Local government finance regime

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:

•
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 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

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Local Government News

Local Government weekly highlights—27 November 2025

This week's edition of Local Government weekly highlights includes: enhanced coverage featuring expert commentary of the 2025 Budget with key announcements for local government practitioners and the Supreme Court judgment in R (Jwanczuk) v SSWP, allowing the Secretary of State's appeal in an Article 14 challenge to BSP contribution condition. It includes case analyses of R (National Association of Head Teachers and Barbara Middleton) v Ofsted on a judicial review challenge to the legality of the 2025 Ofsted inspection framework; the Court of Appeal case of R (SAG) v Governing Body of Winchmore School challenging the permanent exclusion of a pupil for entering a teacher's hotel room without permission to retrieve their confiscated phone; R (on the application of Master Zo) (a child by his litigation friend, AK of the Refugee Council) v Hounslow London Borough Council on an application for judicial review concerning a putative child; and R (Wildfish) v Buckinghamshire Council; R (Jane Wood) v Buckinghamshire Council concerning a judicial review of Buckinghamshire housing approval. It also includes a case report on the Court of Appeal case of Cifci v Sutton LBC in relation to intentional homelsessness, amongst others. It includes further coverage on Pensions, Education, Social housing, Children’s social care, Public procurement, Governance, Local government finance, Planning, Social care, Healthcare and Licensing.

High Court grants application for judicial review concerning a putative child (Master Zo v London Borough of Hounslow (anonymity order))

Local government analysis: The High Court granted an application for judicial review brought on behalf of Z, a putative 17-year old unaccompanied asylum seeking child from Afghanistan, on the grounds that: 1) there had been an unlawful and irrational failure, refusal or undue delay to undertake a reassessment of C’s age given new evidence; and 2) the London Borough of Hounslow’s (‘Council’) failure to provide Z with age-appropriate accommodation and mental health support was unlawful. In agreement with the application, the court also granted an anonymity order, reliance on witness statements, appointment of a named litigation friend, expeditious proceedings and an interim order granting Z putative child status until the conclusion of the proceedings, thus, securing Z accommodation, care and support pursuant to section 20 of the Children Act 1989. This case provides specific guidance to practitioners whose clients are experiencing similar circumstances and a helpful reminder of the law concerning the test for granting permission and interim injunctions. Written by Nicola Wheater, associate at HCR Law.

CQC round-up—26 November 2025

A round-up of the latest news from the Care Quality Commission (CQC), including four care providers rated as inadequate and three services rated as requiring improvement.

Budget 2025—key Local Government announcements

In the Budget 2025 on 26 November 2025, the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP, made several announcements of relevance to local government practitioners, including on local government finance, governance, healthcare, social care, children’s social care, education, licensing, planning, public procurement and pensions. Alan Murdie, Director at Council Tax Legal Services and Tim Coolican, partner and head of health and social care sector at Anthony Collins, have commented on the package of measures.

View Local Government by content type :

News