§ Mr. SheermanTo ask the Deputy Prime Minister(1) if he will make a statement on the new prudential borrowing guidelines for local government; [139700]
(2) what the estimated cost of repayments would be per million pounds borrowed and invested in capital schemes within the framework of the new prudential borrowing scheme. [139701]
§ Mr. RaynsfordThe new capital finance system will start on 1 April 2004. The legislative framework is in the Local Government Act 2003. This is supplemended by a code of practice on prudential borrowing, published by the Chartered Institute of Public Finance and Accountancy, to which authorities are required by the Act to have regard.
It is not possible to estimate future borrowing costs, which will reflect prevailing interest rates and the terms of loan agreements. However, authorities can currently obtain loans repayable after thirty years at a fixed annual interest rate of about 5 per cent.