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Spring Budget: discounted HRA rate for PWLB borrowing announced
Local authorities will be able to borrow money to spend on housing at a new discounted rate from June 2023 in a bid to support the delivery of social homes, according to new government measures announced today.
In the Spring Statement, published on Wednesday, the government announced that there will be a new Housing Revenue Account (HRA) rate for the Public Works Loan Board (PWLB), which provides loans to councils.
“The government will bring forward a new discounted PWLB policy margin to support local authorities borrowing for Housing Revenue Accounts and the delivery of social housing,” it said.
HRAs are ringfenced for housing-related spend.
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According to the government’s policy costings document: “This measure introduces a new 40 basis point discounted rate at the Public Works Loan Board (PWLB) for local authorities’ (LA) Housing Revenue Account (HRA) borrowing for one year.”
The new measure, to be in place from June, affects councils in England, Scotland and Wales.
The government has estimated that the cost to the treasury will be £45m between 2023 and 2028.
“A discounted rate is assumed to lead to higher LA current spending as the savings from lower borrowing costs are recycled without leading to any change in existing borrowing plans,” the document said.
“LA spending is classified as public sector spending in the national accounts, so an increase in LA current spending and corresponding decrease in payments to central government (the PWLB) represents an exchequer cost.”
Rob Beiley, partner at law firm Trowers & Hamlins, said that the move will be a “significant boost” for local authority housing delivery.
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