Economy and Infrastructure

05.06.20

LGA calls for delay to council loan repayments

The Local Government Association (LGA) has today (June 5) called for a delay to council loan repayments as the financial fallout of the crisis threatens their efforts to lead their communities.

The LGA is asking for access to cheaper short-term loans with delayed repayments to ease the cash flow problems during the immediate Covid-19 crisis and after.

Despite a one-year term being available to councils through the Public Works Loan Boards (PWLB), the body is warning that it is too long to help with short-term cash flow problems, and could force councils to turn to short-term loans at expensive rates.

The day-to-day services provided by councils are a vital lifeline for many within communities, and they could be at risk if resources are shifted to repaying interest rests of ‘pay-day’ loans.

In order to ease pressures, PWLB must offer short-term loans to councils, according to the LGA and Government needs to delay repayments on new and existing loans.

Cllr Richard Watts, Chair of the LGA’s Resources Board, said:

“Councils are playing a vital role in supporting communities through this crisis - supporting efforts to track and trace the virus, protecting the vulnerable, helping rough sleepers off the street and keeping other services, such as bin collections, running normally.

“The Government has written off debt for NHS bodies as a result of COVID-19. Providing councils with access to short-term loans and delaying repayments is the least it can do to help tackle the significant cash flow problems many face.

“The scale of the economic, environmental and community challenges that we will face should not be under-estimated. It is vital that councils can support the economic recovery as emergency measures are lifted and we come through this crisis. This is vital if we are to ensure that all communities can contribute to and benefit from this recovery.”

Councils have seen a huge income loss throughout the pandemic on top of a Central Government funding reduction of £15bn over the past decade.

LISTEN: Ep. 16 Cllr Nick Forbes - Net zero and an inclusive economy

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