Responding to a report by the National Audit Office on local authority commercial investments, Cllr Richard Watts, 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 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.”