information can be found at the following websites:

Wales          Capital

Scotland       Local government finance statistics

Northern Ireland  Local government

9.4. User engagement

Users are encouraged to provide feedback on how these statistics are used and how well they meet user needs. Comments on any issues relating to this statistical release are welcomed and encouraged. Responses should be addressed to the contact given in the first page of the release. See the department’s engagement strategy to meet the needs of statistics users.