Stevenage housing plans 'trashed' by interest rate hike for council loans
PUBLISHED: 08:31 17 October 2019
Plans for a £300 million investment in social housing in Stevenage have been 'trashed' due to a shock increase in interest rates for council lending, but the town centre regeneration is said to remain on track.
Like other local authorities, Stevenage Borough Council lends money for large projects from the government, through the Public Works Loan Board.
It had drawn up a 30-year plan to borrow up to £300m through the PWLB, as part of a £1.5 billion plan to make improvements to existing council homes and to build new ones.
But those plans will now have to be reviewed after the government informed councils that PWLB interest rates would increase by a whole percentage point, with immediate effect.
The borough council's leader, Sharon Taylor, said: "This is not good enough.
"There has been no consultation on this whatsoever and, when we are this close to budget time, a major change like this could absolutely blow our plans out of the water."
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It comes, says Cllr Taylor, at a time when local authorities have been asked to be more self-reliant and to look at commercial investment.
She said: "With no prior notice the government stuck one per cent on borrowing from the Public Works Loan Board, trashing our housing business plans and requiring huge revision of our financial planning.
"As a result, we will have to update our plans. The council has taken decisions for its garage improvement programme, provision of private sector homes and, most significantly, its £1.5 billion 30-year capital programme for our new and existing homes.
"We wanted to borrow an additional £300 million over 30 years to make improvements to the housing stock and invest in much-needed new homes.
"Thankfully, our plans for regeneration, funded in the main part by investment from the private sector, will be unaffected by these changes."
A spokesman for HM Treasury said: "This one percentage point increase takes rates back to levels that were available in 2018.
"Even with this change, the PWLB rates offer very good value to local authorities.
"We have also legislated to increase the lending limit of the PWLB to £95billion, as part of the government's commitment that local authorities can access financing to support their capital spending plans."