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City of York Council Forced to Borrow £121m

City of York Council

10:46am 2nd April 2012

On 28th March, City of York Council has paid the Government £121m to pay its contribution towards the Government’s housing debt.

This was paid for by borrowing and is the largest amount City of York Council has ever borrowed.

The borrowing is made up of a number of loans from 12 -23 years, and the interest rates are 2.7-3.5 (higher for the longer periods). All of these rates are fixed.

Labour Leader of City of York Council, Coun. James Alexander said:

“Originally the amount the Government said the council should borrow was £98m, then it was £112m and now it is £121m.

"Labour and other political parties in York have been campaigning for a long time to be able to keep the rent collected from our council houses locally to pay for improvements and new housing.

"However, with these proposals, the Government is giving with one hand and taking away with the other.

"Many local authorities will now be more focused on paying off these massive debts than on building the new social housing which is desperately needed.

“I am very concerned that under the terms of the borrowing to pay off the Government’s housing debt, the Government can pass on further debt onto councils whenever they wish.”

The Government’s housing debt is related to council homes. In return for councils taking on board this debt, councils will be able to keep rents from councils homes locally.

Until now collected rents were passed onto Whitehall and a housing and revenue grant was returned.

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