This article considers the utilisation of the UK’s Prudential Borrowing Framework (PBF) and the associated Prudential Code for local government capital finance. It finds that the increased flexibility and local freedom are at the cost of less financial certainty in terms of the risks borne by local authorities and local tax payers. The PBF seems to encourage a less formal approach to risk, being considered inevitable and handled if and when adverse risk outcomes occur. Consequently capital projects may lack affordability, sustainability and prudence. The Prudential Indicators required by the Code are not easily understood by non-specialists and their calculation cannot be used to replace sound judgement or to identify the best financing option.
Acca (2004) Evaluating the Role of PFI in Roads and Hospitals. London : Association of Chartered Certified Accountants .
2.
Asenova D., Beck M. ( 2003) ‘Scottish Local Authorities and the Procurement of Private Finance Initiative Projects’. Public Works, Management and Policy8(1): 11-27.
3.
Asenova D., Beck M. ( 2007) ‘The Private Finance Initiative (PFI) and Finance Capital: A Note on Gaps in the ‘‘Accountability’’ Debate’. University of York: York Business School , Working paper No 34, July 2007 .
4.
Audit Commission (2003) PFI in Schools, the Quality and Cost of Buildings and Services Provided by Early Private Finance Initiative Schemes. London: Audit Commission.
5.
Bailey SJ ( 1999) Local Government Economics: Principles and Practice . Basingstoke: Palgrave Macmillan .
6.
Bailey SJ ( 2002) Public Sector Economics: Theory, Policy and Practice , second edition. Basingstoke: Palgrave Macmillan .
7.
Bailey SJ, Asenova D., and Hood J. ( 2009) ‘Making Widespread Use of Municipal Bonds in Scotland?’Public Money and Management29(1): 11-18.
8.
Broadbent J., Guthrie J. ( 1992) ‘Changes in the Public Sector: A Review of Recent ‘‘Alternative’’ Accounting Research’. Accounting , Auditing and Accountability Journal5(2): 3-31.
9.
Broadbent J., Laughlin R. ( 2002) ‘Accounting Choices: Technical and Political Trade-offs and the UK’s Private Finance Initiative’. Accounting , Auditing and Accountability Journal15(5): 622-654.
10.
Broadbent J., Laughlin R. ( 2003) ‘Public Private Partnerships: An Introduction’. Accounting, Auditing and Accountability Journal16(3): 332-341.
11.
Carnegie G., West B. ( 2005) ‘Making Accounting Accountable in the Public Sector’ . Critical Perspectives on Accounting16: 905-928.
12.
Cipfa (2003) The Prudential Code for Capital Finance in Local Authorities. London: CIPFA Publications. Available at http://secure.cipfa.org.uk/cgi-bin/cipfa.storefront/44fd55d61398c2ec273f3efdf40706ef/Product/View/CF005 .
13.
Cpwp (2000) Department for Communities and Local Government: Capital Programmes Working Party. London: DCLG. Available at www.local.odpm.gov.uk/finance/capital.
14.
Dltr (2001) ‘Strong Local Leadership: Quality Public Services Cm 5237’. Department of Local Government Transport and the Regions. London : The Stationery Office.
15.
Doig A., Wilson J. ( 1998) ‘What Prices New Public Management?’The Political Quarterly Publishing17: 267-276.
16.
Froud J. ( 2003) ‘The Private Finance Initiative: Risk, Uncertainty, and the State’. Accounting, Organisations and Society28(6): 567-589.
17.
Gosling P. ( 2004) PFI: Against the Public Interest. UNISON Briefing Paper. Retrieved 15 May 2004 from www.unison.org.uk/acrobat/B1457.pdf.
18.
Guthrie J., Olson O., and Humphrey C. ( 1999) ‘Debating Developments in New Public Financial Management: The Limits of Global Theorising and Some New Ways Forward’ . Financial Accountability and Management15(3/4): 209-228.
19.
Heald D. ( 2003) ‘Value for Money Tests and Accounting Treatment in PFI Schemes’. Accounting, Auditing and Accountability Journal16(3): 342-371.
20.
Heald D., Geaughan N. ( 1997) ‘Accounting for the Private Finance Initiative’ . Public Money and Management17(3): 11-16.
21.
HM Treasury (1999) Modern Government, Modern Procurement. London: HM Treasury .
22.
HM Treasury (2000) Public Private Partnerships, The Government’s Approach. London: The Stationary Office.
23.
Hood C. ( 1995) ‘The ‘New Public Management’ in the 1980’s - Variations on a Theme’. Accounting, Organisations and Society20(2/3): 93-109.
24.
Hood C., James O., and Scott C. ( 2000) ‘Regulation of Government: Has It Increased, Is It Increasing Should It Be Diminished?’, Public Administration78(2): 283-304.
25.
Hood J., Asenova D., Bailey SJ, and Manochin M. ( 2007) ‘The UK’s Prudential Borrowing Framework: A Retrograde Step in Managing Risk?’ Journal of Risk Research10(1): 49-66.
26.
Hood J., McGarvey N. ( 2002) ‘Managing Risk of Public-Private Partnerships in Scottish Local Government’. Policy Studies23(1): 21-35.
27.
Jackson A., Lapsley I. ( 2003) ‘The Diffusion of Accounting Practices in the New ‘Managerial’ Public Sector’. The International Journal of Public Sector Management16(5): 359-372.
28.
Lapsley I. ( 1999) ‘Accounting and the New Public Management: Instruments of Substantive Efficiency or a Rationalising Modernity? ’ Financial Accountability and Management15(3/4): 201-207.
29.
Laughlin R. ( 1999) ‘Critical Accounting: Nature, Progress and Prognosis’. Accounting, Auditing and Accountability Journal12(1): 73-78.
30.
Leslie C. ( 2008) Investing Together: The Case for a Local Authority Mutual Fund. London: New Local Government Network. Available at www.nlgn.org.uk.
31.
Levene T. ( 2007) ‘Don’t Believe the Hype’. The Guardian, 11 July.
32.
Lowndes V., Wilson D. ( 2003) ‘Balancing Revisability and Robustness? A New Institutionalist Perspective on Local Government Modernisation’ . Public Administration81(2): 275-298.
33.
Opsr (2002) Reforming Our Public Services: Principles into Practice. Available at: http://www.pm.gov.uk/files/pdf/go_november.pdf.
34.
Pallot J. ( 1992) ‘Elements of a Theoretical Framework for Public Sector Accounting’. Accounting, Auditing and Accountability Journal5(1): 38-59.
35.
Power M. ( 1995) ‘Auditing, Expertise and the Sociology of Technique’ . Critical Perspectives on Accounting6: 317-339.
36.
Power M. ( 1996) ‘Making Things Auditable’. Accounting , Organisations and Society21(2/3): 289-315.
37.
Power M. ( 2004) The Risk Management of Everything, Rethinking the Politics of Uncertainty. London: Demos.
38.
Quirk B. ( 1997) ‘Accountable to Everyone: Post Modern Pressures on Public Managers’. Public Administration75: 569-586.
39.
Romsek B. ( 2000) ‘Dynamics of Public Sector Accountability in an Era of Reform’. International Review of Administrative Sciences66: 21-44.
40.
Rutherford B. ( 2003) ‘The Social Construction of Financial Statement Elements under Private Finance Initiative Schemes’. Accounting, Auditing and Accountability Journal16(3): 372-396.
41.
Scottish Executive (2002) Renewing Local Democracy: The Next Steps. Edinburgh: The Stationery Office.
42.
Scottish Government (2007) Consultation on the Role of a Scottish Futures Trust in Infrastructure Investment in Scotland . Edinburgh: Scottish Government . Available at http://www.scotland.gov.uk/Resource/Doc/207695/0055103.pdf .
43.
Scottish Government (2008) Taking Forward the Scottish Futures Trust. Edinburgh: Scottish Government, Available at http://www.scotland.gov.uk/Resource/Doc/223438/0060176.pdf.
44.
Scottish Parliament ( 2008) Inquiry into the Methods of Funding Capital Investment Projects. Edinburgh: The Scottish Parliament Finance Committee. Available at http://www.scottish.parliament.uk/s3/committees/finance/meetings.htm.
45.
Shaoul J. ( 2005) ‘A Critical Financial Analysis of the Private Finance Initiative: Selecting a Financing Method or Allocating Economic Wealth ? ’ Critical Perspectives on Accounting16(4): 441-71.
46.
Stanton R. ( 1996) Funding the Fabric: Access to Capital for Local Services . London: Chartered Institute of Public Finance.
47.
TTF (1997) Treasury Taskforce Guidance, Partnerships for Prosperity, The Private Finance Initiative. London: HMSO.
