Local government finance regime

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This subtopic provides an overview of the local authority finance regime in terms of management and accounting that must be adhered to.

Local authority investment

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.

A local authority may invest:

  1. •

    for any purpose relevant to its functions under any enactment, or

  2. •

    for the purposes of the prudent management of its financial affairs

In exercising investment, local authorities must have regard to the guidance issued by the Secretary of State.

Capital finance

Capital finance differs from revenue finance as revenue expenditure has to be met from current income whereas capital expenditure can be met by borrowing or capital receipts, and the costs can be spread over the period in which the benefits of the expenditure are expected to accrue.

The Prudential System is a comparatively simple framework that encourages investment in capital assets, which local government needs to improve services and relies on for accounting

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Latest Local Government News

Court of Protection authorises high-risk surgery and post-operative mechanical ventilation in intensive care for young adult lacking capacity (RS, Re (Best Interests: Surgery and Intensive Care))

Private Client analysis: The Court of Protection authorised high-risk spinal surgery and prolonged elective ventilation for an 18-year-old lacking capacity, confirming that such treatment was in his best interests under the Mental Capacity Act 2005 (MCA 2005). Mr Justice Poole applied Aintree University Hospitals NHS Foundation Trust v James, weighing the grave surgical and post-operative risks against the substantial benefits of improved mobility, comfort, and life expectancy. The judgment underscores the court’s role in objectively resolving finely balanced medical treatment decisions, providing assurance to clinicians and families while clarifying that elective intensive care may, in exceptional cases, be justified for patients with profound disabilities. Practical implications written by Victoria Butler-Cole KC of 39 Essex Chambers.

OfS publishes new regulatory strategy for the higher education sector 2025–2030

The Office for Students (OfS) has published a new strategy for 2025–2030, setting out its approach to risk-based regulation of higher education in England. The strategy sets out four regulatory attitudes to guide the OfS’s work: being ambitious for students from all backgrounds; collaborative in pursuing priorities; vigilant in safeguarding public money and student fees; and vocal in emphasising that higher education benefits individuals and communities. The OfS will focus on three priority areas: quality; student experience and support; and sector resilience, aiming for all institutions to demonstrate effective governance in navigating financial and strategic risks. Equality of opportunity will be embedded at every level of the OfS’s regulatory work. The strategy was developed following a public consultation with students, institutions, and other stakeholders, with feedback sessions informing the final approach.

Court of Appeal confirms caravan site licensing must align with planning permissions and enforcement decisions (Haytop Country Park Ltd v Amber Valley Borough Council)

Planning analysis: In Haytop Country Park Ltd v Amber Valley Borough Council, the Court of Appeal confirmed that caravan site licensing must operate consistently with the planning regime and cannot override or expand planning permissions or enforcement outcomes. The decision establishes that licensing authorities must take into account the 'planning baseline' set by planning permissions and enforcement notices, ensuring the two regimes work together rather than at cross-purposes.

Local Government weekly highlights—13 November 2025

This week's edition of Local Government weekly highlights includes: case analysis of GH v RS, in which the COP authorised high-risk surgery and post-operative mechanical ventilation in intensive care for a young adult lacking capacity; Epping Forest District Council v Somani Hotels, in which the High Court refused to grant a final injunction preventing use of an Essex hotel to continue housing asylum seekers and Stop Portland Waste Incinerator v SHCLG confirming flexible application of the proximity principle in waste planning decisions. Case reports include R (RR) v Enfield London BC, in which the Court of Appeal rejected a claim that an LHA allocation scheme was discriminatory. It includes further updates on Social care, Social housing, Education, Planning, Governance, Healthcare, Children’s social care, Licensing and Local government finance.

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