Borrowing by Peterborough City Council increases by £11 million in a year
Borrowing by Peterborough City Council has increased by £11 million in just one year.
By the end of December 2018 the outstanding loans owed by the council stood at £427.6 million, three per cent higher compared to a year ago when it stood at £416.6 million.
Long-term loans used to finance large projects or purchases account for £400 million of this, but the council also took out £27.6 million worth of short-term loans which are normally used to help manage the cash-flow of a council.
Accordingly, Peterborough City Council has one of the highest levels of borrowing by a local authority in the UK according to figures released by the Ministry of Housing, Communities and Local Government.
The Chartered Institute of Public Finance and Accountancy (CIPFA) says that at current levels, delivery of public services could be put at risk.
Don Peebles, head of CIPFA, said: “Many cash-strapped councils are taking out large loans to buy property, as the rent they collect can be higher than the interest they pay on the loans.
“With government funding in decline, it is unsurprising that councils are having to adapt to find alternative sources of money, but borrowing has inherent risks attached and these may expose public finances to risks that could impact on services.”
Leader of the council Cllr John Holdich said: “As per our Final Monitoring Report of 2018/19, at the end of January 2019 the council expected to spend £79.59 million on the approved Capital Programme.
“Of this £46.58 million was required to be financed from additional borrowing, and as such this is why there has been the increase in borrowed amounts.
“The full amount of borrowing required will be finalised in Q4 of the financial year as part of the closure process, and this information went to cabinet on March 25, 2019.”
Figures from Peter Carpenter, acting corporate director of resources at the council, suggest that the final year-to-date figure for borrowing may be significantly higher, perhaps as much as £29.1 million.
The Ministry of Housing, Communities and Local Government (MHCLG) said: “Councils are responsible for managing their own finances and making the right decisions for the communities they serve – including making appropriate investments.”
But Amyas Morse, head of the National Audit Office, responded: “The MHCLG must have better oversight of local authority governance. Poor governance can make the difference between local authorities coping and not coping.
“Given the significant challenges these bodies face, the Government needs to take the lead in addressing weaknesses in the local governance system to ensure that local arrangements function as intended and support local decision-making.”
Nationwide, local authority borrowing topped more than £100 billion in 2018.