Strengthened local government Prudential Code to become published
Following consultation with local government finance professionals, CIPFA has announced that a strengthened Prudential Code is going to be published by no more 2021.
The Prudential Code is really a professional code of practice that aims to make sure local authorities’ financial plans are affordable, prudent and sustainable. Over 100 participants taken care of immediately the consultation captured which put down CIPFA’s proposals for any revised Code.
The key changes being brought forward will be to paragraph 45 of the Prudential Framework, which currently states that ‘authorities mustn't borrow a lot more than or perhaps in coming of their demands purely to be able to make money from the investment from the extra sums borrowed.'
The revised Code will include clarification and types of what's and is not considered prudent borrowing activity. These added principles are intended to protect the public purse and avoid misinterpretation from the Code’s provisions.
Other key changes that will be implemented following consultation include: the inclusion of proportionality as an objective, so that an expert incorporates an assessment of risk against amounts of resources; clarifications to higher define commercial activity and investment; and also the introduction of the Liability Benchmark as a Treasury Management indicator for local government bodies.
Rob Whiteman, CIPFA CEO, said: “We're tremendously grateful to everyone who took the time to talk about their thoughts with us throughout this consultation process. CIPFA is committed to maintaining a principles-based system that gives local authorities the liberty and protection to invest in their communities. It's the actions of a minority of outlying authorities that are putting those freedoms vulnerable to further government intervention in to the Prudential Framework.
“We are certain that the proposals we will be implementing will stop actions that either push the boundaries from the Prudential Code or intentionally misinterpret its provisions.”
