Fears over financial risk taken by local authority, reports James Cracknell
Enfield Council has agreed a new capital programme that includes “unashamedly ambitious” plans to spend more than £2billion on various projects over the next decade.
The bulk of the investment is in new homes and associated infrastructure, with £520million earmarked for the council’s flagship redevelopment project, Meridian Water, including a £156m government grant awarded to the Edmonton housing scheme last summer. The local authority is also planning to build 3,500 council homes across the whole borough, requiring £656m in borrowing over the next ten years.
Other investments include £26m towards a new specialist care home in Winchmore Hill and £21m on school expansion work at Durants, West Lea and Springfield schools, as part of nearly £93m in planned spending on education. Another £71m is earmarked for improvements to highways over the next ten years, £47m on redeveloping Montagu Industrial Estate, £10m on expanding cemeteries, and £5m on installing LED street lamps.
Serious concerns have been voiced, however, over the amount of risk being taken by the council. Projected borrowing levels have doubled, with the council needing to secure £1.22bn in loans to fund its capital investment plans between now and 2030. This comes on top of existing borrowing, which has increased by 52% over the last two years from £597m at the start of 2018 to £911m at the start of 2020.
Opposition Conservative councillors claim “rampant” borrowing – which comes after a government-imposed cap was lifted in 2018 – leaves the authority vulnerable to a rise in interest rates. Problems could also arise if the council is unable to meet its projected returns on investment or fails to make its scheduled cost savings, while council documents warn uncertainty over Brexit “may result in volatility in the property market… consequently impacting the capital strategy”.
In a budget discussion earlier this month, Conservative leader Joanne Laban warned: “If you continue to spend, the interest on our debt will surely impact day-to-day services. If you don’t get a return on investment, it will be the very people the administration wants to help that feel the failure the most.”
It is not just the Tories that are sounding the alarm, with a former Labour cabinet member telling the Dispatch the council could be heading for a financial reckoning. Alan Sitkin led the economic regeneration portfolio under previous council leader Doug Taylor, who was ousted by Nesil Caliskan two weeks after he boosted Labour’s majority at the 2018 local election. Alan said: “We increased our capital programme as well, but how they have got it to £2.25bn is frightening.
“It is almost like she [Cllr Caliskan] is risking Enfield’s solvency in the hope the government will bail her out down the road.”
The council leader dismisses these concerns, describing the local authority’s budget as “sound” and the capital strategy as an “invest to save” plan. She told a recent cabinet meeting: “We want everyone to fulfil their potential. We will not sit on the sidelines and let the housing market get worse, we will build more council homes and we will intervene where we need to.
“To do all these things we have to be a modern council. While we want to in-source as many council services as possible, we will invest in things that help residents access services.
“The government continues to abandon the people of Enfield, but this Labour administration won’t. We will stand up for local people.”
While the government is increasing the amount of grant funding it gives to local authorities for the first time in ten years – with a one-year boost of 6% – the council still only receives around half of the money from central government that it did a decade ago. In its revenue budget for 2020/21, the council is planning to make another £11.9m in cuts to services on top of the £178m saved since 2010. Spending on youth services, however, has been boosted by a new £1.3m grant from City Hall.
Reserves will be reduced by £1.5m over the year, but Mary Maguire, cabinet member for finance, assured councillors: “Our reserves are at an acceptable level.”
Ongoing demographic pressures have led councillors to agree another rise in council tax of just under 4%, with half of this increase being allocated solely for spending on adult social care. People living in an average Band D property will be paying £64 more in 2020/21.
Cllr Caliskan added: “This budget reflects this Labour administration’s values and priorities, and that is to first protect the most vulnerable in our community. This budget is unashamedly ambitious for the borough.”