Local Authority Capital Finance Framework: planned improvements
This sets out our proposals for local authority capital finance and provides an update on our work so far. It clarifies our objectives, what we will do to meet them and what is expected from local authorities.
Applies to England
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The Ministry of Housing, Communities and Local Government has policy responsibility for the Prudential System for capital borrowing and investment. It also has overall responsibility for the local government finance system, which includes monitoring risk from changes in sector behaviour and ensuring the legislation and guidance remain fit for purpose.
As set out in the Secretary of State’s speech at the LGA conference on 6 July 2021, the government recognises the importance of local capital investment. Priorities such as housing provision and levelling up will depend on a robust system of capital investment that ensures value for money and safeguards taxpayers’ money, as well as protecting the local government finance system from excessive risk.
This document sets out the government’s plans for strengthening the current system while protecting the principles of local decision making. It sets out plans for both improving our role as steward of the local government financial system, by ensuring we have the data to effectively monitor risks in a timely way, and to strengthen the current capital system so that it remains effective in driving good decision making and preventing excessive risk.