The following Local Government guidance note provides comprehensive and up to date legal information covering:
Local authorities in England and Wales have extensive powers to borrow money and to make investments. How they do this is largely determined by the Local Government Act 2003 (LGA 2003) and statutory instruments issued under its powers.
The investments have to be made in regard to guidance issued by the Secretary of State (SoS) and this guidance was last revised in 2010 following the problems encountered with the investments in Icelandic banks.
The treasury management function for both borrowing and investment forms part of the Prudential funding structure established by LGA 2003.
For more information see Practice Note: Capital finance.
LGA 2003, s 12 says that a local authority may invest:
for any purpose relevant to its functions under any enactment, or
for the purposes of the prudent management of its financial affairs
In exercising investment local authorities must have regard to guidance issued by the SoS. The latest guidance was issued by the SoS under LGA 2003, s 15(1)(a) and was effective from 1 April 2010.
LGA 2003, s 15(1) requires a local authority to have regard:
to such guidance as the SoS may issue, and
to such other guidance as the SoS may by regulations specify for the purposes of this provision
The CIPFA guidance (Treasury Management in the Public Services: Code of Practice
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