Loans will lift local airports
Finance directors of council-run airports have welcomed the government’s plans to release them from public sector borrowing restrictions.
The proposals, announced by transport minister Dr John Reid, will allow airport authorities to raise development capital on the money markets from 1 April 1999, subject to parliamentary approval.
FDs said the rule change will give local authority-owned airports such as Manchester, Norwich and Newcastle the financial clout to expand to compete with the commercially run operations at Heathrow and Gatwick.
Manchester Airport FD Norman Renfrew said: ‘We wanted to keep the airport as a public asset and we can now borrow on the strength of whatever project we are doing.’
Under the proposals, councils cannot offer loan guarantees to support new borrowing. But lenders would be able to take recourse on particular projects by taking control of capital assets.
‘We have to make sure we comply with financial ratios. Spending has got to be controlled,’ said Renfrew. ‘But within these constraints we will be able to apply for new debt and contribute to the economy of the region.’
The proposals also allow councils to finance improvements in areas such as transport links and facilities.