County's soaring debt rising at almost £2m a week

By Trevor Bevins - Local Democracy Reporter 12th Dec 2024

Opposition Tory group leader, Cllr Andrew Parry
Opposition Tory group leader, Cllr Andrew Parry

DORSET COUNCIL external borrowing could increase by £100million this financial year – almost £2m a week.

At the same time the council is eating into reserves – expecting to take £60million out, half of that to support day to day spending.

And as its reserves fall so does the ability to invest, reducing its likely income further, with more external borrowing adding to interest rate payments.

None of the figures are yet final and may turn out to be better than expected … but only if capital programmes slip, as some already have, pushing the need for payments into the following financial year which starts in April 2025, or stopping some capital programmes completely.

An audit and governance committee was told that when the budget was set it forecast £225m of external borrowing by March 2025, but was now likely to reach £325m, an increase of £100m over the year.

Opposition Tory group leader, Cllr Andrew Parry, has questioned whether the figures might end up being higher than the current projections – with no savings included from transforming council services, something which his group had put into the budget when they set it in February, before losing control to the Lib Dems at the May election.

Cllr Parry also claims that the extra £100m borrowing, now expected to be needed, is likely to add £5million a year to the council's debt in interest rate payments, leaving even less money for services.

Executive director for corporate development Aiden Dunn, said the current financial climate meant tough times for local government, although Dorset Council was better placed than most. He said that although there had been changes, including a change in administration which had different priorities than the previous one, the authority would continue to function smoothly if it stuck to its financial parameters.

He said for the moment the authority was operating well within its financial limits with a capability to borrow more money, should it be needed.

"I'm nervous about the finances but I'm not waving a flag or making huge alert in that regards. In the context of local government across the country we remain in a challenging place but we're not in the area of Croydon (council), or others, who have got themselves in financial difficulty… Dorset is not in a position of financial crisis in any way," he said.

The administration's finance portfolio holder Cllr Simon Clifford said there would be a review of all capital and revenue spending plans, but many, such as the programme for reablement centres, were 'invest to save' projects which would cut council costs into the future.

     

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