Council accused of 'fiddling the books'

Chief executive says process is 'completely above board'

WEST Berkshire Council has been accused of “fiddling the books” – by one of its own members.

Tim Metcalfe (Con, Purley-on-Thames) made his comments after learning that the council was using developer contributions to pay for library books.

The process, known as capitalisation, means councils can pay for items from its capital budget – used for items with a long lifespan, instead of listing it as revenue, normally paid over a short-term period, such as maintenance and repairs.

The leader of the council’s opposition said the method “created a false economy”, but the council’s chief executive has insisted it is above board and not breaking any rules.

Last year the council paid for library books, initially from developers’ contributions, making an estimated saving of £95,000.

The council has also capitalised elements of its highways budget, such as road signs.

This has helped the department forecast an underspend of £120,000, instead of an £193,000 overspend.

Questioning the process at an overview and scrutiny management commission meeting on Tuesday, April 9, Mr Metcalfe said: “Capitalising library books – you’re just bending the rules aren’t you?”

“The reason, I can understand it, because obviously we are getting developers’ contributions, which you can spend on a capital item, so why not bung them in library books as a capital item then we can fiddle the books a bit?”

But the comment was locked down by committee chairman Alan Law (Con, Basildon).

Addressing the press, he said: “I would really like you, if you are going to quote that flippant comment, I’d like you to quote my comment that it was flippant, wasn’t meant and I did ask for it to be withdrawn.”

The council has been facing increasing pressures in adult social care, which was forecasting a £2.9m overspend after £2m was missed off the budget, combined with care home costs.

Responding to the claims, the council’s head of finance Andy Walker said: “Given the position we are in with adult social care, all service areas were asked to look in all areas to see if there were any ways that we could mitigate that position.

“This was one area that was fully explored.”

Chief executive Nick Carter added that the rules over capitalisation had been clarified and that if an item had a life of more than one year it could be classed as a capital spend.

“It’s within the rules, it’s not bending the rules.

“It was debated about library books.

“The rules were clarified and I made the point that these are assets that have a life of more than one year.

“It’s completely appropriate.

“I suspect many other councils who have been placed in the same situation we are in – which is revenue poor, capital a bit richer – are taking the opportunity to capitalise.

“It’s a common occurrence, so there’s certainly no bending of the rules here; capitalising expenditure to reduce pressure on the revenue budget.

“It’s completely above board.”

Faced with making further savings of £7m last year, the council proposed capitalising around £1m of items, including library books, a transport policy post, part of the occupational therapist team and part of the traffic services manager post.

The leader of the council’s Liberal Democrat opposition, Lee Dillon (Thatcham North), said: “The use of capital receipts to fund traditional revenue items is a false economy as it is using one-off money to cover yearly costs, so that money will need to be found again in future years rather than being built into the budget.

“While the rules around how a council can use capital has been relaxed, using such money for library books isn’t in my view within the spirit of the regulations.

“Rather than stand up to the Government and demand that funding should increase, this administration is doing their bidding for them by using money that should be spent on real assets.”