Proposed updates to the CIPFA Prudential Code aimed at restricting borrowing primarily for yield purposes, could lead to ‘unintended consequences’, according to the Local Government Association.
Richard Lloyd-Bithell, senior technical manager at CIPFA, runs through the new proposals for the Prudential Code in response to increased local authority investment in commercial property.
An Essex council says it has been forced to change its borrowing strategy because other councils are unwilling to lend to it after negative press coverage over its investments.
Ealing Council has approved plans to borrow more than £390m over 50 years to on-lend to its housing company to build more than 1,300 affordable homes over the next six years.
Local-authority-to-local-authority borrowing continues to rise, as short-term borrowing rates dropped to 0% last week, according to local government treasury advisors Arlingclose.