Local Government: Investment
The question
To ask the Secretary of State for Housing, Communities and Local Government, with reference to her Department’s press release entitled Councils to be prevented from making risky investments, published on 28 May 2026, what threshold of debt relative to annual revenue is indicative of excessive financial risk by a local authority.
Answered by Alison McGovern
The Government has recently published a consultation on proposed capital risk metrics and associated regulations. This sets out the proposed metrics, their calculation methodologies, and the circumstances in which the Secretary of State’s powers may be exercised, including how risk thresholds will be set. The Government will consider responses from local authorities and other stakeholders before finalising the framework and will publish a response in due course.
To support transparency, every principal local authority must prepare and publish annual accounts, which include information on borrowing, liabilities and assets. Under the Local Government Act 2003, local authorities must have regard to the CIPFA Prudential Code and Treasury Management Code and publish their treasury management strategies, capital plans and investment strategies. MHCLG also publishes investment guidance which encourages the publication of an investment strategy. These documents are typically made available on local authority websites.
The Ministry of Housing of Communities and Local Government collects data returns from local authorities including their borrowing and investment information. These returns are collated and published by MHCLG on the .gov website, data on investments is published on a quarterly basis for all UK local authorities, split by each authority dating back to 2014.
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