Concerns as Cornwall Council's borrowing tops over £1.25billion
Councillors say they're worried about the cost and the impact that rising inflation could have
Concerns have been raised at the level of borrowing at Cornwall Council after it was confirmed it now tops £1.25billion.
Councillors said they were concerned about the cost of borrowing money and the impact that rising inflation could have on the authority.
The council’s audit committee was told this morning that the council currently has long term borrowing of around £1billion and short-term borrowing totalling £250million. Officers explained that the long term borrowing was on fixed term rates which would not be affected by any change in interest rates.
It was explained that much of the long-term borrowing related to the council’s ambitious capital projects which include the likes of Langarth Garden Village scheme and housebuilding programme for Cornwall.
However, councillors were concerned about the amount that the council was borrowing and asked whether it was higher than other local authorities.
Russell Ashman, head of pensions, treasury and technical at the council, said that Cornwall’s level of borrowing was higher than many councils but added that this was offset by the council’s assets and investments.
He said that the council has around £2.5bn in assets but councillors raised concerns that the authority is borrowing around 40% of that total.
Cllr Barry Jordan said that he was concerned about the level of borrowing at the council and John Conway added: “I am starting to get a little bit concerned that we are borrowing so much, 40% seems to be a very high figure. Even if you were to realise those assets I am not sure you would actually get £2.5bn.”
Councillors asked how much the council’s borrowing was costing in interest repayments, Mr Ashman said that was £27.9m.
The council’s chief operating officer, Tracie Langley, told the audit committee that inflationary pressures were already an issue for the council in a number of areas and not just in terms of the rise in energy and fuel costs.
She said that the Bank Of England’s estimate that inflation could rise to 10% by the end of the year was “very significant” for all organisations and individuals due to the cost of living. Ms Langley said that it had been identified as a strategic risk for the council and said this was why the council had established two financial reserves in the most recent budget.
She explained that there is around £11.5m in those reserves but said that she was seeing “pressures coming through in inflation that will exceed that and we need to manage that”.