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To ask the Chancellor of the Exchequer, for what reason (a) the borrowing rate for local authorities from the Public Works Loan Board was increased by HM Treasury by 100bps on 9 October 2019 and (b) that increase was not disclosed in a Delegated Legislation Committee which considered the Instrument that increased the borrowing limit for that board on 3 October 2019.
The Public Works Loan Board enables Local Authorities to borrow money at low rates. Some local authorities substantially increased their use of the Public Works Loan Board over the summer, as the cost of borrowing fell to record lows. To ensure the continued availability of lending for local government investment in capital projects the Government increased the level of available PWLB funding by £10 billion and restored rates to levels available in 2018. In 2018 Local Authorities delivered £25.8bn of capital expenditure in England.
Borrowing from the Public Works Loan Board sits on the Government’s balance sheet and HM Treasury keeps this under review.
It was not possible to announce the rate change prior to its implementation because the change was market sensitive.