An increased lending rate by the government’s loan board will not affect current plans for the regeneration of Hatfield and Welwyn Garden City town centres, but could have an impact on future Welwyn Hatfield Borough Council projects.
The Public Works Loan Board (PWLB) will charge an interest rate of 2.8 per cent instead of 1.8 per cent for a typical loan from next year, meaning an extra £70 million cost to councils per year - according to the Local Government Association (LGA).
The LGA warns some projects may have to be cancelled as a result of the decision.
Currently Welwyn Hatfield Borough Council has outstanding loans worth £242.299m with PWLB, but these are not subject to the new interest rates. So far renovating White Lion Square has cost £1.2m, while the revamp of Hilltop will be to the tune of £45m.
The borough council has said all Welwyn Garden City and Hatfield town centre regenerations projects - including One Town Centre, the multi-storey and Link Drive - will not be affected as they are funded by other sources, but it is "disappointed" that the increase has been for all local authorities and there has been no exemption for "town centre regeneration".
A spokeswoman said: "Due to ongoing economic uncertainty and rate volatility, the council has been assuming prudent rates for future borrowing requirements. This means the rate rise should have minimal to no impact on existing plans."
Looking to the future, a WHBC spokeswoman added: "Given that the council continues to have an ambitious capital programme, including town centre regeneration, economic development projects and plans for a housing company to meet local housing demand, we may need to take out further loans from the PWLB."
Welwyn Hatfield borough councillor Kieran Thorpe, the Labour group leader, accused the Goverment of trying to starve councils of the money they need to succeed.
"Welwyn Hatfield was forced to borrow hundreds of millions from this scheme earlier in the decade and we are still paying that off, only last January we voluntarily made use of it in an attempt to provide space for businesses where the free market failed," said Cllr Thorpe, who represents Hatfield South West.
"It doesn't matter how you look at it, this will severely restrict local councils ability to adapt to events and invest in their communities, particularly in badly needed new housing."
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