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Supporting Local Councils in Leicestershire & Rutland

Government increases margin applied to new PWLB loans with immediate effect

Public Works Board lending is offered at a fixed margin above the Government's cost of borrowing, as measured by gilt yields.

The Treasury raised the margin over gilts to 100bps (one percentage point) in 2010, to better reflect the availability of capital finance, and lowered it to 80bps over gilts in 2013.

Some local authorities have substantially increased their use of the PWLB in recent months, as the cost of borrowing has fallen to record lows. As a result HM Treasury is restoring interest rates to levels available in 2018, by increasing the margin that applies to new loans from the PWLB by 100bps (one percentage point) on top of usual lending terms.

This restoration of normal PWLB lending rates will apply to all new loans with immediate effect. The Government will monitor the impact of this change and keep rates policy under review.

See here for the full PWLB information, and here for a Local Government Chronicle article on the changes.

Posted: Mon, 14 Oct 2019 22:35 by Jake Atkinson

Tags: Financial, Guidance, borrowing