This briefing looks at the failure of London Capital & Finance Plc (LCF) and the consequences for those who invested in the firm's 'mini-bonds'.
Documents to download
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Local government in England: capital finance (2 MB, PDF)
Local authorities are required to distinguish between capital and revenue finance in their accounting. They can access capital finance for infrastructure investment from a number of sources, but borrowing is the most common of these.
In England, local authorities have normally borrowed from the Public Works Loan Board in recent decades, at favourable rates of interest. There has been recent exploration of alternative sources of borrowing, including the new Municipal Bonds Agency.
The Government has also introduced tax increment financing schemes, founded on the Business Rates Retention Scheme introduced in 2013-14. Under these schemes, local authorities may borrow for infrastructure projects, against the future growth in business rate receipts which will result from the projects.
The note also covers recent debates on the possibility of local authority pension funds investing in local authority infrastructure projects; and on the restrictions on investment using funds from local authorities’ Housing Revenue Accounts.
This note covers England only. However, the Public Works Loan Board lends to authorities in England, Scotland and Wales, and the Prudential Code covers England, Scotland and Wales.
Documents to download
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Local government in England: capital finance (2 MB, PDF)
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This Commons Library Briefing Paper discusses the new public sector exit payment cap that comes into force in November 2020. In particular, it considers how the cap could impact lower-income workers and the circumstances in which the cap can be relaxed.
