Opposition Conservatives at Cotswold District Council have expressed further concern over the Lib Dem administration’s £65.8 million borrowing and investing strategy.
At last week’s full council meeting, the Lib Dem administration lifted the threshold where spending needed to be scrutinised and approved by full council from £1 million to £3 million.
This means that from now on, the Lib Dem cabinet will be able to borrow and invest up to £3 million without having to clear their plans with the other councillors. Opposition Conservatives claim this £3 million tolerance is dangerously high considering the size and scale of the council (CDC only has an annual net budget requirement of £12 million per annum).
The Lib Dem administration also approved their first financial investment as part of their new £65.8 million commercialisation strategy.
In theory, Cotswold District Council can borrow money from the Public Works Loan Board (PWLB) on favourable interest rates. It can then lend this money to other organisations (also at favourable interest rates) and theoretically make a small arbitrage profit in the process.
On this basis, the council have now approved a plan to borrow £3,753,000 from the PWLB and then immediately lend this money to a housing association to facilitate a housing development in Moreton in Marsh. £1,897,500 will be borrowed and then leant over a 50-year period, the rest on a short term basis.
In return for beneficial interest rates over 50 years, the housing association has agreed to install solar panels on 15 homes at Davis Road, Moreton in Marsh, (worth around £45,382).
In addition, the loan will hopefully yield the council £10,000 per annum (on current interest rates), but this is well below the minimum 1.5% target return the Lib Dems benchmarked when they adopted the borrowing and investment strategy in September 2020.
Cllr Richard Morgan, leader of the opposition Conservative Group said,
“Whilst we support affordable housing and green homes, borrowing and then lending £1.9 million for minimal return over 50 years is risky and makes no financial sense to us. This development would go ahead with or without any involvement from CDC, whether we loan the money or not. If this is all about £45,382 of solar panels, we could fund these from council reserves or commuted sums as we did at the Stockwell’s development (also in Moreton in Marsh).
We also have serious concerns over the Lib Dem tax, borrow and spend agenda. To up the borrowing and spending scrutiny threshold from £1 million to £3 million is dangerous for a council of our size. It’s clear the Lib Dems intend to accelerate their tax, borrow, and spend agenda and want as little public scrutiny as possible whilst they are doing it.
It needs to be remembered that when the Lib Dems won control of the council in May 2019, they inherited a debt free council, which had balanced budgets and £33 million of financial reserves. It had the seventh lowest district council tax in the country and was statistically the second most efficient in the country. It is amazing how quickly the Lib Dems have ruined this legacy.”