Controls Over Capital Expenditure
Prior to 2004
Up until 2003-04 inclusive, the amount that local authorities could allocate to capital expenditure was controlled through the Capital Consents Regime under Section 94 of the Local Government (Scotland) Act 1973. These were effectively 'authorisations' issued by Scottish Ministers allowing Local Authorities to incur capital expenditure up to an approved limit.
The approved levels of capital consents awarded to individual councils and joint boards between 1999 and 2004 can be seen in the attached spreadsheet:
capital consent allocations 1999-2004
From 2004
The Local Government in Scotland Act 2003 (the 2003 Act) changed this system. With effect from 1 April 2004, the Prudential Regime was introduced. The 2003 Act places a duty on local authorities to manage their own capital expenditure and, in doing so, they must have regard to the Prudential Code. Under this regime, local authorities no longer need to receive consent from Scottish Ministers to incur capital expenditure. They now have the freedom to incur capital expenditure up to maximum limit determined by themselves with reference to a series of Prudential Indicators such as prudence, sustainability and affordability.
In considering the affordability of its capital plans, an authority is required to consider all its resources currently available/estimated for future years, together with the totality of its capital plans, revenue income, and revenue expenditure forecasts for the forthcoming year and the following two years.