Local Government: Regeneration

The Government has recently published a consultation on the proposed capital risk metrics and associated regulations. The consultation sets out the proposed metrics, their calculation methodologies and the circumstances in which the Secretary of State’s powers may be exercised. The Government will carefully consider responses from local authorities, representative bodies and other stakeholders before finalising the regulations. A Government response will be published following consideration of the consultation findings.

Local authorities are responsible for setting their own capital strategies, as they are best placed to make local decisions that reflect the needs of their communities. In making those decisions, however, local authorities must comply with their legal duties and have regard to statutory guidance designed to ensure decisions are prudent, affordable, and sustainable.

The Government recognises the important role that local authority borrowing plays in supporting infrastructure, regeneration, housing and other local priorities. The proposed powers are not intended to restrict prudent borrowing or investment that supports service delivery and economic growth. Rather, they are designed to enable earlier identification and proportionate management of excessive financial risk where borrowing or investment activity may threaten an authority’s financial sustainability. As outlined by the consultation, the proposed framework is designed to target a small number of high-risk outliers, leaving the vast majority of councils unaffected.