Councils granted huge new borrowing powers
Local councils in England are to be handed powers to borrow millions of pounds to pay for major infrastructure projects
The Deputy Prime Minister Nick Clegg this week announced the new powers in his speech to the Liberal Democrat conference.
He said the redevelopment of derelict mines in Sheffield and a science park in Newcastle were among schemes that authorities hoped to fund using the new financing mechanism.
Loans would be secured against the increased income from business rates expected to be generated by the large-scale schemes - a freedom councils have demanded for years in the face of Treasury opposition.
Clegg said: ‘Labour rattled on about decentralisation, but they held the purse strings tight.
‘We are different; we are liberal. Because we will put local government back in charge of the money it raises and spends. That’s why in our first budget we unlocked more than a billion pounds of ring-fenced grants. That’s why we will end central capping of Council Tax. That’s why we will allow councils to keep some of the extra business rates and council tax they raise when they enable new developments to go ahead.
‘And I can announce today that we will be giving local authorities the freedom to borrow against those extra business rates to help pay for additional new developments.
‘Our leaders in Sheffield say it could allow the redevelopment of derelict mines in the Don Valley; our leaders in Newcastle believe this could help them create a new science park; in Leeds they argue the Aire Valley could be transformed.
‘But whether in Newcastle, in Sheffield, in Leeds or indeed in every city in the UK. What matters most is that finally, they will be in the driving seat, instead of waiting for a handout from Whitehall. Local people, local power, local change.’
The Treasury is to open talks with council leaders to thrash out details of the scheme - including crunch issues of where the financial risk will sit and limits on borrowing, Clegg’s aides indicated.