Capital

Capital or revenue

What factor would determine whether expenditure could be classed as capital or revenue?

The DfES guidance is that bulk purchases of capital assets whose collective worth exceeds £2,500 (including VAT) should be classed as Capital. These assets will need to give continuous service beyond the financial year in which they were purchased, for example buildings, land, vehicles and computer servers. Revenue can be used for maintenance, staffing and the purchase of smaller items of equipment.

Could a local authority use Sure Start children's centre capital to purchase a lease?

It depends on the type of the lease. Capital grant is intended for the creation of a tangible asset for which the Exchequer would have an interest (usually protected by lien). Therefore the use of capital grant to purchase a leasehold asset is acceptable provided the period of lease is not less than 25 years. Capital expenditure can not be used to purchase a premium (operating) lease. It is important for local authorities to note that rent and operating leases can not be regarded as capital expenditure.

Capital requirements

There is a requirement that if £1m or more of the General Sure Start Grant (GSSG) main capital is invested then 50 childcare places must be created - why is this?

It is important that we get maximum value for our capital investment, otherwise services for children will continue to be delivered from buildings which have not been purpose built or designed.

If we are to achieve ambitions set out in Ten Year Childcare Strategy, then parents will need increasing access to good-quality childcare and, in some areas, buildings to support those services do not currently exist.

Projects submitted will be considered on a case-by-case basis, and this will include taking into consideration what other childcare is in the area.

Where do we record GSSG projects that are not children's centres projects?

GSSG projects that are not related to children's centres should be recorded on Surestart_on. View a guide to recording this.

Will technical consultants assess the extended schools and sustainability capital projects?

No, these projects will not need assessment in the same way that capital-build projects do. However it is essential to keep this information on Surestart_on up to date as the technical assessors and the department will continually monitor progress and spend of local authorities.

How has the Early Years, Extended Schools and Special Needs Group calculated children’s centre funding?

We have calculated children’s centre revenue and capital allocations based on the number of children local authorities must reach by 2008, with a higher unit-cost allocation for children living in the 30% most disadvantaged super output areas. Local authorities with the same target number of children to reach may have very different allocations as the level of capital and revenue funding will depend on how many children live in areas of deprivation.