2021 Updated Administration Costs and Unspent Funds Framework

The aim of the framework, which was originally published in November 2018, is to help facilitate the delivery of two of HM Revenue & Customs (HMRC's) strategic priority objectives for the Landfill Communities Fund (LCF):

• The level of administration costs incurred by EBs, should be at or below the guidance level of 7.5 per cent of the project expenditure; and
• The value of unspent funds* held by EBs should be reducing year on year.

There is no change to the guidance levels in these areas. The updates to the Framework are:

• The Framework required ENTRUST's CEO to attend the EB Board meeting of all EBs which are placed on quarterly monitoring programmes to explain to the EB Boards the reason for this action. In practice, this is difficult to achieve before the monitoring process has begun due to the timing of the EB board meetings. Following the 2019/2020 data analysis, four EBs are currently subject to the quarterly monitoring of unspent funds. These EBs were advised of the decision to place them on a monitoring programme in June 2020 and none of the EBs affected queried the decision or indicated that they did not understand the reason for the decision. The requirement to meet with EB Boards at the time of placing an EB on the monitoring programme is not necessary and has been removed from the Framework.
• The Corporate Plan for 2021-2024 (due to be published in April 2021), has provided a two-week extension (to mid-July) of the target to provide information on EBs to HMRC, and this has also been updated in the Framework. This will ensure that EBs are given adequate time to provide explanations for any performance issues and ensure that plans they have developed are fully assessed.
• We have also strengthened the wording in the framework to ensure that EBs are clear that any additions they make to their winding up provision are considered part of the administration costs limit, in line with ENTRUST guidance.

In reviewing performance of EBs in 2020/2021, we will also take into account any exceptional circumstances they have faced due to the COVID-19 pandemic, but still expect them to control costs and expenditure. This is covered by the COVID-19 guidance published on the COVID-19 page of our website.

You can access the framework on the Administration Costs and Unspent Funds page of our website and on the right hand side of this page. You can also access the guidance on the unspent funds level in section 3.6 of our Guidance Manual and the guidance on administration costs in section 3.12 of our Guidance Manual, both of which can be found on the Guidance page of our website.

* Unspent funds are those LCF funds remaining as a cash balance at the end of each reporting period, including committed and uncommitted funds. EBs are required to state within their Statutory Annual Return whether these funds are committed to projects or required for winding up. Any other funds are classed as uncommitted. The guidance is that an EB's total unspent funds at year end should be no more than 1.5 times an EB's LCF income (including contributions and transfers) in that year.