Exclusive: Councils charge commuted sums against themselves to boost revenue

21/10/2019
Dominic Browne

Major highway authorities are charging commuted sums to their own schemes in a bid to provide a future revenue source to maintain capital projects, Highways can reveal.

The move is so unusual even that the Chartered Institute of Public Finance and Accountancy told Highways they were not aware of it.

Commuted sums are usually paid by developers or other third parties to highway authorities as compensation for the future maintenance costs attached to newly created highways or highway improvements related to their developments - commonly housing.

The sums can be secured through legal agreements made with developers and landowners under Sections 38 and/or 278 of the Highways Act 1980 (“the 1980 Act”) and have been increasingly used to secure maintenance compensation on assets in recent years given the revenue cuts in local government.

A commuted sum is a single payment invested over an agreed period and from this amount the cost of maintenance is drawn down.

However, in a bid to move funding out of capital and into revenue and thus set up a pot of cash that can be used for maintenance, some authorities are now charging commuted sums against their own works.

Public sector accountancy rules create a divide between capital and revenue in local authority spending, though councils have been granted increasing flexibility in recent years, in part as a response to authorities becoming revenue poor under austerity.

One authority said it had sought to solve the problem by 'turning capital into revenue through charging commuted sums to our own schemes and taking a margin as a whole life cost'.

This practice has been adopted by a number of other authorities. One major county council said that under its internal commuted sums system 'instead of having to prove maintenance on a specific asset the audit trail on the commuted sum is charged to yourself, and it seems to be enough if you attach it to an asset type'.

Highways understands that capital spending can be used for tradional revenue purposes such as maintenance if local authorities can make the case that it will enhance the life of the asset, thus satisfying the public accountancy rules.

Authorities have also complained that it can be difficult to claim back commuted sums when the council holds the funding centrally.

Commuted sums: a snapshot of use

A survey of more than 10 authorities, carried out by the Future Highways Research Club, managed by Proving Services found that commuted sums are charged over a range of years from 15 to 60 years, with 30 years the average.

When asked whether the full cost of maintenance was usually recovered three authorities said yes, five said no and three were unsure.

Finally when asked if developers challenge the charges, most said no; a couple said they had been challenged but not successfully.

Islington LBC has previously said that a recent court case (“the Redrow case”) 'confirms that it is appropriate for Authorities to use these powers to seek commuted sums for all elements of future highway maintenance'.

Council directors' body ADEPT has a commuted sums tool to support local authorities develop policies and Highways understands it is looking at whether the sector could move from a static formula to a dynamic formula that works with diff factors including economic shifts.

Highways jobs

Assistant Director - Planning and Transportation

Tameside Metropolitan Borough Council
£81,495 per annum
We are looking for a highly accomplished, ambitious and determined Chartered Town Planner to join the Growth Directorate’s leadership team. Tameside, Greater Manchester
Recruiter: Tameside Metropolitan Borough Council

Senior Engineer (Development Control)

Wrexham County Borough Council
£36,876 - £39,782 per annum
We are looking to appoint a suitably experienced and qualified candidate to work within the Contracts and Engineering team Wrexham (Wrecsam)
Recruiter: Wrexham County Borough Council

Strategic Director Growth and Regeneration

Kirklees Metropolitan Council
£119,940 to £131,935
A decade of investment invites the opportunity of a decade! Kirklees, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Strategic Director Environment and Climate Change

Kirklees Metropolitan Council
£119,940 to £131,935
A decade of investment invites the opportunity of a decade! Kirklees, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Funeral Operative (As and When)

Brent Council
£24,462 - £26,274 p.a. inc. (pro-rata)
The person will not need previous experience in funeral services as full training will be given but experience would be an advantage. Brent, London (Greater)
Recruiter: Brent Council

Senior Engineer – Transport Policy

The Royal Borough of Kensington & Chelsea Council
£38,800 - £52,600
This is an exciting opportunity to improve road safety and create healthy streets in a busy and dynamic central London borough. Kensington and Chelsea, London (Greater)
Recruiter: The Royal Borough of Kensington & Chelsea Council

Environmental Health Officer / Health and Safety Practitioner

The Royal Borough of Kensington & Chelsea Council
£33,600 - £45,400 per annum plus performance related pay
The ideal candidate will have a detailed knowledge/understanding of Health and Safety legislation.  Kensington and Chelsea, London (Greater)
Recruiter: The Royal Borough of Kensington & Chelsea Council

Head of Operations

Rossendale Borough Council
£49,408 - £52,899
The Head of Operations is a key leader in the Senior Management Team. Rossendale, Lancashire
Recruiter: Rossendale Borough Council

Commercial Officer

Rossendale Borough Council
£25,801 - £29,636
We are keen to improve our recycling levels, tackle the climate change agenda and take pride in our open spaces. Rossendale, Lancashire
Recruiter: Rossendale Borough Council

Principal Electrical Asset Officer

Birmingham City Council
£34,788-£42,683
The role requires the post holder to be a key technical specialist for the Authority’s Highways Electrical Asset Management function, providing... Birmingham, West Midlands
Recruiter: Birmingham City Council

Transport Planning Officer 

Plymouth City Council
£32,878 - £42,683
This is a full time position (37 hours per week) with flexible working arrangements. Plymouth, Devon
Recruiter: Plymouth City Council

Highways & Drainage Team Manager

Newport City Council
£37,849 - £40,760
You will be skilled at analysing multiple sources of information, making excellent decisions, and driving difficult situations towards a... Newport (Casnewydd)
Recruiter: Newport City Council

Senior Environmental Health Officer (Housing Lead)

Mole Valley District Council
£37,821 - £42,329
An exciting opportunity for a Senior Environmental Health Officer to join our forward thinking Environmental Health Partnership Oxted, Surrey
Recruiter: Mole Valley District Council

Street Works Compliance Officer

Telford & Wrekin Council
£29,636 - £31,371 per annum
For further information on the role please click. Telford, Shropshire
Recruiter: Telford & Wrekin Council

Senior Sustainability & Resilience Officer

Essex County Council
£30001.0 - £34017 per annum
This opportunity is to be offered on a 6-month, fixed term / secondment contract basisInterviews scheduled to be held Friday 17th April Job Purpose Es England, Essex, Chelmsford
Recruiter: Essex County Council

Highway Electrical Maintenance & Installation Operative (Street Lighting) Apprentice

Kirklees Metropolitan Council
National minimum wage, currently £8.20 in first 12 months, increasing to £8.72 thereafter
If you are looking for hands on experience and learning on the job then an apprenticeship could be the right route for you. Kirklees, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Highways Civil Engineering Technician Apprentice x 3

Kirklees Metropolitan Council
National minimum wage, currently £8.20 in first 12 months, increasing to £8.72 thereafter
If you are looking for hands on experience and learning on the job then an apprenticeship could be the right route for you. Kirklees, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Safety, Health & Environment Technician Apprentice

Kirklees Metropolitan Council
National minimum wage, currently £8.20 in first 12 months, increasing to £8.72 thereafter
If you are looking for hands on experience and learning on the job then an apprenticeship could be the right route for you. Kirklees, West Yorkshire
Recruiter: Kirklees Metropolitan Council

Strategic Director, Environment & Regeneration

Brent Council
Circa £155,000
Brent is the Borough of Cultures - the most diverse in London - and as a Council we believe in delivering for our communities. Brent, London (Greater)
Recruiter: Brent Council

Street Cleansing Operative x6

Redbridge London Borough Council
£20,466.00 - £20,835.00
This role will involve working as an individual as well as part of a team, litter pick the streets in the local area, empty the litter bins. Redbridge, London (Greater)
Recruiter: Redbridge London Borough Council

Highways on Fridays

Register now!

Latest Issue

latest magazine issue

Inside:

  • Exclusive: Self-assessment results
  • Keeping up momentum on major roads
  • The Lifelines Resilience approach
View the latest issue

Latest Video