Surrey Heath: council warns of "difficult choices" on finances
Photo credit: BBC/Jack Fiehn
The council noted that it is dealing with difficulties, such as rising inflation and interest rates.
BBC Surrey's political correspondent
Councillors have indicated that the council is confronted with “hard decisions” to tackle significant financial difficulties.
Surrey Heath Borough Council needs to secure an extra £4 million annually to pay off interest on loans taken out for real estate investments.
In 2016, the council took out a loan to invest in a collection of properties, which featured a shopping center and the old House of Fraser store in Camberley. The amount of debt incurred was around £170 million.
Leanne MacIntyre, a Liberal Democrat councillor and a member of the finance committee, mentioned that the council is looking at a funding shortfall that could become unmanageable in the next two to three years, alongside rising debt levels.
"Even though tough decisions are coming up, the council is ready to tackle them," she mentioned.
Increased costs have also been attributed to high inflation, rising interest rates, and the growing need for services like affordable housing.
There were worries that the council's revenue from shopping properties had decreased since the number of visitors in Camberley hasn't returned to the pre-pandemic numbers.
Ms. MacIntyre stated that the council obtained long-term loans at stable interest rates from the Public Works Loan Board and various other financial bodies.
The remaining £80 million was funded through short-term loans with variable interest rates that fluctuate based on the Bank of England's base rate.
"In recent years, the rise in interest rates has significantly boosted the indirect costs associated with our debt interest."
Council leader Shaun Macdonald stated, “The truth is that many councils are experiencing significant financial challenges. Factors like escalating inflation, salary requests, and a growing need for services—along with more intricate requirements—have led to an expected funding shortfall of £6.2 billion in the sector over the next two years.”
At the time the properties were bought, the council was managed by the Conservative Party.
Jonny Cope, the local councillor for the party in St Paul's ward, Camberley, stated that Surrey Heath's approach of borrowing funds for investment purposes is not out of the ordinary.
I believe that local councils ought to enhance their town centers. The purpose of investing in the town center was to revitalize Camberley, not to generate profit.
Stay connected with BBC Surrey on Facebook and X. If you have any story suggestions, feel free to email us at [email protected] or reach out via WhatsApp at 08081 002250.
