Ashfield Council boss says finances are ‘well-managed’ amid concerns over £100m borrowing

Ashfield Council’s finances are being “managed effectively”, the authority’s chief executive has insisted, amid concerns over the council’s almost £100 million in borrowing.

By Andrew Topping
Monday, 31st January 2022, 7:55 am

Theresa Hodgkinson, who took over the role six months ago, issued the statement during the latest full council meeting in response to what she described as ‘misleading’ messages about the authority’s finances.

Concerns were raised on social media that the authority is in a difficult situation, after a treasury management report confirmed the high borrowing figure.

The borrowing has accrued over the years as the council invested in a large property portfolio, with purchases including industrial units in Atherstone Falkirk, Grangemouth and Wishaw, along with a hotel in Stratford-upon-Avon.

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Theresa Hodgkinson, Ashfield Council chief executive.

The report states the external borrowing level currently sits at slightly below £100m.

However, it also states this is less than half the authorised limit – the most money the council could afford to have in outstanding borrowing – of £217m.

The borrowing is expected to increase to almost £125m by 2025, when the authorised limit is forecast at £199m.

The figures led to concern from Lee Anderson, Conservative MP for Ashfield, who offered to meet with the council so it can ‘resolve this disastrous mess’.

He suggested the authority needs to get a plan in place to bring it down and said he will be contacting the Government about the situation.

But speaking in the meeting, Mrs Hodgkinson issued a statement to ‘reassure residents … that the council’s finances are well-managed’.

She revealed the authority has received a report from the Local Government Association, which undertook a financial ‘health-check’ on the council at the chief executive’s request.

The full report, she says, will go before the cabinet in February, but gave the assurance the authority’s finances are ‘being managed effectively’.

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Robust

Mrs Hodgkinson said the report confirms the authority has ‘consistently spent within its budget’, has a ‘robust budget-setting and budget monitoring’ procedure, and has ‘managed well’ during the coronavirus pandemic.

And commenting on the borrowing, she explained why the authority took the decision to invest in the properties and confirmed the profit these investments make.

She said: “The annual rental income from these [investment] properties covers both the annual debt and interest costs associated with them.

“In addition, it makes a significant annual contribution well above £2m towards the operating costs of many council services.

“Without this additional rental income, we would not be able to provide some of our valued services.

“The reason the council adopted the policy of acquiring investment properties was to enable it to help fund and protect the vital services that our residents quite rightly expect to receive.”

Other Nottinghamshire councils have similar levels of borrowing as a result of investment plans.

A report from Mansfield Council in September confirmed the authority has outstanding borrowing of roughly £90m – a figure that has fluctuated in recent years.

Nottinghamshire Council’s borrowing is close to £600m. However, Coun Richard Jackson, council finance committee chairman, previously described the figure as ‘healthy borrowing’ which allows the authority to invest in services.

Councils regularly borrow money from the Public Works Loan Board, a Government entity set up to support local authorities with loans at a favourable interest rate.

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