CIPFA demands tougher financial rules to curb council investment risks
The Chartered Institute of Public Finance and Accountancy (CIPFA) has urged stronger financial rules for local councils. The call follows concerns over risky property investments and the need to protect taxpayers’ money. CIPFA also wants councils to play a key role in reviving local economies after the pandemic. Between 2016 and 2019, councils in England spent £6.6bn on property investments. MPs have criticised the government for ignoring the 'extreme risks' some authorities took with these deals. The current Prudential Code already warns against borrowing purely for profit or speculation.
CIPFA chief executive Rob Whiteman has backed the government’s proposals to stop councils gambling with public funds. He advised chief financial officers to adopt the new measures immediately. The institute also wants compliance with the Prudential Code to become a legal requirement.
By early 2022, CIPFA plans to strengthen the code further. It supports flexible lending terms from the Public Works Loan Board (PWLB) to help councils without stifling local growth. However, any changes should remain principles-based rather than overly rigid. CIPFA’s recommendations aim to balance financial caution with economic recovery. Councils will need to follow stricter rules while still supporting their communities. The proposals seek to prevent reckless spending while allowing responsible investment.
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