‘Certainty rate’ borrowing deal laid out
Author: By Ruth Keeling, LGC |
A cheaper rate for councils hoping to borrow money from the Public Works Loans Board is to be available from November, the government has announced.
Councils will be eligible for the so-called ‘certainty rate’ once they have submitted three-year plans of their borrowing, capital expenditure and debt financing, according to a letter from the Treasury to all councils.
The government announced the ‘certainty rate’ in March’s Budget, promising that councils who provided certain information would be able to borrow cash at 20 basis points below the PWLB’s normal rate ? currently 100 basis points above government gilt rates.
To access the certainty rate, councils will have to complete a form by 17 September every year containing their three-year plans for borrowing, capital expenditure and debt financing, as well as a commentary on capital investment plans.
The Treasury believes the information is all data which is already collected by councils and hopes the submission of detailed plans from councils will improve forecasting of public expenditure.
?Given that local authorities’ borrowing impacts on public sector debt, their future borrowing plans form an important part of public expenditure planning,? the Treasury’s letter states. ?In order for forecasts to be as robust as possible, additional information is sought in return for access to the certainty rate.?
A third ?further reduced rate? was also mooted in the Budget, involving an ?independent body? and available to ?authorities demonstrating best quality and value for money?.
However, further information about this rate ? since dubbed the ‘scrutiny rate’ ? remains elusive with the Treasury only saying it was continuing to work with the local government sector.