East Riding of Yorkshire Council has received an early Christmas present this week, after the authority was awarded a tax refund of more than £7m.
A European Court of Justice ruling found that local UK authorities had been incorrectly excluded from a VAT exemption on income from sporting facilities – such as gyms – given to other not-for-profit organisations.
The total receipt to East Riding Council is estimated to be £7.315m, made up of VAT refunds of £4.697m for the period of March 2009 to March 2016, and £2.628m claimed back for between April 2016 and October 2018.
In a meeting of the Cabinet on Tuesday, councillors agreed with recommendations made by the council’s director of corporate resources Darren Stevens as to where the one-off money should be spent.
It has been decided that a total of £400,000 will go into the Excellence for All Fund, which is a programme originally set up by the council in 2012 to improve schools and academies.
In his report, Mr Stevens said: “The fund has supported a radical programme of school to school improvement and has paid dividends, but the balance on the fund is projected to be fully utilised during 2018-19.
“In order to build on the achievements of recent years, and to support the work of the East Riding School Improvement Partnership going forward, it is recommended that Cabinet allocates a further £0.4m to the fund.”
The Excellence for All fund was initially set at £1.75m in 2012, before being topped up to £2.2m in 2015 and £3.2m in 2017.
Cllr Julie Abraham pointed out the improvements East Riding schools have made in the past six years, partly as a result of the fund. She said: “We now have 84 per cent of our schools good or better compared to 53 per cent in 2012 so that £400,000 will help us to solve issues that still out-stand.”
The Cabinet also agreed that £2.038m of the VAT refund will be used to fund a new ICT system for adults and children’s’ social care services.
Mr Stevens’ report read: “It is essential that the council provide sufficient resources to support this major business transformation and ICT change project.
“A detailed assessment of projected costs involved in the implementation of the new case management system has determined that one-off resources of £2.038m will be required to implement the programme over a two year period.”
Meanwhile, the remaining £4.877m will be set aside for the Capital Investment Fund, which the council will use to invest in the local economy and improve local infrastructure.
Cllr Richard Burton said: “It shows you the size and scale of the leisure services from what we are able to achieve really, it’s good to see that the lion’s share of the money is going to go back into the capital investment fund which is investing in the likes of East Riding Leisure Hornsea.”
Councillor Abraham said: “I think the fact that there is £7m coming back to the council from VAT is testament to how well run this council is financially that it isn’t having to be used to prop up the revenue budget.”
Jack Muscutt , Local Democracy Reporting Service