Draft Combined Authorities (Borrowing) Regulations 2018

Michael Fabricant Excerpts

Monday 23rd April 2018 General Committees

[Jake Berry]

I have a bottle of fizzy water on ice, ready for the outcome of the election of the Mayor in South Yorkshire—I hope it is a Conservative. If by some chance a Labour Mayor is elected, he will not be affected by these regulations. These regulations, if approved today, are the secondary step that Parliament will take to agree the additional borrowing powers if—and only if—they agree the debt cap with the Treasury.

[Michael Fabricant (Lichfield) (Con)]

The Minister rightly mentioned Andy Street, the Mayor of the West Midlands, who I know will welcome these powers. I have no background in local government whatsoever, so I would like to know this: how will the interest rates for the borrowing be determined, and from whom will the combined authorities borrow? Will they borrow from the Treasury or from commercial organisations? What supervision will there be on the rates of interest?

[Jake Berry]

I was beginning to worry about my hon. Friend, because he did not jump up to intervene the moment I mentioned Andy Street. The Mayors are free to borrow the money, if it is under the borrowing cap, from anyone they choose. My guess is that they are most likely to borrow from the Public Loan Works Board, which at the moment has an interest rate of 1.91% for a five-year loan. My hon. Friend will understand that the rate changes over time—the Bank of England is rightly independent of Government and will set future rates. The borrowing powers are subject to an overall borrowing cap, to be agreed with the Treasury, for either two or three years, or perhaps for longer in future, and they are covered in the same way as every local authority is now by the prudential borrowing regulations. Not only will they have to remain within their borrowing cap, but they will have to comply with the prudential borrowing regime, if the Committee accepts these regulations.