APPENDIX 1: DRAFT ASSETS OF COMMUNITY
VALUE (ENGLAND) REGULATIONS 2012
DCLG officials have provided the following responses
to the questions put by the Committee:
Q1: The impact assessment gives the following
costs to local authorities: (a) One-off cost to set up the
list of assets of community value £379,000 (for year 1 only);
(b) Cost of managing the list process and five year review of
the list = £2.5m per year; (c) Compensation for loss of asset
value= average of £233k per annum over 9 years; (d) Costs
of enforcement- £35k per annum over 10 years. Which
of these costs will be met by central Government, in full or only
partly, and over what period?
A1: Costs to local authorities will be covered by
central government (via New Burdens) during the Spending Review
period. After this period LAs will have to cover their additional
costs from within their budgets.
Local authorities are being asked to manage the scheme,
including deciding whether to list a nominated asset. The view
has been that it is therefore appropriate for authorities to also
manage the compensation scheme. The Department factored the estimated
costs of compensation claims and the administration of them into
the New Burdens assessment. Local authorities are encouraged to
look at how best to manage the risk of claims, possibly through
individual or mutual insurance. However, recognising the potential
risk, Government will provide a safety net for local authorities
facing claims of over £20,000 in one year - either from a
single claim or a number of separate claims. Such verified claims
over £20,000 will be met by Government. This approach was
agreed as part of the new burdens assessment and then incorporated
into the Impact Assessment. This approach was tested with our
Local Authority reference group in January and did not incur any
significant comment.
Q2: Question 37 in the consultation paper asked:
"Do you agree that compensation claims should be considered
and paid for by the local authority?" The August 2011 summary
of responses states that "Just over half of respondents agreed
with the proposal in the consultation document, and thought it
was reasonable for local authorities to administer the compensation
scheme. However, the majority of local authorities were not in
agreement with this." The relevant table shows that there
were 178 respondents to Q37. The summary states that 87 respondents
disagreed that local authorities should consider and pay compensation
claims because it would impose additional costs and burdens on
local authorities. In particular, they were concerned about the
difficulty of budgeting for an unknown cost, which could be particularly
difficult for smaller authorities to handle. Given the overwhelming
opposition of local authorities to the proposal, how do you justify
going ahead with it?
A2: When making decisions around the structure of
the scheme, it was clearly important to take on board the opinions
of all those stakeholders affected by the policy not just local
authorities in isolation. There is clearly strong and understandable
support for compensation claims to be considered and paid for
by local level by Landowners, Business, the VCS and Parish Councils.
Overall there is a majority in favour of having compensation considered
at the local level and this clearly fits with the overall "localist"
agenda of the policy.
Whilst the Government understand the concerns around
compensation payment expressed by some local authorities, it believes
that the support provided through new burdens and the provision
of a safety net will help to mitigate these worries. Overall,
local authorities are being asked to manage the scheme and the
compensation element is part of this.
Department for Communities and Local Government
6 July 2012
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