transport minister John Reid relaxed government borrowing restrictions.
The move, subject to parliamentary approval, will allow local
authorities to raise development capital on the money markets from 1
Outlining the details, Dr Reid said it paved the way for local
authority-owned airports to meet the challenges of the new
'We want to maximise the contribution these airports make to their
local economies, and to relieve congestion at airports in the South
'Giving financially sound local authority airports the power to
raise private finance for development work will help us do that,' he
Dr Reid emphasised that local authority airports would have to meet
strict financial criteria before being set free from existing
Launching a consultation exercise into the qualifying criteria, he
'Local airports and the regions they serve have pressed us to relax
our controls on airport investment. I am delighted that we have been
able to respond positively.
'The early implementation of the new arrangements will allow the
airports that qualify to bring forward their plans for development
and for improved public transport access.
'But economic benefits have to be balanced with environmental
safeguards and - as we promised in our Integrated Transport White
Paper - we will continue to press with our international partners
for tighter worldwide standards for aircraft noise and emissions. We
will ensure that appropriate standards are set and enforced at UK
airports, including all local authority airports.'
The minimum criteria which will have to be met before a local
authority airport can be excluded from public sector borrowing
- it will not be permissible for any local authority or
other public sector body to provide any guarantees or letters of
comfort in support of new borrowing;
- the new borrowing must be subordinate to both (a) all
existing public sector debt and (b) all existing debt guaranteed or
supported in any way by any public sector body, though where new
borrowing is carried out for a specific project (eg an aircraft
hangar), it will be permissible for the lender to make a claim on the
asset if the airport defaults on the loan; and
- the purpose of the new borrowing must be to finance
airport-related investment (ie capital expenditure) in the United
Kingdom; where shareholders consider that it would be advantageous to
change the structure of an airport company's debt in order to make
best use of the new ability to borrow from the private sector,
private borrowing may be used for the purpose of paying off existing
local authority debt related to the airport in question.
1. The government announced on 11 June 1998 that it intended to give
soundly-based local authority airport companies the freedom to borrow
without being subject to public sector borrowing controls.
2. Local authority airport companies that wish to be removed from
public sector borrowing controls have been invited to apply to the
department by the end of December.
3. Copies of the consulation paper are available from the DETR,
telephone 0171 890 3339.
4. Responses to the consultation should be sent by 11 December 1998
to Alan Nafzger, Zone 2/29, Great Minster House, 76 Marsham Street,
London SW1P 4DR.