Norfolk County Council pays £30million in loan interest each year


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.

Norfolk County Council has raised its debt limit to £1.06billion
– Credit: DENISE BRADLEY/Archant2021

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.

Eaton's Liberal Democrat County Councilor Brian Watkins.  Photo: Liberal Democrats.

Brian Watkins, leader of the Liberal Democrat group at County Hall
– Credit: Liberal Democrats

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’.

Andrew Jamieson, Cabinet Member for Finance at Norfolk County Council.  Photo: Norfolk County Council.

Andrew Jamieson, Norfolk County Council Cabinet Member for Finance
– Credit: Norfolk County Council

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 County and City Councilor Jamie Osborn.

Green County Councilor Jamie Osborn
– Credit: Jamie Osborn

Green Councilor Jamie Osborn said: ‘The Conservatives are putting the finances of the whole council at risk by breaking their own prudential borrowing limits.


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