Treasury reveals it has increased rate at which authorities can borrow money
Council housebuilding projects may have to be cancelled following a government announcement that it is increasing the interest rate at which councils can borrow to fund their schemes.
The Treasury wrote to council finance chiefs last week to say that the rate of interest charged for money raised under the Public Works Loan Board (PWLB) was going up to 1% above the government鈥檚 cost of borrowing.
The Local Government Association responded with a statement saying the news could add 拢70m a year to the cost of local authority borrowing, and put authorities鈥� nascent council housebuilding programmes, funded with PWLB money, at risk.
A spokesperson for the Local Government Association said the cost hike 鈥減resents a real risk that capital schemes, including vital council house building projects, will cease to be affordable and may have to be cancelled as a result鈥�.
A number of councils have announced plans to expand housebuilding programmes following former prime minister Theresa May鈥檚 decision to scrap the cap on local authority borrowing.
Last week, a 拢14m council housing project called Gildsmith Street won this year鈥檚 Stirling prize. Main contractor on the Norwich job was local firm RG Carter.
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