Is council’s luck running out?
Borough: Councillor fears deficit and rising cost of debt
The Royal Borough’s financial situation could be ‘in trouble’, a councillor has said, after it emerged that the ‘longevity’ of the pandemic had led to an overspend of £343,000 for the current financial year.
Cllr Lynne Jones (OWRA, Old Windsor) said that the council could face ‘huge challenges’ if interest rates were to rise in the near future, adding that, so far, RBWM had been ‘very, very lucky’ to face lower interest rates whilst repaying borrowing debts.
At a cabinet meeting on Thursday, Cllr David
Hilton, lead member for finance, presented a report which revealed that the council was expected to have £203million of borrowing debt by March 2022.
He also revealed that predictions that COVID-19 would ‘cast a long, dark shadow’ over the 2021/22 financial year’s budget ‘had proved to be correct’, with a projected overspend of £343,000 by the end of the financial year.
This resulted in a general fund reserve position of £6,716,000, a mere £16,000 above the minimum level approved at full council in February.
Nevertheless, both Cllrs Hilton and Andrew Johnson, the leader of the council, said they were ‘confident’ that overspends could be balanced before the end of the year, with the former stating that ‘all options’ were being considered to ‘manage and mitigate overspends’.
The issue of borrowing debt, however, would need to be addressed by receipts from capitalisation, predominantly the golf course, which is unlikely to be accessible to the council until 2025 at the earliest.
At Thursday’s meeting, Cllr Johnson (Con, Hurley and the Walthams), said: “It is, of course, in the public domain that the council will result in the taxpayer receiving a significant capital receipt [from the golf course].”
Speaking to the Advertiser after the meeting, Cllr Jones said that the council would have been ‘struggling’ to repay its borrowing debt had interest rates been higher and added it would not be clear until later in the year whether RBWM could recover some of the overspends.
“We’ve been very, very lucky that interest rates have been the lowest they’ve possibly been,” said Cllr Jones.
“Without that we would have been really, really struggling with our borrowing costs.
“If interest rates do go up, that’s going to put a huge challenge into the budget, because £203million is a lot of money.
“Even if the BLP comes through, the golf club has still been put back another two or three years, so we’re going to be paying for that for some time.”
Cllr Johnson and Cllr Hilton could not be reached for further comment.