Simple terms explainer

Councils have the power to borrow money, but only for capital projects such as schools, housing, roads, and other long-term investments. Borrowing must follow the Prudential Code, meaning it has to be affordable, sustainable, and prudent. Councils cannot borrow to cover everyday running costs; instead, they must fund services from taxation and grants. Borrowing decisions are closely monitored through treasury management strategies, public reporting, and external audit, with Scottish Ministers able to intervene if councils act imprudently. Councils must also approve a Treasury Management Strategy each year and carry out a mid-year review to monitor against prudential and treasury indicators.