Windsor and Maidenhead's £300m debt crisis
Councillors told more borrowing will add to debt total
Windsor and Maidenhead council could end up in some £300 million of debt – with no easy way to pay it off – its finance chief has said.
The cash-strapped Royal Borough of Windsor and Maidenhead (RBWM) already has debts of some £230 million. But it says it will have to borrow more to balance its budget in April after the government limited its council tax increase to eight per cent.
Ian O’Donnell – RBWM’s interim director of resources – said the council had asked the government for permission to raise council tax by 25 per cent as it lacks the income to pay for all its essential services. He said without that, the council would have to borrow more.
Mr O’Donnell said: “We’re talking about very large amounts of debt here. Something in the region of £300 million by the time you add on the borrowing we’re going to need.”
He also said the council faced a funding shortfall of £20 million to cover its spending, with very few opportunities to make savings.
And he said borrowing would be needed to replenish its general reserve – the pot of money it uses to cover unforeseen costs – which currently has a negative balance.
Mr O’Donnell said RBWM would have to sell off its investment properties to pay off the debts. He noted that that the council was expecting to generate receipts from some major development projects agreed with developers.
These projects include the sale of Maidenhead golf course for a housing development, which is hoped to raise £105 million.
But he said that the value of the council’s investment assets is £81 million.
Mr O’Donnell was speaking to a panel of councillors on Wednesday, February 5. Councillor Pat Sharpe warned against property sales and said the council should look at ways of bringing in new income.
He said: “Disposal of assets is a one-off thing. And by doing that you actually leave the council overall in a much weaker position than you were beforehand.
“Really what the council should be doing is looking at generating income and looking at ways of paying off debt through income rather than through asset sales.”
But Mr O’Donnell said the council’s opportunities to raise income were ‘very limited’.
He said: “Our ability to raise £20 million plus per annum is extremely limited without being able to put up the council tax.
“Any opportunities we have to raise income could of course be used to bring down that deficit over time but it’s very unlikely it will make a substantial dent in it.”
Mr O’Donnell said the council would have to wait for the government to agree on a longer-term solution for council funding after its spending review in June.
He said: “It’s a very difficult situation and the way out of it is quite simply we have to be patient and we have to see what the government is going to do.”