A strengthened Prudential Code will be published by the end of 2021, CIPFA has announced.
The Prudential Code is a professional code of practice that aims to ensure local authorities’ financial plans are affordable, prudent and sustainable.
The key changes being brought forward are to paragraph 45 of the Prudential Framework, which currently states that ‘authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of the extra sums borrowed.’
The revised Code will include clarification and examples of what is and is not classified as prudent borrowing activity. These added principles are intended to protect the public purse and avoid misinterpretation of the Code’s provisions.
CIPFA CEO Rob Whiteman said:“We are confident that the proposals we will be implementing will put an end to actions that either push the boundaries of the Prudential Code or intentionally misinterpret its provisions.”