Borrowing from the Public Works Loan Board hit another recent record high in August, with councils taking £1.983bn in loans.
The figure pips March’s figure of £1.93bn, a spree fuelled by councils swapping short term debt for longer term borrowing due to the low rates on offer.
August’s total is largest amount borrowed in a single month since March 2012, when councils took more than £12bn in advance of the introduction of the housing revenue account self-financing system.
The bumper month of PWLB activity pushes the statutory body’s liabilities even closer to the current cap of £85bn.
In July, Room151 reported that figures in the PWLB’s 2018/19 accounts showed liabilities of £78.34bn, up from £70.88bn the year before – driven by a 76.9% increase in new loans advanced to councils and other bodies in the 12 months.
So far this financial year, councils have added £3.847bn extra borrowing to the total, although the amount of repayments made on existing loans is unknown.
The Finance Act 2014 allows the Treasury to legislate to either lower the cap or legislate to raise it up to a maximum of £95bn.
Leeds City Council was the biggest single borrower during the month, taking £200m from the PWLB.
Northamptonshire County Council also borrowed £110m to refinance short term borrowing and fixing it into cheap long-term rates. London Borough of Enfield and Transport for London also borrowed £100m each.
A surge in PWLB borrowing during recent years has been fuelled by low interest rates, borrowing to fund property investment and the refinancing of Lender Option Borrower Option loans.
