Responding to a report by the National Audit Office on local
authority commercial investments, Cllr , Chair of the Local
Government Association’s Resources Board, said:
“An unprecedented period of funding and demand pressures has
stretched local services to the limit with councils losing almost
£16 billion in central government funding in the past decade.
Councils have faced a choice of either accepting funding
reductions and cutting services – such as care for older and
disabled people, protecting children, reducing homelessness,
fixing roads and collecting bins - or making investments to try
and protect them.
“When making investments, councils follow the strict rules and
assessments to ensure they invest wisely and manage the risk of
their investments appropriately.
“As the NAO rightly recognises, in many cases councils are not
only making investment decisions that can help them replace
funding shortfalls, but also contribute to their local economy
and environment.
“The report highlights that the recent rise in Public Works Loan
Board interest rates announced by the Treasury will affect local
authority decisions to invest in commercial property. This rise
has increased the revenue costs of all new borrowing for councils
and thrown into doubt the viability of new capital programmes
which help deliver on key government priorities, such as housing
and regeneration.
“We are calling on the Government to use the Budget introduce a
borrowing scheme for councils, like the previous Local
Infrastructure Rate for crucial projects, and reinvest any profit
made by the PWLB rate rise as additional funding for local
government.
“Councils continue to face significant pressures and challenges.
Only with long-term investment as part of the Spending Review,
can councils protect local services and improve the lives of
their communities and meet the significant ongoing pressures they
face both now and in the future.”
