04 April 2008
Local government minister John Healey has announced a change in the budgeting rules for councils' capital projects, which he says will encourage self-regulation.
Instead of being told how much to put aside each year to repay capital debt, local authorities will be able to decide their level of provision, having only a duty to ensure this is prudent.
Healey said the scrapping of the minimum revenue provision, which he described as a 'complex regulatory burden', would allow councils greater financial autonomy and give them the flexibility to respond better to their areas' needs. '[The] announcement is one more step towards giving councils the financial freedom they need to provide
high-quality services and value for money,' he added on March 31.
CIPFA was a member of the Department for Communities and Local Government working party that drew up the guidance on the prudential duty.
Alison Scott, a technical manager for the institute, said the change 'brings a welcome degree of realism to local authority capital investment and use of assets'.