New Cumbrian authorities to inherit ‘eye watering’ amount of borrowing
Cumbria County Council had the largest amount of borrowing in March 2020.
Work is underway to decide how two new Cumbrian authorities will handle the “eye watering amount” of borrowing by existing councils.
Cumbria County Council had the largest amount of borrowing in March 2020 at £86.75 million, the Local Democracy Reporting Service has heard.
Barrow Borough Council had the second largest level of borrowing of all Cumbrian councils at £34.48 million.
Allerdale Borough Council borrowed £16.56 million, Carlisle City Council borrowed £13.29 million and South Lakes District Council borrowed £12.80 million.
Eden District Council has not borrowed a single pound from Government since before the previous administration.
Two new unitary authorities set to take over in March 2023 will inherit the debt of existing councils.
Leader of Allerdale Borough Council, Mike Johnson, said that his authority’s borrowing was driven up by the construction of Workington Leisure Centre.
He said:
“That was the leisure centre predominantly, the previous administration borrowed that money to build the leisure centre. All councils borrow money, it’s a fact of life – if you want to do something, build something, you borrow money and pay it off.”
Explaining the disparity between Allerdale’s borrowing and the county council’s, he said:
“They’re a larger council for one and they’ve got a lot of assets but it’s a significant amount of money.
“There’s a programme of work going on at the minute to work out how that lending, more so the county’s, will be handled by the new authorities.”
Cllr Johnson said that Copeland’s financial troubles are exaggerated compared to the borrowing of the county council:
“That’s the number that would keep me awake at night. They went to court with Amey about seven years ago and lost.”
Amey were the highways contractor for the county council at the time.
Cllr Johnson said:
“And it ended up costing us as tax payers £26 million.”
Leader of Cumbria County Council Stewart Young said that Conservatives are trying to shift the blame as “much of the debt was incurred when the Conservatives were in various administrations”.
Labour leader Cllr Young said:
“The county council borrows money to fund capital expenditure, such as building and maintaining schools, care homes and fire stations for example. District councils have much fewer responsibilities and so don’t need to borrow as much.
“We didn’t need to borrow to fund the Amey case as we had made provision for it, as any sensible council would do.
“Splitting this debt between two new unitaries will be incredibly complicated, and like everything else hasn’t been thought through in advance by those who thought it was a good idea.”
Mayor of Copeland, Mike Starkie, has pointed to the low borrowing of his authority as evidence that it is not financially mismanaged.
He said:
“The council (Copeland) only has legacy borrowing of £5 million from 2002 by the previous administration. We have gone to government to get permission to utilise some of that for our revenue budget on behalf of constituents.”
Eden Council boss Virginia Taylor confirmed that the authority has not borrowed money from Government and did not inherit any debt from the previous administration.
She said:
“But I’m not happy about taking on other authority’s debts if that’s the result of poor financial management or for example having unwise court cases.”