Council borrowed £20m in 2022/23, but must repay £35m by 2027/28
Both the Greens & Labour have promised to build more Council homes in their manifesto’s during their campaign. Neither party had sight of the accounts for 2022/23, as they’ve not been published yet. Regardless of this fact, both committed to building more council homes without the latest financial facts available to them.
So our question to the Greens & Labour is, how many more homes do they intend to deliver on top of the 1,300 already set out in the Folkestone & Hythe District Council Housing Asset Management Strategy 2022- 2027, at page 5?
And from who, and where do they intend to borrow the money from, to build these extra homes?
For those of you who might not be aware, Folkestone & Hythe District Council had liquidity issues – read cash flow problems in 2021/22.
These cash flow issues meant they had to take out a one year loan of £5m which was taken up on 22 April 2021, from another local authority at an interest rate of 0.1% for liquidity purposes. This loan was repaid in April 2022. However, another £5m loan which had been taken prior to the one above, and due on 31 January 2022, meant a new loan had to be agreed in advance with another local authority for two years, at an interest rate of 0.4%. This means this loan will be due on the 31 Jan 2024, so during this new administration.
Do remember inflation is currently at 10.1%. For every 1% of inflation, this erodes one pence of the public pound. So a public pound at the current inflation rate is worth 90p.
Moving on, in the dying days of the Tory led administration they went cap in hand to the Public Works Loans Board (PWLB) on the 28 Feb 2023, to borrow £10m, for one year, at an interest rate of 4.54%. This must be repaid by the 28 Feb 2024, meaning that the new administration will have to take account of this in their spending plans. The purpose of the loan is not known.
Just twenty seven days later, on the 27 March 2023, the Council again went back to the PWLB to borrow another £10m at an interest rate of 3.93%. This must be repaid by the 27 March 2035. This loan must be serviced, so will put some financial constraints on the new administration.
Loans from the PWLB can only be used for
- Service spending
- Treasury Management
Also during this administration which runs until May 2027, a further £16m plus approx £4m in interest, must be repaid to the PWLB. Those marked in purple are the loans which must be repaid in the time of this administration – May 2023 – May 2027
We know during this administration the sum of £26m plus interest of approx £4m will have to be repaid. We know the public pound is being eroded by inflation, so they’ll have to do more with less.
We also know the Minimum Revenue Provision (MRP) for 2022/23, was £1,667m. A simple way to understand the MRP is, the amount a council has to set aside from its day-to-day budget to repay the money it has borrowed. This is usually paid out of Council Tax income, so effects frontline services, if it rises, as it has done since 2019/20. And as we said the public pound has been eroded and this will impact the MRP as well.
We know at the end of the financial year 2021/22, the sum of £47,155m was still owed to the PWLB, according to the Council’s accounts for this financial year. The fair value on the amount to be repaid was £52.7m. We don’t know what the PWLB loans had fallen to as of 31 March 2023, as the accounts for 2022/23 have not been published yet.
We must also consider Otterpool Park LLP wish to borrow a further £80m. The council will possibly have to turn to the PWLB for more money. It would be wise and prudent for the new administration to ask from who this money will come from. The PWLB, Inter Authority Lending Bank Loans?
Lets not forget, the new administration is being asked to do more with less, due to the erosion of the public pound by inflation. So again we’d ask how they intend to pay for any new council homes, and where they intend to get the money, and how much it will cost residents.
As they’ve just been elected, we’ll give them a little time to think it over. After all, both the Greens and Labour have committed themselves to more transparency. So we’ll wait and see if they live up to their promises.
The Shepway Vox Team
Journalism for the People NOT the Powerful
The answer to borrowing more money is to scrap Otterpool
New administration must not proceed with Otterpool.Save our district by protecting our countryside for the future
The new Council must get rid of Susan Priest and get someone that knows what they are doing .
Get rid of hoardings at Princess Parade get communities in to re wild the area and suffer the loses of this failed project.
Give no more money to Otterpool. There are now more Councillors that opposed this monstrosity than voted for it.
Sell Connect 38 for whatever you can get. Monk bought this as another of his vanity projects.
Close down Oportunitas as it’s obviously not profit making and never will be .
Councillors stick to what you were voted in to do, and that is run the Council for the people, and not for your own self gratification.
We now have a Council that will listen to residents and do what they were voted in to do.
As stated, the majority of Councillors were opposed to Otterpool, as are the residents so let’s scrap this immediately before any more damage is done. Then return Princes Parade to what it was before Monk and Co. Ruined it.
great news the torys have lost FHDC ……. does this mean outsourced parking enforcement could come back in house .
The Tories lost on development issues ie princes Parade and Otterpool proposal. I hope Labour and the greens realise this and dump both projects as their unattainable both in cost and lack of infrastructure ie hospitals, Gp’s both will be black holes.
Lorraine Well said. That’s what we would all like but will it happen. Fingers crossed that Greens and Labour can work together at least on these two urgent issues.
How can a council be allowed to run up such huge debt is there no control.