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Local Authorities (Borrowing)

Volume 409: debated on Friday 18 July 2003

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To ask the Deputy Prime Minister what proposals he has for allowing councils to borrow on the security of (a) council housing stock, (b) rent income from council housing and (c) service charges on council housing; and whether he intends that such borrowing would have to be approved by (i) his Department and (ii) HM Treasury. [126585]

The Office of the Deputy Prime Minister does not consider it prudent for local authorities to borrow against the security of their capital assets, since the potential seizure of property by creditors would pose an unacceptable threat to the delivery of services. Similarly it is not proposed to allow authorities to sell future streams of revenue such as rents, in return for immediate one-off payments. The Local Government Bill will allow authorities to borrow without Government consent, provided that they can afford to service the debt from their own revenues, which could include housing income.