Draft borrowing code regulations due next month

26 Jun 03
CIPFA has described as 'significant' the Office of the Deputy Prime Minister's intention to publish draft regulations for the prudential borrowing code next month. Maureen Wellen, the institute's assistant director, local government finance an

27 June 2003

CIPFA has described as 'significant' the Office of the Deputy Prime Minister's intention to publish draft regulations for the prudential borrowing code next month.

Maureen Wellen, the institute's assistant director, local government finance and policy, told Public Finance it was a welcome development that raised the prospects of important new freedoms for local authorities being available from April 2004.

'The code has definite and immediate scope for making new projects possible,' she added. 'There will be new choices between revenue-intensive and capital-intensive methods of procuring new services.'

Wellen was responding to remarks by Pam Williams, head of local government at the ODPM, at a CIPFA conference on June 23.
Williams told delegates it was the ODPM's 'intention' to issue the draft regulations for consultation in July, with a view to publishing the final regulations in September.

These will clarify issues such as the replacement for the minimum revenue provision. Wellen said this would give authorities 'key pieces of information', allowing them to plan for the introduction of prudential borrowing.

Currently, the ODPM gives credit approvals for all borrowing. Under the new framework, councils will be able to borrow funds for capital investment as long as the level of debt they take on reflects the resources they have at their disposal and remains within prudent limits.

CIPFA was asked to draw up the code that councils will be expected to adhere to when prudential borrowing passes into law. Wellen, who led this work, said: 'This is a very significant new freedom for local authorities and a significant new responsibility.'

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