Publication - Correspondence

General Capital Grant: offer letter 2018-2019

Published: 5 Sep 2018

Letter from the Head of Local Authority Accounting to Local Authority Directors of Finance setting out proposals for the General Capital Grant for 2018 to 2019.

Published:
5 Sep 2018
General Capital Grant: offer letter 2018-2019
 
By e-mail
To: Local Authority Directors of Finance
Chief Executive of Scottish Local
Authorities (COSLA)

Our ref: A19830217
07 March 2018

Dear Director of Finance

GENERAL CAPITAL GRANT 2018-2019

1. The Scottish Ministers, in exercise of their powers under legislation detailed in Schedule 1 of this Offer Letter, hereby offer to local authorities (“the Grantees”) grant totalling £598.282 million STERLING (with individual allocations as per Schedule 2), payable in the financial year 2018-19, to finance capital investment, subject to the terms and conditions set out below at paragraph 3 onwards.

2. The grant offer reflects the amounts in the Local Government Finance Settlement 2018-19 (Finance Circular 4/2018). It includes any additional amounts agreed by Scottish Ministers to be paid as General Capital Grant. There are no undistributed amounts.

Definitions and interpretation

3. In these Conditions, the words and expressions set out in Schedule 3 shall have the meanings ascribed to them in that Schedule.

4. In these Conditions, unless the context otherwise requires, words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders.

5. The headings in these Conditions are for convenience only and shall not be read as forming part of the Conditions or taken into account in their interpretation.

6. Except as otherwise provided for in these Conditions, any reference to a clause, paragraph, sub-paragraph or schedule shall be a reference to a clause, paragraph, sub-paragraph or schedule of these Conditions.

Purpose of the Grant

7. The Grant is to enable local authorities to finance capital investment in a way which ensures the delivery of their Single Outcome Agreement and contributes to the national Strategic Objectives and Purpose.

Conditions of the Grant

8. The Grant may be used to fund capital expenditure of the local authority.
 
9. The Grant may also be used to fund third party capital expenditure in the current year, either directly or through the provision of grants to third parties (public sector bodies, private sector bodies or individuals) which would, if incurred by the local authority, be capital expenditure. Limitations apply and these are detailed in Schedule 1.
 
10. The Grant must be used in the financial year 2018-19. There is an assumption that the Grant will be applied to finance local authority capital programmes before the application of any other capital or revenue resources such as capital receipts or borrowing.
 
11. Should any grant be used to fund third party capital expenditure and that third party is another local authority or a public body the grant must be used by that third party in the financial year 2018-19. Should the grant be made to a local authority controlled company or other body that will be consolidated into the council’s group accounts the grant must be used by that body in the financial year 2018-19.
 
12. For the avoidance of doubt no part of the grant may be transferred to the Capital Fund, nor may any part of the grant be used to meet the costs of debt redemption.
 
13. No part of the grant may be used to fund any ‘capital’ injection into a Public Private Partnership (PPP) or similar scheme without the written consent of Scottish Ministers.
 
14. Where the local authority provides grant to any person, whether for use by that person or by a third party, the conditions attaching to the grant award must ensure that the expenditure it funds would, if incurred by the authority, be capital expenditure. The grant conditions must also ensure that the eligible costs exclude reclaimable Value Added Tax. Where the grant is to another local authority or public body, or a body that is consolidated into a local authority group accounts, the conditions attaching to that grant award must ensure the grant is fully used in the financial year 2018-19.
 
15. Any grant paid to a third party subsequently repaid to the local authority, may only be used to fund further capital investment as permitted by this agreement. This condition only applies where the grant is repaid within five years of the original grant payment.
 
16. If the Grantee does not fully use the grant in the financial year 2018-19 any unused grant is to be repaid to the Scottish Government unless otherwise agreed in writing by Scottish Ministers.
 
17. No part of the Grant shall be used to fund any activity or material which is party political in intention, use, or presentation or appears to be designed to affect support for a political party.
 
18. Revisions to the conditions of this offer shall be subject to the written agreement of the Scottish Ministers.

Conditions of grant – reporting of 2018-19 expenditure

19. The Grantee shall keep the Scottish Ministers informed of the use of their grant through the completion of Capital Returns issued by the Scottish Government.
 
20. A statement of compliance with the Conditions of Grant will be included in the Final Capital Return 2018-19 which must be certified by the grantee’s Director of Finance or equivalent.
 
21. The Grantee shall also provide any other information that the Scottish Ministers may reasonably require to satisfy themselves that the expenditure is consistent with the Agreement. The Grantee shall provide the Scottish Ministers with prompt access to any information they reasonably require to ensure compliance with these Conditions.
 
22. The Grantee shall keep and maintain for a minimum period of 5 years after the expenditure occurs, adequate and proper records and books of account recording all receipts and expenditure of monies paid to it by the Scottish Ministers by way of the Grant. The Grantee shall afford the Scottish Ministers, their representatives, the Auditor General for Scotland, his/her representatives and such other persons as the Scottish Ministers may reasonably specify from time to time, such access to those records and books of account as may be required by them at any reasonable time in response to a written request for such access from the person seeking it. The Grantee shall provide such reasonable assistance and explanation as the person carrying out the inspection may from time to time require.
 
23. Where the grantee uses the General Capital Grant to fund third party capital projects the grant should be treated, for annual accounts purposes, as service revenue income in the Comprehensive Income & Expenditure Statement (CIES). This will therefore require that General Capital Grant used to support third party capital expenditure be matched, on the same CIES service line, to the grant paid out or direct expenditure paid by the authority.

Payment of Grant

24. The Grant shall be paid by the Scottish Ministers to local authorities in instalments on or about the 15th of each month of the financial year 2018-19.

Confidentiality and data protection

25. To comply with section 31(3) of the Public Services Reform (Scotland) Act 2010, the Scottish Ministers publish an annual statement of all payments over £25,000. In addition, in line with openness and transparency, the Scottish Government publishes a monthly report of all payments over £25,000. The Grantee should note that where a payment is made in excess of £25,000 there will be disclosure (in the form of the name of the payee, the date of the payment, the subject matter and the amount of grant) in the both the monthly report and the annual Public Services Reform (Scotland) Act 2010 statement.

Default

26. The Scottish Ministers reserve the right to withhold, make deduction from or require repayment of grant monies where the conditions included in this Agreement are not met.

Variation

27. Any variation to this Agreement will only be valid when confirmed in writing by the Scottish Ministers.

Corrupt gifts and payments of commission

28. The Grantee shall not offer or give or agree to give any person any gift or consideration of any kind as an inducement or reward in relation to this Grant. The Grantee shall ensure that its employees shall not breach the terms of the Prevention of Corruption Acts, 1889 to 1916 in relation to this or any other grant.

Continuation of conditions

29. These Conditions shall continue to apply for a period of 5 years after the end of the financial year in which the final instalment of the Grant was paid.

Compliance with the law

30. The Grantee shall ensure that in relation to expenditure funded with this Grant, they and anyone acting on their behalf shall comply with the relevant law, for the time being in force in Scotland.

Acceptance of grant

31. To accept the grant offer on the terms and conditions as set out in the letter and schedules, we require a letter from the Council signed by the Director of Finance (or equivalent). The letter must identify the grant being accepted on the terms and conditions set out in this grant offer letter. A suggested format is set out below. Please send your acceptance letter to Nadiyah Abdullatif (Nadiyah.Abdullatif@gov.scot), prefereably electronically as an attachment to an email or in hard copy to Nadiyah at the address on the top of this letter. To enable us to to make the first payment in April we require your response no later than 21 March 2018.
 
Yours faithfully
Hazel Black
Head of Local Authority Accounting