The Deputy Chief Executive/Director of Finance reported that, in recognising that the capitalisation of expenditure normally classified as revenue expenditure provided financial flexibility to Councils in managing one-off unexpected costs and thereby easing the pressure on Council Tax and on services, the Department for Communities and Local Government (DCLG) had given Wirral permission to treat statutory redundancy payments as capital spend, rather than revenue spend, in 2011/2012.

The Director commented that using the Direction to classify the statutory redundancy payment element of the EVR/VS Scheme as capital expenditure would release £3m of the previously identified provision for EVR/VS costs to the General Fund balance. The element related to Schools represented an unmet financial pressure in 2011/2012 the cost of which could now be met from the capital programme.

He commented that in making use of the permission, the Council needed to approve a variation in the Capital Programme for 2011/2012 and he reported that the Cabinet (minute 152 (13 October 2011) refers) had agreed –

(a)  That the DCLG be advised that Wirral will utilise the permission to treat as capital £4m of revenue expenditure in 2011/2012.

(b)  That the Capital Programme be increased for the Finance Department by £3m and for the Children & Young People Department by £1m and this be referred to Council.

(c)  That the release of £3m from the provision for the Early Voluntary Retirement / Voluntary Severance Scheme costs to balances be agreed.

Resolved – That the report be noted.