A SHOCK report into Barnsley Council’s financial commitments and subsequent future borrowing needs shows the local authority now has a debt totalling more than £800m, the Chronicle can reveal.
Councillors met on Wednesday to discuss the findings, which were revealed in a report compiled by finance director Neil Copley.
Local authorities’ external debts - which refers to the amount councils owe through either short-term or long-term loans - is capped at just over £1bn through the Local Government Act and Barnsley’s figure topped £836m at the end of the 2022/23 financial year.
The sum is enough to buy several Premier League football clubs including West Ham and Everton - both of which are valued less than the council’s debt.
Mr Copley’s report said: “It is a statutory duty for the council to determine and keep under review the affordable borrowing limits.
“During the year to March 31, the council has operated within the prudential and treasury indicators - no difficulties are envisaged for the current or future years in complying.
“The council continue to assess its position in terms of its financial resilience and ability to continue to meet future financial challenges - this position will be kept under close scrutiny so that the council’s future policy choices are not overly constrained and to ensure that its long-term financial sustainability is maintained.
“While there are no issues foreseen from a credit perspective - there are regulations in place to avoid local authorities going bankrupt - officers recognise the reputational risk associated with such investments and take this into consideration when deciding where to invest the council’s surplus cash.
“There was a £32.7m decrease in total external debt during the year.”
The report shows long-term loans - charged at an interest rate of 4.21 per cent - top £90m, while cheaper agreements of two per cent are in place for £6.7m worth of cash from other local authorities.
No new long-term borrowing was done in 2022/23, although £144.8m will be required by the end of 2024/25, of which £71.1m will be on fixed-rate deals.
The £144.8m includes planned capital investments of £55m, maturing loans which will cost £105m and more than £15m set aside to repay debts.
Finance bosses previously admitted the council holds higher-than-normal levels of debt compared to its neighbours, chiefly due to the town centre investment in the Glass Works regeneration scheme.
“The worry is that inflation could remain stubbornly high, due to core inflation - which excludes items such as food and energy - and price rises remaining widespread across the economy due to a relatively tight economic environment.
“This means that a degree of caution must be used in terms of interest rate forecasts and long-term decision making.”
Coun Sir Steve Houghton, leader of Barnsley Council, told the Chronicle the local authority’s finances were well-managed.
“To date, long-term borrowing secured over many years has helped contribute towards 23,286 council-owned fixed assets with a total value of £1.5bn at the end of 2023.
“These assets include 18,000 council houses, 34 maintained schools - plus 54 schools that have become academies - and 729 miles of highway.
“The council also currently holds £219m of strategic reserves earmarked for projects and £25m of housing-related reserves.
“Our finances have always been well-managed - this is a testament to our fantastic employees, their long-term planning, and their drive to think outside the box.
“It is normal for councils to borrow funds relating to major and long-term capital investment programmes in this way to make improvements to their area and have the facilities to deliver quality services to the public.
“Our day-to-day revenue budget is approximately £586m per year to fund the range of services the council provides.
“Our capital borrowing is managed effectively in line with codes of practice and has been given independent assurance by an external audit.”
