Local Government Minister Simeon Brown has unveiled changes to allow new council-owned water companies to be able to access more cheap borrowing from the Local Government Funding Agency (LGFA). 

The LGFA is jointly owned by 30 councils and central government, which owns 20%. The LGFA, with its backing from central government, allows councils to access much cheaper borrowing than they would on their own. That cheap borrowing has been available to CCOs, but today’s changes allow those CCOs to borrow far more than before. 

Currently, councils borrowing through the LGFA are not allowed to breach a debt covenant debt equating to 280% of revenue. Water CCOs will be able to borrow up to 500% of revenue. 

There are currently relatively few water CCOs, but the Government’s replacement for Labour’s Three Waters policy is predicated on councils forming more of them. 

More to come...