Determining the interest rate
The Department of Health has published guidance on how to work out the maximum interest rate for Deferred Payment Agreements. This guidance is contained in the revised paragraph 9.67 of the Care and Support Statutory Guidance published in October 2016.
9.67: The national maximum interest rate will change every 6 months on the first of January and July respectively, to track the market gilts rate specified in the most recently published report by the Office of Budget Responsibility (OBR) plus a 0.15% default component (for example, gilt rate 1% plus 0.15% equals a maximum interest rate of 1.15%). The market gilt rate is currently published in the Economic and Fiscal Outlook, which is usually published twice-yearly alongside the Budget and Autumn Statement on the OBR website. The web page shows the latest statement but past statements can be found by clicking on ‘choose' under the ‘previous forecasts' heading on the page. The market gilt rate is near the bottom of the table: Determinants of the fiscal forecast.
Local authorities must ensure that any changes to the national maximum rate are reflected within their authority and are applied to any agreements they have entered into (unless they are already charging less than the national maximum). Individual agreements must also contain adequate terms and conditions to ensure that the interest rate within any given agreement does not exceed the nationally set maximum.