Flagship Council House Building Scheme Quietly Axed

A flagship £100m Local Government Association scheme, designed to give smaller local authorities the opportunity to borrow collectively to build housing, has been wound down. LG Develop, which planned to pool local authorities’ borrowing powers and was intended to offer them better rates than borrowing from the Public Works Loan Board, will no longer continue after councils deemed it too risky. The group was set up by the LGA, working with debt advisory firm Centrus, to allow councils to spread costs and risks, and to access finance in larger tranches, lowering borrowing costs. Six councils were signed up to use LG Develop to court institutional debt to build around 2,400 new homes. Read more on Inside Housing.

Rental Income Buyout for Self-Financing Councils Lower Than Expected

The government has finalised the amount that local authorities will have to pay to take control of their rental income, with many of the final payouts coming in lower than expected. After making the final calculations, the CLG has confirmed that 136 councils will be required to make a payment to the government, with the London borough of Wandsworth to make the largest payment of £433.6m. However, 33 councils that are currently subsidised by the government will receive payments to help reduce their inherited debt, with the London borough of Hackney to receive the largest share with £752.6m. Councils making the move to self-financing are expected to borrow at discounted rates from the Public Works Loan Board in order to service the debt. The move to self-financing will apply from 1 April 2012, with payments from councils due on 28 March 2012. Read more on the Guardian website.