Council will borrow £28m to repair the car park by Garrick House and build link road behind it
The Council is meeting on February 3rd to agree its Capital Spending Budget for the next four years.
Council budgets are hard to understand but, taking it at face value, the council net budget, not including schools, is £143.4m[1] and its net debt is £145.6m[2]. Servicing this debt already costs 12% of the Council’s revenue. The Council is intending increasing the debt by £109m over the next four years.
Though everyone knows you can do anything with figures, a key sum for Herefordshire tax payers is that the increase in borrowing will lead to an increase in Council Tax, of £20 on a Council Band D property by 2015[3] just to cover interest and repayments.
But why is the Council increasing borrowing when the country is in financial crisis? Well the Conservatives don’t seem to worry about this. Their shopping list includes:
- 27m for the relief road for Edgar Street Grid development
- £1m for repairs to Garrick House car park
- £6m match funding for Broadband county wide,
- £6m for a new Archives Centre at Rotherwas
These schemes are over and above on-going projects. The total capital funding programme is £39m in this year alone will add £109m over the four years to 2016[4].
The Council’s argument is the schemes are needed and that borrowing is cheap. It’s Our County says that money could be better spent, or, not spent at all.
Said Cllr Mark Hubbard, Leader of It’s Our County
“If the Shopping Centre is such a viable concern then the developers should pay for it. Why should tax payers have to pay to repair their car park or fork out for a new road to handle the extra traffic caused by the retail developments? We were always led to believe Stanhope, the shopping centre developers, would be footing the bill.”
The £210m ESG shopping centre scheme (whoops £80m now) of 42,000sq m (whoops 29,000 sq m now) seems to have hit the buffers, despite official websites telling us they have spent £12m on a Master Plan, have promises of Debenhams, Odeon and Waitrose and will be completed in 2013. Herefordshire Council should not be helping a non-viable project by borrowing money to further woo investment-shy developers.”
Another issue is the decline in Reserve Funds. Day to day council spending comes from Reserve Funding. This has declined from £29m in 2009 to £16.6m today[5]. The biggest decline in the Fund happens this year. It is yet another indication that the Council are doing too much.
It’s Our County are not averse to spending money, but it should be on the right things; true investment that will lead to true returns and boost manufacturing, like green energy, producing food and tourism projects. This is how Herefordshire’s biggest opposition party would target Capital Spending.
[1] The 2011/12 net Budget total was £148.28m
[2] Answer to Question from public Full Council Meeting November 2011; this debt is 30% of Council Long Term Assets. Though you can do anything with figures, it is £171m including PFI, or £208m according to Appendix I in the documents quoted in footnotes below.
[3] See 7, p 118 Medium Term Financial Strategy; http://councillors.herefordshire.gov.uk/documents/s50004037/04%20MTFS%202012_%202015%20as%20at%20250112.pdf
[4] http://councillors.herefordshire.gov.uk/ieListDocuments.aspx?CId=291&MId=3563&Ver=4 paragraph 70 of Joint Capital Strategy 2012 published Feb 2012