§ Mr. WorthingtonTo ask the Secretary of State for Scotland how the amount of capital receipts received by a district council affects its capital allocations; and if he will make a statement.
§ Lord James Douglas-HamiltonDistrict councils receive two allocations covering housing and general services respectively. Gross housing capital allocations are determined, within the total gross resources available, on the basis of individual authorities' relative needs. The net allocation for each authority is calculated by deducting estimated receipts from its gross allocation. The estimate of receipts is discussed fully with each authority and can be updated until March, when final allocations are issued.
After final allocations are issued, each authority has consent to incur during that year's capital expenditure up to its net figure, plus actual receipts generated. It is therefore in an authority's interest to generate as great a volume of receipts as possible; for example, by encouraging the sale of council houses under tenants' right to buy.
Authorities' estimates of the capital receipts they expect to raise are one of the factors taken into account in determining their general services allocations, which are issued, on a net basis, in February. A district council may augment its capital allocation by an amount equivalent to the actual capital receipts it raises in the year. Receipts raised on general services may not be applied to housing expenditure and vice versa.
§ Mr. WorthingtonTo ask the Secretary of State for Scotland how he deals with the covenant proposals of district councils in deciding capital allocations; and how covenant proposals are allocated for accounting purposes between different financial years.
§ Lord James Douglas-HamiltonIn deciding the level of an individual authority's capital allocation, full account is144W taken of the expenditure projections contained in the authority's financial plan submitted each year to my Department. The public accounting treatment of covenant schemes depends on the sums involved and the date on which they are entered into. Precise guidance on the treatment of covenant schemes is included in the explanatory memorandum enclosed with the letter issued each year by my Department notifying authorities of their capital allocations.
§ Mr. WorthingtonTo ask the Secretary of State for Scotland what are the principles used to decide upon capital allocations to district councils.
§ Lord James Douglas-HamiltonThe allocation of resources for capital expenditure by district councils are determined, within the resources available, on the basis of their relative needs. In the light of the financial plans they submit each year, authorities' relative needs are assessed taking account of a number of factors, including the capital costs of individual projects, the current expenditure consequences, their previous spending patterns and performance; authorities' forecast of capital receipts and the desirability of aiding continuity in financial planning by adhering to the provisional allocations already issued and the need to adjust these to reflect changes in circumstances or of emphasis in their financial plans.
For housing allocations, also taken into account are authorities' capital programmes as set out in their housing plans and checklists.