Autumn Statement delivers borrowing powers for combined authorities

23 Nov 16

Combined authorities led by mayors are to be given borrowing powers and councils will have access to new low-cost loans under proposals set out today in the Autumn Statement to boost local growth.

As part of a series of measures to improve productivity, chancellor Philip Hammond said combined authorities would be given the powers “to borrow for their new functions”, which would allow them to invest in economically productive infrastructure.

A borrowing cap would be agreed by the Treasury for each mayoral led authority, which are being established as part of the government’s devolution drive in Greater Manchester, Sheffield, Birmingham and Liverpool and the Tees Valley.

Others are also under discussion, while a proposal for the North East Combined Authority has been rejected by four of the seven councils.

In addition to these powers, Hammond announced that the government will also consult on lending local authorities up to £1bn at a new local infrastructure rate of government gilts + 60 basis points for three years to support infrastructure projects that are deemed high value for money. This would be an expansion of the current project rate of borrowing from the Public Works Loan Board, which is available to one project in each local enterprise partnership area in England for schemes agreed with constituent authorities.

The main rate of borrowing for local authorities is gilts +100 basis points, although authorities that set out details of their borrowing needs qualify for a concession rate of gilts +80 points.

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