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Local Government Finance

Communities and Local Government written question – answered on 20th July 2011.

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Photo of Iain Wright Iain Wright Shadow Minister (Education)

To ask the Secretary of State for Communities and Local Government what his policy is on the powers of local authorities to raise finance through the issue of municipal bonds; and if he will make a statement.

Photo of Bob Neill Bob Neill The Parliamentary Under-Secretary of State for Communities and Local Government

Under the prudential system local authorities are able to borrow for capital projects without Government consent, provided that they can afford the borrowing costs. Authorities are free to choose the source of these loans, and may borrow, should they wish to do so, by issuing bonds.

Also the Local Government Resource Review is considering how, in the context of changes to the business rate system, Tax Increment Financing can be introduced. Tax Increment Financing enables borrowing against future increases in business rate receipts to help fund the development of infrastructure.

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