40bps off PWLB Standard Rate for infrastructure loans

The Chancellor has unveiled a special PWLB rate for infrastructure projects put forward by Local Enterprise Partnerships. George Osbourne announced the rate of 40 basis points below the Standard Rate in yesterday’s Autumn statement.

The rate for LEP projects follows the thinking in Lord Heseltine’s No stone unturned in pursuit of growth report released six weeks ago. In a speech launching the report Heseltine said of LEPs: “This country has a framework that replicates the strengths of the city states in all our competing economies. It is no longer a case of waiting for London. The army; it now has its fighting divisions. The immediate challenge is to bring them up to strength and to give them the tools to do the job.”

Responding to the Statement, chair of the Local Government Association Sir Merrick Cockell said: “There needs to be a rapid and significant devolution of resources to local areas so councils and their partners in business can promote local economies and drive national growth. The boost in funding for Local Enterprise Partnerships and the Regional Growth Fund, alongside the reversal of cuts to councils’ road maintenance budgets, are all steps in the right direction but more still needs to be done.”

However he warned of “bureaucratic bidding wars” between areas and urged the Government to quickly dispense funding to areas with shovel ready projects. The Chancellor also announced a single funding pot, to be in place by April 2015, to include funding for transport, housing, and “additional local growth funding” among other things.

Community Budgets were another area to receive encouragement. Said Cockell: “It is pleasing to see a positive statement by the Government on the value of the whole-place Community Budget pilots in showing how better integration between local services can use money better … We now need to ensure that the barriers to rolling the whole-place approach out are removed and start to put this change into operation in the four pilots and elsewhere.”

PwC’s head of local government Andy Ford said that while results from the pilots had been impressive, time is in short supply for councils struggling to balance budgets. “There must be serious doubts about whether Community Budget type initiatives alone will help councils address the further challenges they are going to have to confront in the next two years,” he commented.

Cuts announced in the Statement were in line with previous announcements. Said Cockell: “Local government has borne the brunt of cuts to public spending so far and, while it is pleasing our campaigning has resulted in councils being protected from additional cuts next year, the extra two per cent cut in 2014/15 is unsustainable.

“Cutting council funding to help pay for nationally-administered economic stimulus programmes would be bad for local frontline services and makes no sense economically.”