Interest cut to deliver £100m boost for housing
Councils leaving the housing revenue account subsidy system are to receive a £100 million a year boost due to a cut in interest rates.
Speaking at the Liberal Democrat annual conference today (Sunday), Danny Alexander, chief secretary to the Treasury, said the Public Works Loan Board would offer a reduced interest rate on the £13 billion councils need to borrow to finance leaving the HRA.
Under plans to scrap the HRA subsidy system some councils will have to pay back historic debt to the Treasury. In return they will be able to keep income from rents, which is currently returned to government and then redistributed between local authorities.
Mr Alexander said the reduced rate of interest would effectively mean councils have an extra £100 million a year to spend on housing.
‘I’ve listened to local authority concerns that this is a one-off transaction within the public sector and should be financed as such,’ he said.
‘Let me put it simply – an extra £100 million every year that councils can then reinvest in housing.’
Mr Alexander also announced a £500 million ‘growing places’ fund to kickstart stalled infrastructure projects. He said the investment would unlock schemes to deliver thousands of homes and jobs.
‘In South Gloucestershire, £300 million of private investment, 3,000 jobs and 2,200 homes is being unlocked with £6 million of public money to build a link road,’ he said. ‘Just think what we will be able to do with £500 million.
‘Unlocking local growth by freeing businesses to grow, creating jobs, and freeing councils to build housing.’