Bath and North East Somerset Council should use savings achieved through lower interest rates on debt repayments to protect services to children and the elderly, Conservative councillors have urged.
The Council recently announced that it expects to save up to £1.7 million a year through restructuring its debt to take greater advantage of Britain’s historically low long-term interest rates. The savings will be achieved by reducing the amount of external debt the authority holds, and instead using the Council’s excess ‘cash-flow’ to effectively borrow money from itself to fund capital projects.
Conservative councillors have said this is a sensible move in the short term, though have warned that it will result in more external borrowing in future years.
They have called on the Liberal Democrat-run authority to use the savings it will make to help protect to Adult Social Care and Children’s Services, which are currently facing budget reductions of over £5 million in the coming years.
Cllr Charles Gerrish, Conservative Shadow Resources spokesman, has tabled a question to the Liberal Democrat Cabinet at next week’s public Cabinet meeting calling for these services to be prioritised for additional funding.
Cllr Gerrish said:
“The priority must be for the Council to protect services to elderly and vulnerable residents, as well as children and young people.
“As a result of Britain’s historically low long-term interest rates B&NES expects to be able to save up to £1.7m a year through restructuring its debt. We believe the Council should use these savings to help protect the Adult Social Care and Children’s Services budgets, which the Council is putting under tremendous pressure in the next couple of years.
“We have therefore called on the Lib Dems to make these services a greater priority in the Council’s next budget round.”
Commenting on the Council’s debt restructuring, Cllr Gerrish added:
“Using the Council’s excess cash-flow to fund capital projects will mean the authority sacrifices the interest it makes on this money, but when interest rates are as low as they are right now this makes sense in the short to medium term.
“However, the danger is that the Council will have to borrow more externally in future years when it no longer has the scope to borrow from its own cash balances, by which time interest rates may well have risen.”