Cost of NDR Western Link not affected by shock loan rate rise, says council
PUBLISHED: 15:53 11 October 2019 | UPDATED: 15:53 11 October 2019
Council bosses insist a surprise rise in interest rates for Treasury loans will not hike costs for schemes such as the Great Yarmouth Third River Crossing or the mooted Western Link for the Norwich Northern Distributor Road.
But Norfolk County Council says the one percentage point increase on loans taken out from the public works loan board will affect its £120m programme to build new special schools and its £29m project to make money available for housing with care.
Councils borrow money from the loans board at a rate of 1.81pc, but the rise for new loans means the interest rate has increased to 2.82pc.
The county council said that borrowing for the £120m Great Yarmouth Third River Crossing and the £153m Western Link, which would connect the NDR to the A47, would not be affected.
A spokesman said: "This change will have no effect on the majority of our infrastructure borrowing, as favourable government Local Infrastructure Loans rates are not affected.
"We will continue to bid for borrowing at this favourable rate to support projects including the Great Yarmouth Third River Crossing and the Norwich Western Link, as well as seeking alternative sources of funding for the local funding element of these schemes.
You may also want to watch:
"The council is not forecasting additional borrowing costs on these projects at this stage."
Money was borrowed from the board to build the NDR, now known as Broadland Northway, but that was at a fixed 2pc rate and is not affected by the increase.
But the council acknowledged money it was borrowing to build four new special schools would be affected, along with a £29m pot which companies can apply for to build housing with care units.
The council said it would "explore alternative sources of borrowing". But it said even with the increase, the public works loan board rates were still at historically low levels and lower than assumptions used in future budgets.
The Local Government Association has estimated the rise will cost councils an extra £70m a year in borrowing costs.
The Treasury had said it was increasing the rates because some councils had substantially increased their use of the loans.
There has also been criticism that some have borrowed money to buy commercial property.