Loan figures show Borders Council's debt profile

 by EWAN LAMB

A new set of statistics published by the Public Works Loan Board (PLB) which advances money to local authorities shows Scottish Borders Council's outstanding balance now stands at over £166 million which is £46 million more than the council owed in 2010.

Research by Not Just Sheep & Rugby has assembled a debt profile for SBC covering the period since the PWLB started publishing data eleven years ago. 

In the recent past the Borders council has fended off criticism that it has allowed its debt burden to grow too high even though current interest rates are at rock bottom.

As well as the 53 loans currently held by SBC the council has also borrowed money from other sources. But our table below only includes data made available by the PWLB.

Some of the borrowing from the Board dates back to the 1990s  while a substantial number of the loans are due to run until 2050 and beyond. The fixed interest rates range from 8.5% for sums acquired in 1995 down to just 1.49% for a ten year loan totalling £4 million arranged in 2016.

Much of the increase in the principal balance has occurred since 2016 when PWLB debt stood at £127 million. The March 2021 figure of £166.3 million showed a slight decrease from the previous year's figure of £167.1 million after three loans reached their maturity date.

Here's how the figures stack up:

Year ending	Number of loans	Balance outstanding	Year End Value
March 2010	50	£120,131,362	£154,109,980
March 2011	50	£120,131,362	£158,708,128
March 2012	51	£127,631,362	£194,623,718
March 2013	51	£127,631,362	£198,407,422
March 2014	51	£127,631,362	£187,033,833
March 2015	51	£127,631,362	£233,428,208
March 2016	51	£127,631,362	£236,795,464
March 2017	53	£139,631,362	£274,550,037
March 2018	54	£149,631,362	£281,363,738
March 2019	55	£159,631,362	£297,634,808
March 2020	56	£167,131,362	£348,479,343
March 2021	53	£166,369,133	not available

  SBC's Opposition Group leader Stuart Bell (SNP), who chairs the authority's audit and scrutiny committee claimed in a newspaper article two years ago that the amount of borrowing was limiting potential spending in other service areas. He claimed: “I have been repeatedly saying that Scottish Borders Council is nearly maxed-out on capital.

“There are strict fiscal limitations on the amount of money that a local authority can borrow and Scottish Borders Council is not unusual in being close to that upper limit."

In a detailed statement issued to media outlets in 2019 Scottish Borders Council had this to say on its levels of borrowing:

"The council’s liabilities associated with capital borrowing totalled £194.4m at 31 March 2018.

“This sum represents outstanding principal sum associated with the past capital investment decisions of the council and its predecessor authorities.

“The debt, which is financed predominantly via long term borrowing from the Government sponsored Public Works Loans Board, is broadly in line with the average debt level for Scottish local authorities.

“Most of this borrowing, undertaken to invest in the creation and enhancement of assets such as schools, bridges and roads and flood protection works, has been financed via long-term loans at favourable interest rates with varying maturity profiles.

“In order to ensure the most effective management of this debt, the council operates a loans fund.

“The level of capital borrowing undertaken by the council and the associated debt accounted for on the balance sheet is monitored and regulated using the Chartered Institute of Public Finance and Accountancy’s prudential code which ensures that borrowing by the council for capital purposes remains both affordable in the short term and financially sustainable over the longer term.

“The prudential code places limits on the level of borrowing which a council can prudently undertake, known as the operational boundary, and places an overall limit, known as the authorised limit, beyond which the council cannot undertake any further borrowing.

“Scottish Borders Council debt is significantly below both the operational boundary and our authorised debt limit, demonstrating the prudence of our approach."