The Prudential Code: flimsy fig leaf in the coming storm

Document type
Policy briefing
Cuthbert, Jim
Jimmy Reid Foundation
Date of publication
19 January 2017
Social Policy, Education and Skills, Poverty Alleviation Welfare Benefits and Financial Inclusion
Social welfare
Material type

Download (472KB )

This paper is concerned with the operation in Scotland of the Prudential Code for Capital Finance in Local Authorities, which has been developed by the Chartered Institute of Public Finance and Accounting (CIPFA). The Prudential Code, which applies to the whole of the UK, underpins a major change in the control of local authority capital expenditure and was introduced in April 2004.

The purpose of this paper is to examine how the code is operating in Scotland, and asks whether it is still practical. This question is particularly acute just now, given that the fiscal environment for local authorities will be much more challenging in the foreseeable future.

The primary conclusion of this paper is that the kind of disaggregated system represented by the code means that it might not be able to cope with future challenges.

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