04:50PM, Thursday 21 October 2021
The Royal Borough’s lead member for finance has provided an update on the borough’s financial situation after an opposition councillor raised concerns.
Earlier this month, Cllr Lynne Jones (OWRA, Old Windsor) said that the council could face ‘huge challenges’ if interest rates were to rise and added that, so far, RBWM had been ‘very, very lucky’ to face lower interest rates while repaying borrowing debts.
A report presented at a recent cabinet meeting revealed that the council is projected to have borrowing debts of £203million by the end of the financial year.
Cllr David Hilton (Con, Ascot & Sunningdale) told the Advertiser the council would not be able to ‘buy its way’ out of the circa £60milllion long-term debt inherited from Berkshire County Council, for which RBWM pays around four per cent interest.
“The rest of [the debt] is short-term debt which will be covered off by capital receipts,” said Cllr Hilton.
“The capital receipts far, far outweigh the debt as it stands. One of the things that COVID has done is push back capital receipts on some of the projects that we have.
“Like every other council, we work with companies who provide advice and guidance on where interest rates are likely to go and all aspects of treasury management.
“As soon as we see there is a probability of interest rates going up, we will begin to move some of our short-term debt into long-term debt and capture the lower interest rates.
“At the moment, the short-term interest rates are so attractive that it’s not sound financial practice to move any money into longer-term debt because there’s too big a gap.
“Our planning is done on the basis of higher interest rates, but we’re capturing the lower interest rates for short-term debt.
“Luck has got nothing to do with this, it is actually sound financial management.”
In response, Cllr Jones highlighted that the council had a pensions deficit of around £80million to ‘add onto’ the borrowing deficit, and that the borough had already began to move between different fixed amounts.
“We don’t know how much we’re going to make from capital receipts yet because it’s development,” said Cllr Jones.
“We all know the construction costs are going up as we speak, and borrowing’s going up.
“The main capital receipts are coming from the Borough Local Plan, which is basically Maidenhead Golf Club – that’s where the bulk of our capital receipts are looking to come from.
“That’s not been hit by COVID at all, that’s the fact they (the administration) haven’t been able to get the Borough Local Plan through.”
Cllr Jones added that she believed there was ‘better sound financial management now’ due to the recent work of senior officers but reiterated her view that ‘the administration has been very lucky because interest rates have been historically low’.
“If interest rates had gone up in the last couple of years, we would not have been able to suffer the borrowing costs on the amount that we’ve borrowed because it wasn’t in the medium-term financial plan that we’d still be carrying this debt, so they have been very lucky,” she said.
The UK has voted to leave the European Union in yesterday's referendum - and while the Royal Borough of Windsor and Maidenhead fell into the remain camp, Slough voted to support a Brexit.