Self-financed Borrowing
The Prudential Regime provides a flexible framework for investment in the infrastructure that is vital to growing the economy. From 1 April 2004, local authorities are free to determine their own capital programmes for investment in assets central to the delivery of quality public services, such as schools, housing and roads. In doing so, authorities must have regard to the Prudential Code, which requires that plans are affordable, prudent and sustainable. To supplement central government support, local authorities are able to incur self-financed borrowing, if affordable.
Self-financed borrowing is in addition to, and enhances, the Supported Borrowing that is funded by the Scottish Government through Loan Charge Support (LCS) for the life of the debts. This support is received by local authorities through Revenue Support Grant (RSG), and is based on an allocated amount of new borrowing each year that the Scottish Ministers commit to funding.