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Credit approvals ceased to exist from 1 April 2004 when the Local Government Act 2003 brought in a new prudential capital finance system. From 2004/05 Government support for capital investment will be described as either Supported Capital Expenditure (Revenue), known as SCE(R), or Supported Capital Expenditure (Capital Grant), known as SCE(C), Supported Capital Expenditure (Revenue) is the amount of expenditure towards which revenue grant will be paid to a local authority on the costs of borrowing.
SCE can be further classified as either single pot SCE(R)/SCE(C) or ringfenced SCE(R)/SCE(C) - although this distinction is irrelevant to single purpose authorities and the GLA, who are outside the single capital pot.
Previously, credit approvals from central government set the limit of a local authority’s long-term borrowing, and attracted Revenue Support Grant (RSG) or Housing Revenue Account Subsidy (HRAS)) towards the financing costs of loans (interest payments and provisions for the repayment of principal). Under the new system, unless, exceptionally, a national limit is imposed, a local authority will be free to make its own borrowing decisions according to what it can afford. However, central government support for borrowing through RSG/HRAS will continue to be given on the basis of a named amount of capital expenditure which the borrowing will support.
The local authority will take the totality of Government support, both SCE(R) and SCE(C), into account in setting its prudential limits for the forthcoming financial year.
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Published on 11 August 2004
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