BCP Council's billion pound debt threshold discussed at meeting

A meeting of the corporate and community overview and scrutiny committee on Monday considered a report from the council's chief finance officer on the medium-term financial plan update.

As well as tackling the cost of living crisis and its impact on the budget, the report also detailed why the council want to increase their debt threshold to more than a billion pounds.

Read more: Why BCP Council want to raise debt limit to more than a billion pounds

Clashing with opposition councillors during the meeting, council leader Drew Mellor said the road-map for future spending, which could see BCP borrowings more than triple to £1.33billion, is investing for the future.

But opponents say it will simple saddle council taxpayers with paying interest on debt.

What happened at the meeting?

Cllr Mellor and Christchurch councillor Mike Cox, who says the council leadership is living in a parallel universe, traded arguments over future spending plans.

Cllr Cox says the council is over-reaching itself, is using complex financial arrangements to borrow which the chief financial officer, Adam Richens, has warned could be risky, and is preparing to raise debt levels which are unnecessary.

“This is just pushing he problem further down the line…it’s like a Ponzi scheme, to be funded by the next generation,” claimed Cllr Cox.

Who else raised concerns?

Cllr Lewis Allison, one of the younger councillors on the authority, told the council leader that in his view the Conservative administration was just pushing financial problems into the future where it would become the problem of generations to come.

Cllr Millie Earl said residents saw the council differently than its leaders – not as a money-making machine, but as a provider of services.

“You are putting business matters first, rather than residents, and I’m not happy about it,” she said.

What did the leader say?

But Cllr Mellor challenged his critics to say which housing projects and infrastructure improvement plans they would cancel if they wished to limit council debt, which, he said, was well within the means of the council to take on, being one of the least borrowed councils in the country for its size.

Cllr Mellor said that further savings would be made by transforming council services, which he claimed, when achieved, could save £50million a year, every year, although there would be a cost to making the changes, including some redundancy payments.

He also pledged that the council would take advantage of changes in Government legislation to potentially double the level of council tax paid by second home owners and said his administration was constantly looking for ways to make services more cost-effective.

But Cllr Cox said while he marvelled at the council leader’s constant optimism the reality was that the authority was calculating, each week, whether or not it could pay its bills and had yet to find the £61million transformation costs – a claim which Cllr Mellor denied saying the authority’s spending plans remained on track and was investing in services, not cutting them.

What else was heard? 

The meeting heard that council borrowing currently stands at around £487million, although it has been agreed that this could be pushed to £850million without the need to come back to councillors.

Mr Richens said that other financial pressures were beginning to emerge – with rises in cost of living likely to add £13.3m to this year’s budget and £18.7million in 2022-23.

What was the result?

A move to rein back the borrowing was defeated by a one-vote margin – although had it been approved it would only have come in the form of advice to the cabinet.