Council will borrow £60.2 million in 2024/25, while debt repayments will rise by 44%

Ninety percent of politics is deciding who to blame – Meg Greenfield

When you borrow money you normal set aside money to repay what you have borrowed, this generally means that you have less to spend, while you are repaying your debts.

In Council terminology this is called the Minimum Revenue Provision 2024/25 (MRP). A simple way to understand MRP is- the amount a council has to set aside from its day-to-day budget to repay the money it borrows.

Put another way the MRP is a charge the Council which is not debt free is required to make in their accounts for the repayment of debt (as measured by the underlying need to borrow, rather than actual debt). The underlying debt is needed to finance the capital programme. Capital expenditure is generally expenditure on assets which have a life expectancy of more than one year e.g. buildings, vehicles, machinery etc. It is therefore prudent to charge an amount for the repayment of debt over the life of the asset or some similar proxy figure, allowing borrowing to be matched to asset life. Setting aside an amount for the repayment of debt in this manner allows for future borrowing to be taken out to finance the asset when it needs replacing at no incremental cost.

The graph below makes it very clear, that in 2024/25, the amount Folkestone & Hythe District Council will take from its day to day budget to pay back its borrowings on its Capital Finance Programme will increase by 44%.

In 2022/23 the MRP rose by 88%.

In 2024/25, the Council will have £700,000 less to spend on day to day services over the course of 2024/25. This is the price residents pay when our Council borrow more money to finance its capital finance programmer (CFP).

Of course, it is wise and prudent the Council repay its debts so it can continue financing services, and its CFP. However, in 2024/25, FHDC say they’ll borrow a further £60.2m for their CFP as is set out at 4.1 of the Treasury Management Strategy. It already has £106.2m of borrowings.

In the Capital Finance Strategy 2024/25 at Appendix 1 Capital-Strategy-2024-25, it makes clear the main capital investment projects for 2024/25, include further expenditure on the Otterpool Park Garden Town Development (£7.5m) and the completion of the Coastal Drive Seafront Development scheme at Littlestone (£0.7m). There is no explanation where, or on what the other £52m will be spent.

The document goes onto say £16.5m of the £19.8m the Council received from the leveling up fund will be spent on the Folkestone – A Brighter Future project – revamp of bus station and train station walk to town. Private Sector Housing Improvement initiatives  (£1.4m), Rural England Prosperity Fund capital grants scheme (£0.4m) and UK Shared Prosperity Fund capital grants scheme (£0.35m). But this is money already received from the leveling up fund, so is  not to be part of any borrowings for the CFP.

The proposed medium term capital programme to 2027/28 includes £10m (profiled over 2025/26 and 2026/27) for the second phase of Folkestone – A Brighter Future project – FOLCA 2. This is the restoration of the town’s former Debenhams store, not the proposed medical facility which is FOLCA 1. As such the building will remain empty and not bringing in any money for the council for a further three to four years. Not a great advert for Folkestone High St.

Then £26m has been profiled from 2025/26, for the provision of a new leisure centre in the district. This means it’s possible some other location in the district is likely to be chosen to host this facility, as it wasn’t wanted on Princes Parade.

It’s clear the Green led council have failed to explain where the other £52m of the borrowings they’ll make in 2024/25, will be spent. This is either a culture of excessive confidentiality, a lack transparency or both.

As always, we’ll leave you to make up your own mind, which it might be.

The Shepway Vox Team

Dissent is NOT a Crime