Local Government Finance

Ministry of Housing, Communities and Local Government written question – answered on 1st July 2020.

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Photo of Lord Myners Lord Myners Non-affiliated

To ask Her Majesty's Government what assessment they have made of the effect of any fall in the value of retail properties on the finances of local authorities which have borrowed money from the Treasury and government agencies to acquire investment properties outside the geographical limits of the relevant authorities; and what assessment they have made of whether losses that might arise as a result will affect government funding to such authorities.

Photo of Lord Greenhalgh Lord Greenhalgh Minister of State (Housing, Communities and Local Government), The Minister of State, Home Department

When local authorities borrow and invest, they must have regard to the Prudential Framework, to ensure that the capital investment plans are affordable, prudent and sustainable. The Department's statutory investment guidance forms part of this Framework, and it makes clear that authorities should include mitigating actions in their investment strategies if there is a risk that asset values will not be sufficient to cover losses to the capital invested.

The Department does not collect data on the regional holdings of local authority owned investment properties. However, throughout this period we have continued to work with local government to ensure we have a collective understanding of the pressures councils are facing, including losses from commercial sources. The Department is working on a comprehensive plan to ensure councils' financial sustainability over the financial year ahead.

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