What is Treasury Management?

Local authorities in England and Wales have broad powers for borrowing and investment. How they do this is largely determined by the Local Government Act 2003 (LGA 2003) and statutory instruments issued under its powers.

The treasury management function for both borrowing and investment forms part of the Prudential funding structure established by LGA 2003.

Authorities are required to have regard to a range of guidance when exercising these powers:

1. •

   Guidance issued by the Secretary of State (3rd edition applicable from 1 April 2018)

2. •

   Chartered Institute of Public Finance and Accountancy (CIPFA) Treasury Management Code of Practice (2021 edition)

3. •

   CIPFA Prudential Code (2021 edition)

4. •

   Government response to the consultation on changes to statutory guidance and regulations: Minimum Revenue Provision​

The guidance is periodically updated in order to reflect the changing environment for local authorities and the related risks relating to treasury management. The most recent versions of the guidance have expanded the focus to include areas that may be outside the traditional treasury management environment,