Council assures taxpayers that they are not putting “hardworking” people’s money at risk

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Money

Bedford Borough Council is not one of the councils behind a government warning about putting taxpayers’ money at risk, the councillor in charge of its purse strings has said.

On Monday (1 August) the Secretary of State for Levelling Up, Greg Clark, wrote to all council leaders highlighting an accountancy amendment after “some councils” attempted to bypass rules for the flexible use of capital receipts.

Capital receipts refer to incoming cash flows from the sale of fixed assets, shares, or debt.

The Department for Levelling Up, Housing and Communities (DLUHC) said the letter makes it clear these flexibilities can only be used to fund transformation projects where councils do not retain either direct or indirect control of disposed assets.

The move aims to prevent councils from using novel practices which can put taxpayer money at risk and drain resources.

The DLUHC added this will also help put a stop to accountancy firms and consultancies wasting taxpayer money advising councils on creative accounting.

In a press release, Levelling Up Secretary Greg Clark said: “Every council has a duty to use the tax they receive from hardworking people in a responsible way.

“It’s not right that some councils have been using unorthodox accounting practices which put taxpayer cash at risk. That’s why we’ve tightened the rules which some authorities have been attempting to bypass.”

The letter followed action taken by the levelling-up secretary to block the sale of beach huts by Bournemouth, Christchurch and Poole Council.

According to the BBC, the council was planning to create a majority or wholly owned company to purchase thousands of huts at market value using third-party debt and an additional shareholder loan from the local authority.

The council said this would have provided around £50million to plug a hole in its budget to fund the transformation of services.

Speaking about the secretary of state’s letter, councillor Michael Headley, Bedford Borough Council’s portfolio holder for finance, said: “The council has never circumvented the rules in the way that central government is trying to prevent and does not put taxpayers’ money at risk by following creative accounting advice.

“It has always had strong financial control and works to ensure the best value for money for local taxpayers. This has resulted in the Council having the fourth lowest percentage council tax rise of all unitary councils since the creation of the council in 2009.”

The Secretary of State can still provide councils with permission to capitalise revenue costs if there is a compelling case to do so.

by John Guinn
Local Democracy Reporter

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