Levelling up secretary Greg Clark is writing to councils today to confirm that rules under which local authorities sell assets to companies they control are to be tightened.
By selling their assets to their own companies, councils are able to exchange one-off payments for ongoing rental income.
The Government aims to tightened these rules to ensure that proceeds can only be earmarked for ‘transformation projects’ if the council does not retain ‘some direct or indirect control of the assets’.
Mr Clark said the measures were being brought in to prevent what he described as ‘dodgy deals’.
‘Every council has a duty to use the tax they receive from hardworking people in a responsible way,’ he said.
‘It's not right that some councils have attempted to abuse a loophole to do dodgy deals which only benefit the bottom lines of consultancies and accounting firms.
‘That's why we are cracking down on accounting practices that put taxpayer cash at risk.’