Supported Borrowing
Since the introduction of the Prudential Regime on 1 April 2004, the Scottish Government has provided an element of revenue funding ( loan charge support) to support debt charges associated with borrowing for a notional amount of new in-year capital expenditure (known as Supported Borrowing).
The distribution method for new in-year supported borrowing in the 2005-06 to 2007-08 settlement was based on the Single Formula Allocation ( SFA). This was essentially a needs-based formula using population, pupil numbers, road lane length and non- HRA housing as indicators, with each authority receiving a minimum fixed allocation of £1 million. However, the four indicators used had not been updated since 2001.
As part of the Loan Charge Support review during the 2007 Spending Review, a new distribution mechanism for supported borrowing was agreed. Each local authority is allocated £1m, with the balance being distributed on the basis of population and road lane length weighted 75% for population, 25% for road lane length. Full details of the new methodology can be found in Finance Circular No. 1/2008.
Calculation of the distribution of supported borrowing for2008-11 using this methodology can be found here.
The levels of supported borrowing since 2004-05 can be found in the attached spreadhseet:
Loan Charge Support and Supported Borrowing allocations from 2004-05 to 2011-12.