01:46 PM July 6, 2022
The scale of Norfolk County Council’s borrowing – meaning County Hall pays nearly £31million in interest a year – has been compared to “credit card maximizing”.
But leaders of the Tory-controlled authority have defended their financial approach.
Latest figures show the council had borrowed £853.2m by the end of May, with almost £50m of that committed to other long-term debt, such as leases.
The board considered the possibility of borrowing up to £80m more in 2022/23 and recently raised its authorized debt limit from £999m to just over £1.06bn of pounds sterling.
At a council cabinet meeting this week, it was confirmed that the authority was paying nearly £31million a year in interest on the loans.
That figure was £29.2m in 2020/21 and £25.7m in 2016/17.
Brian Watkins, leader of the Liberal Democrat group, said: “The council has been financially irresponsible in maxing out its credit card by borrowing nearly £400million over the past five years.
“They are now at the limit that they can legally borrow and that puts big projects that require a lot of borrowing, like the Norwich Western Link, at risk.”
He said the council needed a ‘full restart’ of its operations or ‘may even face bankruptcy’.
But Andrew Jamieson, a cabinet member of the council for finance, said the council was far from such a scenario.
He said that as interest rate payments increased, the council was spending more, so a key figure was the ratio of those payments to the revenue budget.
And he said: “It was 7.6% in 2016/17 and 7% at the end of last year, so it’s come down. It’s important to put that £31m in that context.”
Mr Jamieson said the additional potential borrowing of £80million was “at the high end” of what might be needed.
But he said it made financial sense to borrow against long-term fixed costs, for projects such as building new schools for children with special educational needs, when interest rates were low.
The council may have to borrow £37.7m to help pay for the Norwich Western Link, if the government agrees to fund the rest of the £251m cost.
Green Councilor Jamie Osborn said: ‘The Conservatives are putting the finances of the whole council at risk by breaking their own prudential borrowing limits.