By Mandy Bretherton, CIPFA Technical Manager – Local Government Finance
CIPFA experts specialise in supporting the public sector, and our on-going work on transport infrastructure assets is an example we want to share with you of how our unique knowledge and expert guidance can help public sector organisations prepare for, understand and manage the impact of legislative change.
The revised Code of Practice on Transport Infrastructure Assets (transport code) and the anticipated changes in the Code of Practice on Local Authority Accounting are the culmination of many years work by CIPFA and key stakeholders, to develop a workable and appropriate method for measuring transport infrastructure assets.
The transport code story
Our work began in 2008, when the HM Treasury (HMT) and the Department for Transport commissioned a CIPFA review of the accounting, management and finance mechanisms for local authority transport infrastructure assets. The review recognised the importance of transport infrastructure assets, and that comprehensive transport asset management had the potential to deliver significant value for money benefits and improvements in the services delivered to users.
Transport infrastructure assets, the local highway network and other local transport infrastructure assets, together represent the biggest asset the UK public sector holds. Authorities that have made good progress in implementing transport asset management have demonstrated both the potential to achieve benefits, and shown it is possible to prioritise implementation, gaining early benefits from focused initial investment.
Having considered the available approaches, CIPFA’s review concluded that an asset management-based approach was the one capable way of fully supporting sound financial management decisions and effective long term stewardship of the asset base. The approach was intended to help authorities make better informed decisions about spending priorities, by demonstrating the long term consequences of particular levels of investment. And to help them maximise the output that can be achieved for the given level of expenditure.
Following our review, the Department for Transport made £32m available for local authority asset management in 2009/10. Of this, £28m was invested with authorities to improve on their databases and associated tasks, and £8 million was passed to a selection of authorities to carry out innovative work and advise others.
The transport code was published in 2010 as a direct result of the government’s response to our review. Since its introduction, it has been used to provide information for the Whole of Government Accounts (WGA), and to support asset management. The transport code is based on the idea that the same data should be used for asset management, financial management and financial reporting, with the more effective management of assets being the key driver.
The latest update of the code
The Project Implementation Steering Group, which is responsible for the development and implementation of the transport code, has now reviewed and updated the code, set for publication in December. The purpose of the code is to support an asset management based approach to the provision of financial information about local authority transport infrastructure assets. The intention is that each authority should develop a single set of financial management information about these assets that is robust and consistent between transport authorities.
CIPFA/LASAAC, the body responsible for developing the Code of Practice on Local Authority Accounting in the United Kingdom, also consulted over the adoption of the measurement requirements of the transport code in the Code of Practice on Local Authority Accounting. For many years CIPFA/LASAAC has expressed the view that current value accounting is the more appropriate measurement base for local authority assets.
Therefore, following significant debate and consideration of arising practical issues, CIPFA/LASAAC decided that the formal adoption of these measurement requirements is likely to be 2016/17, with 2015/16 being the preparatory year. Our 2014/15 Code of Practice on Local Authority Accounting will confirm the approach for implementation.
Our comprehensive expertise in, and understanding of, transport infrastructure assets is demonstrated in our new products, available for public sector professionals, which provide specific guidance for local authorities.