West Dunbartonshire Council's debt rises by £34m in one year
Published: 15 Sep 2015 15:30
West Dunbartonshire Council’s total debt has increased by £34m in one year to £289.867m.
Official council papers revealed the external debt figures includes both short term and long term debt. This is due to a strategy of using short-term borrowing to fund long-term capital investment enabling the council to take advantage of lower interest rates.
Critics have claimed the rising debt will overshadow future generations, as paying for debt is a priority for the authority, whilst the administration has praised the level of local investment.
The local authority’s total capital expenditure – the amount spent to improve a long-term asset such as equipment or buildings – this year was £63.842m.
In addition, the council undertook new borrowing of £103.1m for the approved capital plans (£33m) and used the rest to pay off £70.1m of debt during 2014/15.
The council’s investments increased from £4.652m at the beginning of the year to £12.573m at the end of the year with an average balance of £10.364m and received an average return of 0.42 per cent over the year. The investment activity during the year conformed to the approved strategy, and the council had no liquidity difficulties.
In an Audit and Performance Review committee report, the executive director of corporate services reported investment return averaged 0.42 per cent which is a year-on-year decrease of 0.14 per cent.
The average return of 0.42 per cent was lower than the council’s investment account of the return which was 0.50 per cent.
Independent councillor George Black said: “A statutory duty is placed upon councils to pay their debt and the auditor has for a number of years commented that a risk to the council is that they may be unable to provide services as they must pay the debt as a priority.
“This fact, coupled with the other fact that this administration has allowed slippage to increase as well, the question must be, why are you increasing borrowing and allowing capital projects to slip at the same time?”
Socialist councillor Jim Bollan said: “In principle, the Scottish Socialist Party agree to controlled capital borrowing only if it is to invest in the quality and quantity of publicly owned services and assets.
“We are opposed to borrowing more capital to pay off earlier debts and to also subsidise the profits of private companies like BAM who are guaranteed a yearly profit of 16 per cent for 30 years as a result of building new schools for the council under the PPP (Public Private Partnership) schemes.
“The PPP debt is by far the biggest millstone around the council taxpayers’ necks which the council has burdened them, their children, and grandchildren with.”
In March this year, the total debt for Scotland’s 32 local councils stands at £14.8bn, equivalent to £6,166 per household. This compares to £3,100 per household in England and £2,825 in Wales.
However, the Convention of Scottish Local Authorities (Cosla), the main councils’ umbrella body, said, it ‘firmly believes’ that the borrowing was prudent and affordable.
The Accounts Commission in Scotland said borrowing is a necessary tool, but it warns regardless of what the money is used for and why, these debts will have to be paid off.
A West Dunbartonshire Council spokeswoman said: “The council has borrowed money to invest in schools, offices, road, and lighting improvements and sports facilities. These will improve the living standards of the people of West Dunbartonshire for generations to come.
“The investment has been undertaken carefully as part of a 10 year capital investment plan, and these figures are both planned and part of agreed expenditure.
“The increase in debt for investment in both council assets and in council housing assets, was planned and agreed. The council’s long-term financial plan fully supports the repayments required.
“When looking at general fund debt the most recent Scottish government statistics available showed West Dunbartonshire had the ninth lowest level of debt per head of population in Scotland.”
Council leader Cllr Martin Rooney told the Reporter: “I am extremely proud West Dunbartonshire is one of the best performing councils in Scotland.
“We have deliberately targeted hundreds of millions of pounds into improving our public infrastructure.
“In housing, we invested £90m over the last three years and have committed a further £122m over the next five years to build new council houses and improve existing ones.
“In relation to the general capital programme again we are investing hundreds of millions of pounds into constructing new schools, care homes, offices, and leisure facilities. We are also using our economic and political power to drive forward regeneration in our towns so that we can grow the economy.”