Research and Analytics


CIPFA Prudential Indicators

October 2004

CIPFA has played a key role in the development of the prudential framework for capital investment by local government. This replaces the previous regulatory frameworks in England, Wales and Scotland. The new system is one based largely on self-regulation by local authorities. At its heart is the CIPFA Prudential Code for Capital Finance in Local Authorities. This is potentially the most significant and positive change in local authority finance for decades and will enable authorities to take greater control of their investment in the fixed assets that are central to the delivery of quality local public services.

From 1 April 2004 local authorities throughout Great Britain are required by Regulation to have regard to The Prudential Code when carrying out their duties in England and Wales under Part 1 of the Local Government Act 2003, and in Scotland under Part 7 of the Local Government in Scotland Act 2003. Indicators are consistent with those published in the CIPFA 'Prudential Code for Capital Finance in Local Authorities'. For full details reference should be made to that publication. For details about how to obtain a copy please e-mail: or visit or telephone 020 7543 5602. Guidance is also available from our Technical Information Service at including links to the relevant legislation underpinning the Code.

Also available at the cost of 100 (plus VAT) are individual profiles showing your own authority's data in relation to other anonymous members of your class of authority, in both tabular and graphical format. A sample and order form can be downloaded at

Objectives of the Code

The key objectives of the Prudential Code are to ensure that the capital investment plans of local authorities are affordable, prudent and sustainable - or, to demonstrate that there is a danger of not ensuring this, so the local authority concerned can take timely remedial action. It is specifically stated within the Code that they are NOT designed to be comparative performance indicators. They are designed to support and record the local decision making process. The following pages aim to provide an informative base to demonstrate how authorities are responding to the new freedom offered by the Code and in doing so act as a guide to practitioners.

Presentation of Data

In order to keep individual authority data confidential, information is only shown by class of authority, and only if more than three authorities responded to that particular section. This has made it necessary to combine certain classes of authority. As there are only three Welsh Fire and four Welsh Police authorities they have been included within the respective English non-metropolitan classes. Similarly the three Scottish Island authorities are included with the Scottish Unitaries. Data (for all classes) is shown in five categories:

Minimum, Lower Quartile, Median, Upper Quartile and Maximum for the budget estimate 2004-05, and forecast years 2005-06 and 2006-07.

Information for this publication was gathered by use of a questionnaire (sent to all authorities throughout Great Britain) that can be found on pages 154 and 155. The statistical tables follow a similar format to that of the questionnaire. As a useful guide, each page of the main statistical tables is accompanied on the opposite page, with additional information detailing the number of authorities that provided data for each indicator, against the potential number in that class.

It has become clear from studying the results that there is a wide variation between classes of authorities and within class, especially when the minimum and maximum figures are examined. It is worth noting that minimum and maximum figures within each separate section are not necessarily from the same authority. For example in 'Section A - Affordability, ratio of financing costs to net revenue stream i) Non-HRA' data may come from an authority which has not been able to provide data for 'part ii) HRA'. Hence the minimum and maximum figures would necessarily be taken from a different authority's data set.

October 2004

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