£97 Million Lifeline: Councils Turn to Borrowing to Solve Financial Woes

Overview

In a significant move aimed at alleviating severe financial strains, the government has relaxed budgeting rules for four councils in the South East, enabling them to borrow a total of £97 million to balance their budgets.

Details of the Borrowing

The councils affected include:

  • Woking Borough Council (WBC): Potentially borrowing £74.6 million.

  • Medway Council: Possibly borrowing £18.4 million.

  • Worthing and Eastbourne Borough Councils: Each eligible to borrow £2 million.

This funding can be sourced from Treasury loans or generated through asset sales, a shift from traditional rules that typically restrict councils from using borrowed funds for daily operational costs.

Government Support

Local government minister Jim McMahon emphasized the government’s acknowledgment of the difficult circumstances facing councils, reaffirming commitment to restore stability within local governments. This initiative is part of a broader strategy, where £1.31 billion in support loans has been earmarked for 30 councils nationwide for the 2025/26 financial year.

Response from the Councils

WBC’s leader, Ann-Marie Barker, welcomed the financial aid, stating it would facilitate their efforts in managing a substantial £2.1 billion debt without compromising services to residents. The council considers this support essential as they work towards a more durable financial solution.

In contrast, Eastbourne Borough Council expressed skepticism regarding borrowed funds, labelling the financial support as an “unsustainable short-term fix.” They criticized the reliance on loans for service funding, insisting on the need for the government to provide adequate financial resources to councils from the start. Medway Council refrained from commenting on the issue.

Next Steps

The plans for borrowing these funds are currently provisional and await discussions in forthcoming council meetings. Councils from the region are expected to deliberate further on the implications and practicalities of this arrangement.

Samuel wycliffe