Northumberland County Council borrowing passes £800million

The authority’s total external borrowing rose by £93.5million, from £731.5million at the start of the financial year to £825million at March 31 this year.

The amount of new or replacement borrowing taken out during the 12-month period actually rose by £175million, but this was offset by £81.5million of loans maturing and being repaid.

These figures were included in the annual treasury management report, which was presented to the council’s audit committee on Wednesday, July 29.

It shows that the interest paid on this borrowing in 2019-20 was £22.8million, although this was £835,000 below budget, due to the average rate of interest paid over the year being lower than estimated – 2.9% against 3.06%.

Borrowing had decreased from £772.1million at the start of 2018-19 to £707.8million by the midway point of the year, but then rose up again up to April 2019.

At an audit committee meeting last January, some caution was expressed over the proposed hike in borrowing, which is largely to fund capital spending in the coming years.

What concerned some of the committee members at that time was the increase in the council’s capital financing requirement (CFR), which was then forecast to rise by more than a quarter in the next three years – from £911.9million at the start of 2019-20 to £1.17billion by the end of 2021-22.

The CFR figure for the start of the financial year ended up being lower than predicted at £888.4million, but by the end of March, it had reached £930.6million.

CFR is a measure of the council’s long-term borrowing requirement that represents the total historic outstanding capital expenditure which has not yet been paid for. It is repaid over time by an annual charge to the council’s revenue spending, known as the minimum revenue provision (MRP).

In February, the council agreed a capital spending programme, on the likes of schools, leisure centres and infrastructure, totalling almost £680million over the next three years.

Every £1million of borrowing costs the authority around £60,000 a year to service.

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