Written question asked by Lord Beecham (Labour), in the House of Lords. It was answered by Baroness Hanham (Conservative) on Wednesday, 22 December 2010.

Local Government: Finance

Question: To ask Her Majesty’s Government whether, in light of the Local Government Finance Settlement announced on 13 December and the Local Government Association's estimate of a requirement of up to £2 billion to capitalise redundancy and severance costs, they will increase the £200 million being made available for this purpose.

Answer: Capitalisation permits local authorities, exceptionally, to treat revenue costs as capital costs, and allows them to borrow for these purposes. This is a relaxation of accounting rules, and as such, it is strictly controlled. While capitalisation will provide important support to authorities next year to help them to manage organisational restructuring, the Government cannot meet all of these costs, and it will be for authorities to assess how they best manage the costs from their own resources, including from reserves.

Secondary information