By Nick Mann | 18 November 2011
Guildford Borough Council has become the first district council to achieve the top triple-A credit rating.
Announcing the rating from Moody’s yesterday, the Surrey local authority said it was a result of its ‘long-term prudence and responsible financial planning’. The rating would give the council access to the lowest rates of borrowing and make it ‘far easier’ to raise funds for any future major projects at a lower rate to the taxpayer.
In common with other councils, such as Wandsworth, Guildford had originally sought a credit rating to raise the finance needed to buy out of the centralised Housing Revenue Account. From April 2012 councils will keep their own rent income and be responsible for financing and maintaining their housing stock.
For Guildford this is expected to involve taking on around £200m of the current national housing debt – ‘one of the largest amounts going’, chief executive David Hill told Public Finance this week.
But in September the government cut the interest rates for HRA borrowing from the Public Works Loan Board, making this a more attractive option than raising finance from the markets.
Hill confirmed that, in light of this, Guildford ‘may not need to use the rating’ but said that securing it would still be beneficial to the council.
‘It gives us more flexibility if we want to raise finance for any other projects we’re involved in,’ he explained. In particular, he said the council was partnered with the Westfield retail company and was also looking at developing a brownfield site in the town.
‘We wanted some external validation about how we approach the management of our finances,’ he added, noting that Moody’s had awarded the rating knowing the council was about to take on £200m of new debt.
Sue Sturgeon, chief finance officer at the council, told PF that Guildford planned to take ‘most of’ the debt through the PWLB. She added that a final decision would not be made until the amount has been confirmed, which is expected next week.
