§ Mr. Simon Burns (Chelmsford)To ask the Chancellor of the Exchequer if any changes are proposed in the quotas for lending to local authorities by the Public Works Loan Board.
§ Mr. Norman LamontYes. The Public Works Loan Board Commissioners have issued a circular today giving local authorities advance notice of a change in the formula for calculating the quotas for 1992–93, reflecting continued concern about the level of investments held by some authorities expressed, among others, by the Treasury and Civil Service Select Committee in its recent report "Banking Supervision and BCCI: the Role of Local Authorities and Money Brokers", HC26. The modified formula will reduce the quota available to local authorities who hold substantial investments which could be used in place of fresh borrowing. It will have little or no effect on authorities where investments are small. Quota loans are made at rates close to but below market rates: local authorities will still have access to non-quota loans.
The circular also notified local authorities of two improvements to the board's facilities: the ability to make premature repayments of loans in advance of the day on which it is due will be extended to include variable rate loans, and an option given to replace a fixed rate loan before maturity by a variable rate loan.
A copy of the circular has been placed in the House Library.