Never mind the Budget, it’s HRA-Friday

Today is the the day for all draft loans to be completed and registered with the PWLB for HRA self-financing.

And while local authorities are mostly comfortable with the work they have done, according to Sector adviser John Whitehouse, there is some frustration that rates have increased around a quarter of a percent since January.

“Many had originally budgeted at 4.5%-5%,” said Whitehouse. “They’ve undertaken a lot in the last couple of months and got to the stage where they’ve populated the site with loans and tested them,” he said. “Clients are a lot happier than they were a couple of months ago, and I’d say that 99% are pretty comfortable with their situation.”

Barry Hunter, director of finance for Babergh District Council, says that all the work is done. “We’re going to take a mix of loans going for the short to middle ground, 10-20 years,” he explained. “We wanted to be able to pay it off relatively quickly but still have enough money in the HRA for manoeuvre.”

When Room 151 spoke to CFOs at the beginning of the month many were looking at mid- to long-dated debt. Sector too has, in general, advised this duration. There is no standard client profile, but matching the debt to the business plan and going neutral to long has been the way forward, says Whitehouse.

“We’ve always said that the default position is to match to the business plan and clients have had to look at how robust their business plan is,” he said. “Two to three months ago they weren’t that robust and the risk is that the debt has to stay longer than the council anticipated, that something knocks the business plan longer, an environmental thing, a carbon thing, a position taken by a member for example.”

Councils have until the end of today to input their draft loans. And with everyone crossing their fingers for no catastrophic event over the weekend, final loan applications will be submitted next Monday with settlement on Wednesday.