Council set to borrow £30 million

Tomorrow evening councillors will be asked to support a plan to borrow £30 million in an urgent change to their budget arrangements.

It is proposed that due to reductions in central government funding over the remainder of this decade that the Council has been forced, along with many other councils, to examine alternative revenue streams.

In this particular case the Council will pursuing a capital investment programme which it is hoped would generate capital receipts and/or revenue streams.

In layman’s terms this would potentially involve the Council entering into speculative development, i.e. funding the construction of a cinema, retail premises or restaurants in the hope that they can recoup the investment in rental income over time.

In fact, the Sittingbourne Town Centre regeneration proposals is the example provided, although no specific allocation is being attributed to this.

It is proposed that individual decisions will be made on their own merits at Cabinet level, i.e. without requiring consent from all councillors or political parties.

So is this a ploy for the Council to help fund the regeneration?

Why are the Council not using their £15 million reserve?

What experience does the Council have in the speculative development business? 

So many questions, and not a lot of answers at this point.

Update: 

Cllr Bowles has just stated at a public meeting that there are currently no plans to use any of this money for the regeneration project. In fact there are currently no schemes in the pipeline, this would be used for as yet unidentified projects in the future.

Update 2:

Conservative Councillor Lloyd Bowen has stated that this is only permission to arrange a £30 million loan if needed rather than permission to take the loan.

This subject he gathers has created a bit of a storm and he hopes that he can perhaps clarify the situation.

"In short the council wanted to have the financial ability to negotiate (where appropriate) and have some funding potentially available to help secure future development in the borough. In essence it is like an overdraft that could be called on if needed."

"The council, as yet, has not applied or received a loan and has not identified any items where a loan maybe required. Any major expenditure will still need to go through the appropriate scrutiny procedures."

"You may be saying ‘so what’ to this which I totally understand so a little bit of background is that by 2020 it is intended that Swale will need to be self-financing and grants from government will cease. This will be a problem for any council."

"We therefore need to invest in items that will generate income for the borough as a whole and this potential loan will help to achieve that and provide sufficient returns on investment that makes it self-funding. We do not want to cut front line services nor do I want to see increases to council tax and this option will, I hope, help allow the council to meet this aim."

Andy Hudson
Sittingbourne.Me