Thursday, 23 November 2017

Suddenly Tories are the "borrowing party"


Conservative-led Scottish Borders Council may have inadvertently set the mood for Philip Hammond's budget by embarking on a borrowing spree which will increase local government debt in the region by in excess of £15 million in 2017/18, equivalent to more than £280,000 a week.

However, this complete turnaround in fiscal policy in the face of Tory declarations stressing 'we must get the deficit down' has not even merited a mention in Borders local newspapers even though the details were published in full in the council's mid-year Treasury Management Report.

The latest hike in borrowing will push SBC's outstanding debt to a figure well above the council's annual revenue budget. The report revealed: "Additional borrowing amounting to £10 million has been undertaken in April 2017. Further borrowing of £5.2 million is anticipated during the remainder of the year".

All of that against a backdrop of £6 million additional grant from the (SNP) Scottish Government and the prospect of the much trumpeted South-east City Deal which is already turning out to be far less attractive for the Borders than the spin doctors would have us believe.

So much for the battle cries of those at the top of the Tory Party since 2010 that "we must not leave higher burdens of debt to our children and grandchildren". Labour were the bad guys who would bankrupt the nation by borrowing billions to fund public services, warned Theresa May and her Cabinet colleagues

In the Borders this greater reliance on borrowing means the council’s external debt which was already £265.4 million at the start of the current financial year (bigger than the annual revenue budget of £264.7 million) will now rise to £271.2 million.

Apparently the current approved (capital expenditure) budget at SBC is higher than the original budget due to "adverse timing movements from February 2017 to 31 March 2017 in areas of the capital plan".

According to the finance document: "The key drivers for the 2016/17 changes are assets and infrastructure - roads and transport infrastructure total additions to budget amount to £1.86 million.

"Also increases to the Land and Property Infrastructure projects total £0.63 million. The Other Corporate Services budget has increased by £2.85 million, principally from the inclusion of additional £2.64 million ICT Transformation budget.

"Children & Young People - School Estate budget increases amount to £3.32 million. The key increases in estimated expenditure result from a net timing movement relating to the construction of Broomlands (Kelso) and Duns Primary Schools.

"Economic Development - Additional budget as a timing movement between financial year amounting to £3.6 million relates to the Hawick Regeneration project".

The council's liabilities comprise long-term borrowing of £198.3 million plus £72.9 million of other outstanding debts. The level of debt has increased significantly over the last five years. The equivalent figures in 2010/11 were £164.8 million for long term borrowing plus £61.8 million for "other liabilities".

But at least the Tory group on SBC can claim to be in step with the party hierarchy. Following yesterday's UK budget in which Chancellor Hammond also embarked on a campaign to increase borrowing any hopes of balancing the nation's books have been dashed until at least 2031.

Unfortunately, in the Borders case, - given the current direction of travel - it could be several centuries before the debt is paid down, leaving generations of council taxpayers to pick up the tab for servicing those burgeoning external liabilities. Interest payments are currently running at more than £10 million a year.

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