The Capital Financing Requirement (CFR)
About this course
What the CFR actually is, how it's built up from capital expenditure, and how it links external borrowing, internal borrowing and reserves. The single most important balance-sheet number in council treasury.
What you'll learn
- What is the CFR?
- How CFR builds up
- Internal vs external
- CFR & prudential indicators
- Projecting the CFR
- GF and HRA CFR
- In practice
Part of these pathways
Related courses
- Balance sheet projections
- ESG & sustainable treasury
- Alternatives to PWLB
- After the S114: capitalisation & EFS
- Devolution & reorganisation: the treasury view
- Liability Benchmark: the essentials
Common questions
What is Authorised limit?
The absolute maximum external debt a council is permitted to hold during the year. Set by full Council. Statutory limit under §3 of the Local Government Act 2003. Must be above projected CFR through the planning period.
What is Capital expenditure?
Spending that creates or enhances a long-term asset. Adds to the CFR if not funded immediately by capital receipts, grants or revenue contributions.
What is Capital receipt?
Cash received from selling a fixed asset. Can be applied to fund new capital expenditure or to repay debt — application to debt directly reduces the CFR.
What is CFR?
Capital Financing Requirement. The aggregate financing need from past capital expenditure that hasn't yet been resourced from receipts or revenue. The single most important balance-sheet number for treasury — sets the upper bound on borrowing.
What is Financing costs ratio?
A prudential indicator showing financing costs (interest + MRP) as a percentage of net revenue stream. Indicates affordability of the council's capital programme.
What is HRA?
Housing Revenue Account. Statutorily separate account in stock-holding councils for housing landlord activities. Has its own CFR, its own MRP rules, and its own ringfenced funding.