Barking and Dagenham Council borrowing over past 10 years tops £1billion, report shows
PUBLISHED: 17:00 17 June 2020 | UPDATED: 16:28 22 June 2020
The council has borrowed more than £1billion over the last 10 years.
Barking and Dagenham Council’s borrowing amounted to £1.116bn but did not break the local authority’s authorised limit of £1.152bn.
The sum did, however, exceed the town hall’s £1.052bn operational boundary limit as a result of short term borrowing to fund an investment, a council report detailing Barking and Dagenham’s finances shows.
The total borrowing cost incurred by the council last year was £12.37m from a budget of just over £500m, amounting to less than paying back 2p on every £1 borrowed.
Cllr Dominic Twomey, the council’s finance chief, said: “We have a duty to protect public money.
“But we also have a duty to to ensure we continue to run as many services as we possibly can above and beyond statutory levels.”
He explained that a decade of austerity meant local authorities across the country were forced into borrowing, pointing to Spelthorne Borough Council, which borrowed up to 50 times its income over permitted limits.
“You just can’t play fast and loose with public money,” he told cabinet colleagues in an online council meeting on June 16.
He went on to say that the “prudent” team managing the council’s coffers had a good year “by and large”, adding that the authority complies with limits and indicators.
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And Barking and Dagenham had a “very successful” year in comparison with other councils when it came to the interest rates it received.
He welcomed an average return on interest of 1.35 per cent for being more than half a per cent higher than London councils similar to Barking and Dagenham.
Work by the town hall’s companies, including Be First, could also benefit the borough if the economy starts to struggle in the face of the coronavirus pandemic.
The report shows that in the 2019-20 financial year, Barking and Dagenham held investments totalling £346.95million, up from £286.84m the year before.
Interest earned was £8.8m, up £2.2m on a budgeted £6.6m. Interest payable by the council amounted to £34.2m.
On loans it made, the council saw an average return of 3.57pc, down from 3.63pc in 2018-19.
Total long-term general fund borrowing was £579.7m, made up of loans from the market, the Public Works Loan Board, other local authorities, the European Investment Bank and the Green Investment Bank.
“Everything is pinned on our growth strategy,” Cllr Twomey said on the council’s borrowing. “Ultimately, the pandemic has put a slowing down on that. I’m confident we can take opportunities that present themselves.”
On June 22 this article was corrected to show that Barking and Dagenham Council’s total borrowing was £1.116bn over the last 10 years and not £1.116bn in the 2019/20 financial year as originally stated. The 2019/20 total borrowing cost has been added.
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