Northumberland County Council's external borrowing set to top £1billion
Northumberland County Council’s external borrowing is set to top £1billion in the next two years.
The figures are included as part of the authority’s treasury management strategy for 2021-22, which is being presented to the audit committee on Wednesday, January 27, before going to full council for approval.
The report notes that during the current financial year, total external borrowing has decreased by £58.3million from £825million at the start of year to £766.7million at November 30, 2020, with the year-end figure expected to be around £805.4million.
Looking ahead though, increases in external borrowing of £136.5million, £93.5million and £53.4million are being forecast for next year, 2022-23 and 2023-24 respectively.
This means the authority will breach the £1billion mark during the 2022-23 financial year.
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However, this does not accurately reflect the council’s long-term borrowing requirement, which, as the report explains, is measured by the capital financing requirement (CFR).
The CFR represents the total historic outstanding capital expenditure which has not yet been paid for and has to be repaid over time by an annual charge to revenue, known as the minimum revenue provision (MRP).
The council’s CFR is forecast to hit the £1billion mark during the coming financial year, rising by £119.9million from £987.1million to £1.107billion at the end of 2021-22.
There would then be further rises of £86.2million and £58.6million in the following years, taking the CFR to £1.251billion by the end of 2023-24.
The report states that one of the main functions of the treasury management service is the funding of the council’s capital plans, which ‘provide a guide to the borrowing need of the council; essentially the longer-term cash-flow planning, to ensure that the council can meet its capital spending obligations.
‘This management of longer-term cash may involve arranging long or short-term loans, or using longer-term cash-flow surpluses. On occasion, when it is prudent and economic, any debt previously drawn may be restructured to meet council risk or cost objectives.’
The Conservative administration at County Hall has previously defended its borrowing figures by stating that the last budget under the previous Labour council, in February 2017, would have led to even higher borrowing, including loans to third parties, such as the development company Arch, of £450million over three years.
The borrowing will fund what Cllr Nick Oliver, the cabinet member for corporate services, described as a ‘very, very ambitious’ capital spending plan, with investment ‘in all of our key towns’.