Local government finance regime

This subtopic provides an overview of the local authority finance regime in terms of management and accounting that must be adhered to.

Local authority investment

Local authorities in England and Wales have extensive powers to borrow money and to make investments. How they do this is largely determined by the Local Government Act 2003 (LGA 2003) and statutory instruments issued under its powers.

A local authority may invest:

•
for any purpose relevant to its functions under any enactment, or
•
for the purposes of the prudent management of its financial affairs

In exercising investment, local authorities must have regard to the guidance issued by the Secretary of State.

Capital finance

Capital finance differs from revenue finance as revenue expenditure has to be met from current income whereas capital expenditure can be met by borrowing or capital receipts, and the costs can be spread over the period in which the benefits of the expenditure are expected to accrue.

The Prudential System is a comparatively simple framework that encourages investment in capital assets, which local government needs to improve services and relies on for accounting

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Local Government News

CJC concludes comprehensive review of pre-action protocols with publication of final report (phase two)

The Civil Justice Council (CJC) has concluded its extensive review of pre-action protocols (PAPs) with the publication of its phase two report. The first phase of the final report, published in August 2023, examined the role of PAPs in the civil justice system and explored the potential for digitalising pre-action processes. The second phase was published in November 2024. In the second (and final) phase report the CJC has set out its recommendations for the reform of various existing PAPs, including those for Personal Injury, Housing, Judicial Review, Debt, Construction and Engineering, Professional Negligence and Media and Communications. The report also recommends the creation of two new PAPs, one for dealing with child abuse and one for Multi-Track Claims in the Business and Property Courts of England and Wales (with a draft included at Appendix 1).

LGSCO proposes expanded powers to enhance public service oversight

The Local Government and Social Care Ombudsman (LGSCO) has published its Triennial review, outlining four key recommendations to improve public services and enhance its investigative capabilities. The proposals include expanding the LGSCO's remit to investigate education, health and care plan implementation in schools, mandating signposting to the LGSCO by independent adult social care providers, updating its jurisdiction to encompass emerging local government services and establishing a statutory duty to monitor compliance with the forthcoming complaint handling code. These recommendations aim to address accountability gaps and modernise the Ombudsman's service in response to increasing case complexity, particularly in areas such as special educational needs and disabilities (SEND), adult social care and homelessness.

DHSC opens consultation on tackling modern slavery in NHS procurement

The Department of Health and Social Care (DHSC) has launched a consultation on proposed regulations and guidance aimed at combatting modern slavery in NHS procurement. The draft National Health Service (Procurement, Slavery and Human Trafficking) Regulations 2024 seek to ensure that NHS supply chains and business activities are free from ethical and labour standards abuses. The consultation invites views from public bodies, suppliers and the public on various aspects, including implementation strategies, impact assessment, risk management in procurement frameworks and support mechanisms for public bodies to fulfil these new duties. This initiative aligns with the government's stance that the NHS has a crucial role in addressing modern slavery through its procurement practices. The consultation closes on 13 February 2025.

DLUHC launches consultation on Right to Buy reforms to protect social housing

The Department for Levelling Up, Housing and Communities (DLUHC) has launched an eight week consultation on proposed reforms to the Right to Buy scheme. Key measures under consideration include extending the minimum tenancy period for eligibility, exempting newly built social homes from the scheme and introducing targets for councils to replace sold stock. The government has already reduced maximum Right to Buy discounts to £16,000 - £38,000 and increased the cost floor protection period to 30 years. Councils can now retain all receipts from sales and the scheme will not be extended to housing associations. These reforms aim to create a more sustainable Right to Buy programme while protecting and increasing social housing stock amidst unprecedented housing pressures.

View Local Government by content type :

News