Council welcomes reduction in public sector interest rates

Birmingham City Council has welcomed the Treasury’s decision to offer a temporary reduction to the interest rate offered to local authorities borrowing from its public sector lending arm.

The decision to lower rates, to take effect from January, is expected to save councils millions of pounds that can be reinvested in housing as they move into the new era of self-financing. The move helps deliver the reforms of Housing Revenue Account and will allow councils to help finance the one-off debt payments needed to leave the existing system.

Birmingham City Council’s Cabinet Member for Housing, Cllr John Lines, said: “The Council welcomes this proposal, particularly as the city is expecting to be allocated additional debt of almost £400 million based on the current national estimates,” said Councillor John Lines, the city council’s cabinet member for housing.

“Proposing a reduction in interest rates for the borrowing under the HRA Self Financing Reforms is an indication that the government has listened to the concerns of local authorities and a reflection of the effective joint working between central and local government officers.

“This has the potential to reduce the Council’s HRA borrowing costs for the self financing settlement by up to £3 million per annum, providing there are no changes to the current proposals to the level of debt reallocation. The details of the proposal will be evaluated to ensure it provides the maximum benefit for citizens of Birmingham.”