Council debt repayments soar by 59% in single year.
Folkestone & Hythe District Council debt repayments increased by 59% between 2021/22 and 2022/23. At of March 31, 2023 the total debt repayment stood at £3.263m. The level of debt repayment in 2023/24 will have risen, as the Council, led by the Greens and supported by the Lib Dems and Labour, borrowed £19m from the Public Works Loan Board
The first, second and fourth loan is solely intended for use in the Council’s Housing Revenue Account and primarily for new housing delivery, according to the PWLB. These three loans amount to £14m. How, and on what it will be spent precisely, is not known.
The other £5m will more likely have been for cash flow issues, as it is usually in the final quarter of a financial year, issues arise.
Of course, you cannot borrow without repaying. This means the Minimum Revenue Provision (MRP) for 2023/24, will rise above £3.5m and be heading towards £4m. We won’t know precisely until the late accounts for 2023/24, are eventually published
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 front line services, if it rises, as it has done since 2019/20, the amount of services which can be provided are impacted. The public pound has been eroded by inflation and interest rate rises over the last couple of years, this too impacts the MRP.
At March 31 2022, the MRP was £2,053,000. By March 31, 2023, this had risen to £3.263m, a rise of 59% in debt repayment in a single year. All of this is set out in the external auditors audit findings report, for 2022/23. The Council borrowed £20m from the PWLB in 2022/23.
Furthermore, the Council tax income was £14.152m in 2022/23.
This means the amount of Council Tax Income used to repay debts of £3.262m was 23.1%. So nearly one in every four pounds collected went to pay of the Council’s debts. The MRP will rise above 25% in 2023/24, due to the latest borrowings of £19m.
In 2021/22, the MRP was £2.053m. The Council Tax Income was £13,370m. The amount used to repay debts was 15.35%. This is a little less than one in six pounds.
Between 2021/22 & 2022/23, the MRP rose by 8%.
It was not just the borrowing which increased the debt payment’s. The Council factored in £1.4m for the Otterpool Scheme to ensure that it is compliant with Regulations.
With a further borrowing of £19m, this will mean a rise in repayments levels. This will impact department budgets, which will impact the level of service provision provideable to the public.
The borrowing of £39m in the last two financial years affects us all. The money to repay these debts comes from Council Tax income; which the council receive from you. Higher debt repayments means less money to provide the essential public services we all need and rely on.
It isn’t just Tories who cut budgets and service provisions, it’s clear Greens, Lib Dems and Labour do just the same, according to the Council’s accounts, the external auditor’s report and PWLB published data.
The Shepway Vox TEAM
Dissent is NOT a Crime
Why do they keep borrowing for ‘Otterpool’ when it is clear it is not financially viable or in the right place!
They could recoup some money by selling off some of Monks pipe dreams such as Westenhangar Castle and Dover Place in Ashford .
The latter which has remained largely empty and surely doesn’t turn a profit for our debt ridden Council .
Is this ‘debt repayment’ or debt service. Debt service includes intetest. Call a spade a spade..
Would prefer £3.263m to £3,263m. Nearly fell off my chair.