Clash over council’s multi-million pound borrowing strategy

Party leaders clashed over a council’s medium term borrowing strategy as it posted an underspend in its overall budget.

Telford & Wrekin Council’s Labour cabinet celebrated recording a £91,000 underspend in the 2024/25 budget, comparing it to the situation in Shropshire which posted a “multi-million pound” deficit.

But the Conservative group leader said at a meeting last Thursday that the authority risked becoming a “slave to interest rates” as it heads towards having borrowing totalling “three quarters of a billion pounds” in four years’ time.

But Labour’s council leader hit back, saying that the local Tory chief was “focusing on the doom and gloom all the time” while the ruling party is “taking the tough decisions” against a background of Conservative cuts.

Councillor Tim Nelson (Conservative, Newport North) told the meeting of the council’s Labour cabinet that it was “heading for a situation of having debts of three quarters of a billion pounds in four years time.”

He added: “This is an immense figure. When you are lending money, interest rates are your servant. When you are borrowing money you are a slave of interest rates.”

In a criticism of Government economic policy he added that the situation at the moment is “benign” because the “economy is on its back and likely to remain so.”

Council Labour leader Lee Carter (Arleston & College) said without investments that brought in a return of “£40million” the council would have to be cutting back.

“If we made no investments we would be cutting back services,” he said.

“You never come up with any of the answers, and take no part in the budget process or suggest alternatives.”

He added that the background was in £180million of cuts made by the Conservative government to Telford & Wrekin Council during “14 disastrous years in government.”

“All of the challenges are as a result of that 14 years of disastrous Conservative government.”

He compared that to “support at last” from Labour in Government and having an “MP fighting our corner.”

He claimed that Councillor Nelson was in effect “arguing for charging for parking, charging for green waste collections and raising (local) bus fares from £2.”

The council’s most recent Treasury Management Strategy pointed to the council having an estimated capital financing requirement of £742m in March 2027 and £782m in March 2028.

But the same papers say that the legally authorized limit for those two years is expected to be £799m in 2026/7 and £829million in 2027/28. The council has set its own boundaries below that level.

Council officials say the limits reflect “the level of external debt which, while not desired, could be afforded in the short-term, but is not sustainable in the longer term.”

They add that they believe the council’s strategy is “prudent as medium and longer dated borrowing rates are expected to continue falling from their current levels albeit at a slower rate than previously forecast in May 2024.”

In the most recent report to councillors, finance officers told councillors that “The Authority is currently maintaining an under-borrowed position.”