§ Mr. SandersTo ask the Secretary of State for Transport, Local Government and the Regions if he will publish the criteria under the Local Government and Housing Act 1989 governing the use by local authorities of housing investment programme allocations for social services staff redundancy packages; and if he will make a statement. [3534]
§ Ms KeebleHousing investment programme allocations, together with those for a number of other capital programmes, are issued in the form of Basic Credit Approvals. Authorities are free to use these for any capital purpose.
Expenditure for capital purposes is defined in the 1989 Act, but the Act also provides, in section 40(6), for the Secretary of State to make a direction that expenditure normally defined as revenue be treated by the authority concerned as expenditure for capital purposes. Directions are not normally issued unless the expenditure:
(a) is substantial in relation to the authority's revenue budget for the financial year concerned and was unforeseeable when that budget was adopted; or(b) cannot be met out of financial reserves but will result in revenue account savings in future years.Applications for capitalisation of redundancy costs, and similar lump-sum costs such as severance or premature retirement payments, are normally considered against test (b) as stated. In those cases, directions are not usually given unless the expenditure to be capitalised exceeds both:5 per cent. of the authority's available reserves (excluding Local Management of Schools (LMS) reserves) and0.25 per cent. of its total budgeted expenditure for the financial year in question.11W It is therefore possible, owing to the flexibility allowed to authorities in the use of BCAs, and following issue of a section 40(6) direction, for housing capital allocations to be used to fund redundancy costs. But this would only be in an exceptional case and the authority in question would still be expected to meet longer term targets for housing improvement.