Councillors’ regeneration £4,200 tab is equivalent to debt for every home in the borough

‘But taxpayers won’t foot bill’

DEBT incurred by Wokingham Borough Council is the equivalent of £4,200 for every household in the borough and is a sharp rise from the £150 million currently owed by the council.

That was the verdict from from resident Rachel Bishop-Firth who wanted to know what the council’s plans were for paying the debt – £271 million – back.

Cllr Oliver Whittle pledged that “residents will not have to pick up the cost of the regeneration” as it was being run as a commercial development.

When completed, the council estimated that it would generate £3 million a year in profit “which can be used to fund services and projects across the borough”.

He added that the proposals for the town centre regeneration were right.

“The decisions to replace the existing leisure centre and library are financially sound and offer best value to local residents,” he said.

The increase in borrowing “is to fund our capital programme which invests in schools, town centre regeneration, council-owned companies and invest to save schemes.

“Some of this borrowing is to invest in our local infrastructure such as highways, bridges and crash barriers. This is charged to the council taxpayer.

“Other elements are run more commercially, with capital investment funded by borrowing until the borrowing can be repaid and the asset provide a financial contribution to the council, thus reducing charges to residents and taxpayers.”

He continued: “The borrowing is also funded from the sale of town centre assets as the regeneration goes forward”.

And he pledged: “With current approved levels of planned borrowing and repayment, it would possible to repay all the additional borrowing between 2017/18 to 2019/20 in nine years.”

This equates to paying back £120million, plus interest, at a rate of approximately £13 million per year.

Speaking to The Wokingham Paper afterwards, Cllr Whittle said: “This increase will be used to fund the regeneration project (£68m), schools (£8m) Council owned companies (£25m), invest to save schemes (£9m) which are leisure related schemes, and infrastructure projects such as roads, bridges, crash barriers etc.

“The increased borrowing of £121m will be offset by capital receipts of approximately £246m over nine years, from the sale of houses and flats (mainly from Elms Field) as part of the regeneration project, from developers funds, Council owned companies, and from other capital receipts.

“The regeneration project itself will also generate significant income from its’ retained assets and provide rental income in excess of £3m per annum, rising to over £4m in the longer term.”

And he said the council tax payers’ money was safe: “All of the council loans are taken with known sources of repayment. In the case of loans for highways infrastructure the borrowing costs is met from within the overall council tax payment.”

But Liberal Democrat leader Cllr Lindsay Ferris was concerned at the level of borrowing, particularly if the economic picture changes over the next nine years.

“It is the council tax payer that gets the exposure. Council tax payers could end up having to pay that debt and interest,” he said.

Over the next two years, the council’s central Government grant will be reduced to zero and new rules could see the council sending money to them instead.

“It’s like a cake,” Cllr Ferris said. “The top could be cut off by the government and cut at the bottom to pay interest. It’s a real threat to services we have at Wokingham. “I am very, very concerned.

“They have already overspent the best part of £1m in this year’s budget and we’re only in November – what will it be like in March?”

However, Cllr Whittle said that the regeneration will meet its costs.

“Interest rates may rise, but leeway for this possibility has been built into the project business case.

“The business case breaks even already with the current number of pre-lets in place.

“With all units let, there will be a significant annual surplus available to fund vital council services.”

EARLIER this week, research revealed that the average Briton is in the red to the tune of £8,000 …plus their mortage.

And the same survey found that six million of us feel we’ll never be debt free during our lifetimes.

So the news that the borough council expects to pay back £270 million in nine years raises eyebrows.

The scale of the borrowing is scary: a debt mountain that could be just fine, or it could be built on a house of cards.

All it will take is one credit crunch, one financial hiccup or one house building recession for everything to fall down, and fall down quickly.

The Executive last week promised that the council taxpayer will not be responsible for this massive debt.

But it still equates to £4,200 for every household in the borough.

That is a challenging sum in this tough environment.

While we support the regeneration works, without a firm plan in place this is a debt that might never be paid off.