Debate over rising council debt levels

A significant chunk of council borrowing relates to investment at its Meridian Water development, where not a single home has yet been built

Labour administration seeks to reassure opposition Tories over £18m cost of council’s borrowing, reports Simon Allin, Local Democracy Reporter

Senior councillors have defended spending millions of pounds on paying down around £1billion in debt as an “investment in the borough”.

Members of the Labour administration said borrowing large sums would enable Enfield Council to invest in homes, infrastructure and the local economy.

It came during discussion of budget plans that includes a 4.99% rise in council tax for the next financial year, with 3% of that being used solely to fund adult social care.

Tory councillors Joanne Laban and Edward Smith raised the issue of debt at a meeting of the overview and scrutiny committee last week. Cllr Laban asked how much of the revenue budget would be spent on interest on the £1bn sum.

Mary Maguire, cabinet member for finance, said the money paid on interest charges was included in the revenue budget. She added: “What we are doing is borrowing money to invest in the borough to build homes, to improve some of our homes and ensure they are fit places to live, and to invest in other infrastructure – which we will get a return on – and there is a huge social value to our borough and our residents.”

Council leader Nesil Caliskan compared the council’s debt to a mortgage, saying borrowers would pay interest on a loan like an investment in a home. “The debt pays for new care homes, affordable homes for people in the borough, roads, infrastructure, public realm, and in some instances supporting the local economy,” she added.

“It is money well spent and a reflection of an administration that wants to do something to improve the borough.”

Fay Hammond, the council’s executive director of resources, said interest and other borrowing charges totalled £18million, but pointed out borrowing sometimes generates income and “efficiencies”.

Cllr Smith claimed the money spent on debt repayment was “about a quarter of the cost of the adult social care department”. He added: “Choices have to be made about what is desirable and where money can be spent.

“If there is a huge debt mountain of £1bn – which is planned to go to £2bn in the next five years – that is money that would otherwise be spent on frontline services.”

Cllr Caliskan responded: “The choices we talk about are directed by political values – and for us, those values are about making sure people have a decent place to live, providing homes for them, and making our town centres economically vibrant places where people can find a decent job.”

Earlier in the meeting, in response to a question by committee chairman Susan Erbil, Cllr Maguire assured councillors Enfield was not in a similar position to Croydon Council, which effectively declared itself bankrupt last year.

Cllr Maguire said Enfield had not “engaged in any commercial activities outside the borough” and had instead decided to borrow to invest in Enfield.