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Bucks County Council borrow £302 million

Bucks County Council borrow £302 million

Published by the Mix96 News Team at 5:43am 16th April 2019.

Borrowing by Buckinghamshire County Council has increased by £92 million in just one year, as experts warn councils are risking taking on too much debt.

The Chartered Institute of Public Finance and Accountancy says delivery of public services could be put at risk by unsustainable borrowing, after debt among UK local authorities rose to more than £100 billion.

BCC's Borrowing:

  • By the end of December BCC's outstanding loans stood at £302.1 million, according to figures from the Ministry of Housing, Communities and Local Government
  • This was a 44% increase compared to a year ago, when it stood at £210.1 million
  • Long-term loans accounted for £274 million of the borrowing, these last for more than one year and are used to finance large projects or purchases
  • The council also took out £28 million worth of shorter-term loans, which are normally used to help manage a council's cash flow.

The Chartered Institute says many cash-strapped councils are taking out large loans to buy property, as the rent they collect can be higher than the interest they pay on the loans.

Funding for councils fell by almost half between 2010-11 and 2017-18, according to the National Audit Office.

Don Peebles, is head of policy at the Chartered Institute:

“With government funding in decline, it is unsurprising councils are having to adapt and find alternatives."

“While councils are borrowing for a wide range of purposes, such as building houses and investing in major infrastructure, one trend which has been concerning is the growth in investment in commercial property - which exposes public finances to new risks."

He added that councils could be in breach of the Institute's guidance – which they have to take into account when developing investment plans – by borrowing too much, or borrowing in advance of their needs.

Bucks County Council
Bucks County Council borrowed £92m in one year

The government's Public Works Loan Board was the main lender to Buckinghamshire County Council as of December, followed by UK banks, then other local authorities.

The loan board offers low-interest loans to councils, without requiring them to prove they can afford the repayments.

There is no limit to the amount councils can borrow from it.

The Local Government Association, which represents councils in England, said budget cuts had forced councils to find new ways of making money.

A spokesman said councils had followed the rules "to ensure they invest wisely and manage the risk".

A spokeswoman for the MHCLG said:

“Councils are responsible for managing their own finances and making the right decisions for the communities they serve – including making appropriate investments.

“Guidance on council investments was updated in April 2018 with new codes that strike the right balance between allowing councils to continue to be innovative while ensuring that taxpayers’ money is properly protected.”

Cabinet Member for Resources at Buckinghamshire County Council, John Chilver, told us why they've borrowed so much in a year:

"One of the reasons was the energy from waste plant at Calvert, we borrowed around £100 million to build that.

"The other main factor in the increase in our borrowing has been the acquisition of some new investment properties, which are properties acquired by the council to generate revenue."

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