Ashfield council chief responds to £100m debt concerns by emphasising authority's finances are ‘well-managed'
Ashfield District Council’s finances are being ‘managed effectively’, the authority’s chief executive insisted, amid concerns over the council’s almost £100 million in borrowing.
Theresa Hodgkinson, who took over the role six months ago, issued the statement during a full council meeting in response to what she described as ‘misleading’ messages about the authority’s finances.
Concerns were raised on social media that the authority is in a difficult situation after a treasury management report confirmed the high borrowing figure.
The borrowing has accrued over the years as the council invested in a large property portfolio, with purchases including industrial units in Atherstone Falkirk, Grangemouth and Wishaw along with a hotel in Stratford-upon-Avon.
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The report states the external borrowing level currently sits at slightly below £100 million.
However, it also states this is less than half the authorised limit – the most money the council could afford to have in outstanding borrowing – of £217 million.
The borrowing is expected to increase to almost £125 million by 2025, when the authorised limit is forecast at £199 million.
The figures led to concern from Ashfield MP Lee Anderson (Con) who offered to meet with the council so it can ‘resolve this disastrous mess’.
He suggested the authority needs to get a plan in place to bring it down and said he will be contacting the Government about the situation.
But speaking in the meeting on January 27, Mrs Hodgkinson issued a statement to ‘reassure residents … that the council’s finances are well-managed’.
She revealed the authority has received a finalised report from the Local Government Association (LGA), which undertook a financial ‘health-check’ on the council at the chief executive’s request.
The full report, she says, will go before the cabinet in February, but gave the assurance that the authority’s finances are ‘being managed effectively’.
She said the report confirms the authority has ‘consistently spent within its budget’, has a ‘robust budget-setting and budget monitoring’ procedure, and has ‘managed well’ during the pandemic.
And commenting on the borrowing, she explained why the authority took the decision to invest in the properties and confirmed the profit these investments make.
She said: “The annual rental income from these (investment) properties covers both the annual debt and interest costs associated with them.
“In addition, it makes a significant annual contribution well above £2 million towards the operating costs of many council services.
“Without this additional rental income, we would not be able to provide some of our valued services.
“The reason the council adopted the policy of acquiring investment properties was to enable it to help fund and protect the vital services that our residents quite rightly expect to receive.”
Other Nottinghamshire councils have similar levels of borrowing as a result of investment plans.
A report from Mansfield District Council in September last year confirmed the authority has outstanding borrowing of roughly £90 million – a figure that has fluctuated in recent years.
Nottinghamshire County Council’s borrowing is close to £600 million.
However, Coun Richard Jackson (Con), its finance chairman, previously described the figure as ‘healthy borrowing’ that allows the authority to invest in services.
Councils regularly borrow money from the Public Works Loan Board, a Government entity set up to support local authorities with loans at a favourable interest rate.