Welsh councils' £60m road repair borrowing could pave way for new money

Councils in Wales will borrow for road maintenance over three years

Councils will borrow £60m to spend on road repairs this year under a 22-year commitment by the Welsh government.

If successful the scheme could be used in other areas to help plug big cuts in public spending.

The Welsh government is providing revenue so county halls can repay the money. Unlike councils, the Welsh government cannot borrow money.

Over the next three years it is predicted to bring in about £170m for highways maintenance.

Officials say the £60m being borrowed this year is a big boost to local transport budgets at a time when the capital needed for public works is being hit by UK-wide spending cuts.

The repayments, comparable to paying off a mortgage, will cost the Welsh government about £240m over 22 years. It is setting aside £4m in the first year of the Local Government Borrowing Initiative.

Finance Minister Jane Hutt will announce how much each council will receive during a visit to Newport later on Monday.

'Prudent'

If it works, the Welsh Local Government Association (WLGA) says "prudential borrowing" could be a blueprint for spending on other areas, such as schools.

WLGA regeneration director Tim Peppin said: "It's very much a question of seeing how this works, but it has the potential to be used in other areas.

"Some people in authorities have raised concerns, but there's a world of difference between borrowing to finance straight consumption and borrowing to put the main bedrock of the economy into shape."

Ms Hutt said: "We want to help councils address revenue pressures, and see them undertake new and necessary capital investment in our highways.

"By providing £4m in the first year of the scheme local authorities will be boosting their capital spending by £60m this year resulting in immediate improvements to our roads and highways, and creating or safeguarding around 900 jobs.

"Without our effective collaboration, this kind of investment would, quite simply, have been unaffordable."

Ms Hutt said that as part of a commitment to creating jobs, the Welsh government would "take every cost-effective opportunity to increase capital investment, despite the severe cuts in our budget".

Plaid Cymru has accused Labour of not using capital spending to breathe life into the economy.