The CPOBE 2020 return was issued to local authorities on 25 March 2020 with a deadline of 6 May 2020. Due to the timing of this return, the vast majority of local authorities’ returns do not take account of the potential impacts of Covid-19 on capital expenditure. Three local authorities advised that their returns did contain an element of slippage from 2019-20 to 2020-21, reflecting delays due to Covid-19.
Scottish Government Grant figures in this publication include capital allocations paid to local authorities as part of the Local Government Finance Settlement. Details of these allocations can be found in the relevant Local Government Finance Circular.
The Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code sets out a framework for a local authority to demonstrate its capital investment plans are affordable, prudent and sustainable. One of the prudential indicators is the CFR which represents the amount of capital expenditure a local authority has determined should be met from borrowing with the repayment of that borrowing to be met from future local authority revenue budgets. The CFR only represents an authority’s underlying need to borrow to finance capital expenditure. The actual Total External Debt may be less than the CFR where a local authority has chosen to utilise internal cash reserves rather than borrow externally; or Total External Debt may exceed the CFR where they have chosen to borrow in advance of actual capital expenditure.
The CPOBE collection is still relatively new and sufficient analysis has not yet been carried out to assess differences between provisional and final outturn figures. It is therefore not advisable to compare these figures at this time as it is not known whether differences between the figures are random variation or if there is a systematic bias in the data collection that may need to be adjusted for. Further, the ‘lumpy’ nature of capital expenditure means that delays or changes to large capital projects at the end of the financial year can have a large impact on the final figures.
When comparing provisional outturn or budget estimates over time, comparisons should be made on a like for like basis. Due to the ‘lumpy’ nature of capital, service level expenditure can change significantly between years due to phasing of specific large-scale projects. Across years, changes in accounting standards may also impact on the categorisation of expenditure which can lead to discontinuity in the data collected between financial years. Where these changes are significant, it will be noted in the commentary.
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