Community Safety Implications. None 8 Background papers No background papers were used in the preparation of this report. 9 Appendices Appendix 1: Background to the UK Municipal Bonds Agency Appendix 2: UK Municipal Bonds Agency Local Authority Financing Framework Agreement 10 Inspection of papers To inspect the background papers or if you have a query on the report please contact Xxxxxxxx Xxxx, Head of Finance and Section 151 Officer, tel: 00000 000000, email: xxxxxxxx.xxxx@xxxxxxxxx.xxx.xx Appendix 1: Background to the UK Municipal Bonds Agency Establishment The establishment of the UK Municipal Bonds Agency was led by the LGA following the announcement in the 2010 Autumn Statement that PWLB rates would increase from 0.15 per cent over Gilts to 1 per cent over Gilts, greatly increasing the cost of new borrowing and refinancing. This followed the introduction of punitive early repayment penalties by the PWLB in 2007, which have prevented local authorities from restructuring their loan portfolios to reduce costs while interest rates are low. Although the Government subsequently introduced the “certainty rate”, which effectively reduced the PWLB’s margin to 0.8 per cent over Gilts in return for the limited disclosure of an authority’s borrowing plans, the LGA found that rate remained higher than a bonds agency should be able to achieve The recent history of the PWLB highlights that the council is at risk due to changes to the PWLB’s terms and conditions. The PWLB increased its lending margin by 1 per cent in 2019 before being cut by 1 per cent in late 2020. Changes to the terms and conditions were introduced in late 2020 and further refined in 2021. At present there are few strategic alternatives to the PWLB available and thus local authorities are reliant upon the PWLB for long term capital finance. Local authorities would never risk investing the majority of their cash balances with one financial institution, but are taking a very similar risk on sources of borrowing; and unlike a financial institution, the PWLB’s terms and conditions can be changed at will. The LGA also noted that it was easy for UK investors such as pension funds to provide capital to overseas local authorities through the London capital markets, but not so to UK local authorities. The LGA published a revised business case in March 2014 that set out how a bonds agency would issue bonds on behalf of local authorities in an efficient and cost-effective manner and at lower rates than the PWLB. It identified that the reg...
Community Safety Implications. As part of the additional funding (5% sustainability) with an ALMO there would be the opportunities to address community safety issues on estates, which remains a high priority for tenants and leaseholders.
Community Safety Implications. 10.1 None arising from this report.
Community Safety Implications. None relevant to this proposal
