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Local Government: Borrowing

Question for Ministry of Housing, Communities and Local Government

UIN HL13392, tabled on 4 February 2019

To ask Her Majesty's Government what was the total amount of funding made available to local authorities to acquire commercial properties for investment purposes in each of the financial years since and including 2014–15 in (1) England, (2) Wales, (3) Scotland, and (4) Northern Ireland.

Answered on

11 February 2019

In England, commercial property investments, like any other asset purchases are categorised as capital expenditure. The decision making process for all capital investment and funding including commercial property investments is devolved to each individual local authority. Central Government sets the framework which local authorities must operate within and it is designed to ensure that the capital expenditure plans of local authorities are affordable, prudent and sustainable.

No direct funding is made available to local authorities for commercial asset acquisitions from Central Government. If a local authority chooses to purchase commercial assets they will have to finance it using one of 3 potential sources. These are:

1. Capital receipts - Statute states that funds generated through the sale of assets must be used for the purchase of future assets or for the repayment of debt

2. Direct revenue transfers - Revenue funds can be used to fund capital expenditure

3. Borrowing - If borrowing is used the local authority must ensure that the amount borrowed is affordable by having regard to statutory guidance. This involves ensuring that all debt servicing costs are funded through available revenue resources.

Local authorities are not required to disclose how they have financed each capital investment, therefore, it is not possible to identify the mix sources that have been used to fund commercial property investments.

As local authority financing is a devolved matter, all questions about commercial property investments by local authorities in Scotland, Wales and Northern Ireland need to be addressed to the devolved administrations.