Lambeth’s exceptional financial support request granted by government

May 16, 2024

2 minutes read

Lambeth London Borough Council will receive up to a further £30m in exceptional financial support from the government for financial year 2023/24.

The capitalisation direction was approved following an external assurance review conducted by the Chartered Institute of Public Finance and Accountancy (CIPFA).

Lambeth will now receive a total of up to £50m in exceptional financial support covering 2023-24 to 2024-25, the government has confirmed in principle, with certain costs able to be treated as capital expenditure.

Conditions of the approval state that the council may only capitalise expenditure when it is incurred or where its capital financing requirement is increased as a result of the capitalisation of expenditure under the direction.

Any further borrowing from the date of approval (15 May) up to and including, but not exceeding, the increase in the financing requirement must be obtained from the Public Works Loan Board (PWLB) and is subject to an additional one percentage point premium on the interest rate above the rate the loan would otherwise be subject to.

This requirement does not apply to borrowing in relation to the Housing Revenue Account, however.

Lambeth Council has £50m in exceptional financial support approved covering 2023-24 to 2024-25. Photo: Lambeth Council.

Lambeth must also develop and share an action plan with the Department for Levelling Up, Housing and Communities (DLUHC) within one month addressing the key recommendations from CIPFA’s assurance review. The authority must ensure steps are taken to implement these recommendations over the next twelve months.

In its report, CIFPA said it was “reasonably assured” of Lambeth’s financial position and that the council had taken all reasonable steps to minimise the need for government support, as of the date of writing in August 2023.

CIPFA’s recommendations included the council reinforcing the need to deliver on its savings programme and continue to hold directors and lead members to account for delivery, and putting a specific focus on the potential impact of changes in senior officer roles and future succession plans across finance.

The report also recommended a review of the future capital programme for affordability and to highlight any potential demand pressures that warrant further analysis. Finally, CIPFA said the council should consider how it uses comparative information from nearest neighbour councils “to inform future budget reports and savings opportunities, including ‘what if?’ modelling in key service areas”.

Capitalisation directions requested by 19 councils for 2024/25 were agreed by the government at the end of February, with eight councils receiving exceptional financial support for 2023-24.