Flexible Use of Capital Receipts Policy

Policy Ownership

Office of Police and Crime Commissioner – Treasurer

Initial implementation date: 2024/25 Financial year

Next review date: March 2026

Risk rating: Low

Equality analysis : Low

West Mercia Police welcome comments and suggestions from the public and staff about the contents and implementation of this policy. Please e-mail [email protected]

POLICY OUTLINE

The Police and Crime Commissioner for West Mercia is responsible, as set out in the Police Reform and Social Responsibility Act 2011, for the ‘Police Fund’ and the allocation of resources to fund policing in West Mercia. The PCC is also responsible for all assets required to support the delivery of policing services, and consequently for decisions on the sale of those assets, which will result in a capital receipt.

Capital receipts can only be used for specific purposes, and these are set out in Regulation 23 of the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 made under Section 11 of the Local Government Act 2003. The main permitted purpose is to fund capital expenditure. The use of capital receipts to support revenue expenditure is not permitted by the regulations.

The Secretary of State is empowered to issue Directions allowing expenditure incurred by local authorities to be treated as capital expenditure. Where such a direction is made, the specified expenditure can then be funded from capital receipts under the regulations. The Secretary of State for Communities and Local Government issued guidance in March 2016, giving local authorities greater freedoms with how capital receipts can be used to finance expenditure. This direction allows for the following expenditure to be treated as capital,

“expenditure on any project that is designed to generate ongoing revenue savings in the delivery of public services and/or transform service delivery to reduce costs and/or transform service delivery in a way that reduces costs or demand for services in future years for any of the public sector delivery partners.”

Under Regulation 23, the Police and Crime Commissioner for West Mercia is listed as being a ‘local authority’ eligible to use this flexibility. This flexibility grants organisations the ability to use up to 100% of capital receipts on revenue costs associated with transformation projects which are designed to deliver savings, service improvement or provide a more sustainable service.

PURPOSE OF POLICY  

The purpose of this policy is to outline the framework for utilising capital receipts flexibly to support transformational projects that deliver ongoing savings or improve the efficiency and effectiveness of policing services. This policy ensures compliance with relevant legislation and regulatory guidance while maximising the benefits from all resources available to West Mercia.

Capital receipts for the purpose of this policy is any receipt from the disposal of surplus assets, property, or other qualifying transactions that are greater than £10,000 in value (excluding VAT).

  The objectives of this policy are to:

• Support investment in projects that enable transformation and efficiency improvements.
• Ensure compliance with statutory regulations and guidance on the use of capital receipts.
• Maintain transparency and accountability in the allocation and use of capital receipts.
• Optimise the use of resources to deliver long-term financial sustainability.

            This policy outlines the conditions under which these receipts may be used to fund eligible revenue expenditure in accordance with government guidance.

IMPLICATIONS of the POLICY

This policy along with a plan on how capital receipts will be used under capital receipt flexibility are prerequisites required by the Secretary of State before West Mercia Police are allowed to undertake this process.

This will also serve as sound rationale and transparency around decision making for external audit.

PROCEDURE

As per the Secretary of States direction capital receipts can be applied flexibly to fund revenue costs incurred for the following purposes:

• Projects that deliver ongoing savings.
• Initiatives that improve service delivery or operational efficiency.
• Costs associated with restructuring to improve financial sustainability.
• Investment in technology, systems, or processes that lead to measurable improvements in efficiency.

Capital receipts will not be used for general operational costs or to fund on going service delivery unless explicitly permitted by statutory guidance.

Capital receipts held at the 31^st March in any financial year can be considered for use for this purpose. The underlying principle is affordability of the use of the capital receipts against the need to fund the capital programme and to hold receipts to offset future investment in assets. This will be assessed through the Treasury Management and Capital Strategies.

The Treasurer as S.151 officer for the Police and Crime Commissioner shall decide on a case-by-case basis in conjunction with the Director of Commercial Services as S.151 officer for the Chief Constable whether capital receipts should be used flexibly or not and its application subject to meeting the above criteria.

A report will be provided annually in conjunction with the budget report to the West Mercia Governance Board setting out the planned use of flexible capital receipts.

PRUDENTIAL INDICATORS

The guidance requires that the impact on the Council’s Prudential Indicators should be considered when preparing the report on the flexible use of capital receipts.

The indicators that will be impacted by this strategy are set out below;

• Estimates of Capital Expenditure Indicator.
• Capital Financing Requirement, as capital receipts supported schemes within the existing programme that will now be financed by prudential borrowing.
• Financing costs as a percentage of net revenue stream (%),
• Incremental Impact on Council Tax of capital investment decisions

The Prudential Indicators are used to demonstrate that the use of capital receipts for this purpose is affordable and that the impact on the funding of the wider capital programme is sustainable.

CONSULTATION

Business Lead/ Chief Officer Consulted: Date Consulted

Richard Muirhead (Force Director of Commercial Services: 04/02/2025

Gareth Boulton (OPCC Chief Executive):Gareth Boulton (OPCC Chief Executive)

Assessment and ANALYSIS

 Consideration has been given to equalities impact and any protected characteristics that may be impacted by the implementation of this policy. The decisions to utilise capital receipts will have an indirect impact on employees of the organisation through being used to offset potential redundancy costs. However, the equality implications will be considered through the redundancy policy and processes.

MONITORING / EVALUATION

Themonitoring and review of this procedure is the responsibility of the procedure owner.

DOCUMENT HISTORY

Proposed use of flexible capital receipts

The balance on the capital receipts account held by West Mercia as at the 31^st January is £1.3m.

A summary of projects identified as being potentially eligible for capital receipts funding through 2024/25 and into 2025/26 is set out below, with a description of the activity being undertaken. It is not expected that the current balance on capital receipts is sufficient to meet the potential cost of all this activity and a choice will need to be made as to what can be delivered within the restricted receipts that are available.

This list is not definitive and further potentially eligible projects could be identified and will be highlighted as part of the decision-making process.

The outcomes of these projects are expected to delivery efficiency in how services are delivered, freeing up resources to be dedicated to priority areas in policing and a reduction of operating costs.

Delivery of Operation Franklin

This is a review by the Chief Constable of the policing operating model to ensure that it is fit for purpose and deliverable within the funding that is available. Review of how front-line policing is organised and how the structures that support this are delivered to focus on the priorities set out in the West Mercia Safer Communities plan and policing objectives. The flexible use of capital receipts will be applied to offset the cost of redundancy and actuarial strain to enable restructure of services which will reduce the ongoing revenue operating cost.

Review of Enabling services

Review of requirements in digital and change teams following the end of the digital transformation project over the previous 5 financial years Opportunity to review the structure of enabling services going forward to ensure that it is set up to support the force through the next phase of organisational development over the medium term. The flexible use of capital receipts will look at offsetting the cost of redundancy and actuarial strain to enable restructure of the service which will reduce the ongoing revenue operating cost.

Review of technological solutions to drive efficiencies

Investment in technology to enabled channel shift and promote efficient delivery of services to the public of West Mercia, including consideration of emerging opportunities from investment in AI technology. Investment in the movement from traditional forms of contact and processes to digital means, such as self-service portals, e-forms and also other means of communication. This will include delivering non-cashable savings through reduction in administrative burden on officers and staff to free up time to focus on front line policing activities. The flexible use of capital receipts will be considered for the cost of system upgrades / system development which is expected to have a demonstratable benefits to the efficiency of the organisation to manage demand. Also, redundancy costs/actuarial strain through reduction in roles that are no longer required due to the investment.

Review of use of buildings and investment in new infrastructure Review the assets that are required to deliver services (Op Wembley), building on how we operate within the workplace strategy and the policing operating model. Look at options that increase the return on investment or opportunities to rationalise the estate portfolio. Costs that will be considered include feasibility studies to review options for making efficiencies, such as initiatives for carbon reduction. Costs of work undertaken up to RIBA stage 4 to assess the feasibility to deliver new assets which have a long-term benefit to the organisation to meet statutory obligations or which demonstrates either non cashable or cashable benefits.