How much does £1 billion look like if its cash? Probably a lot more than this! That’s what Liverpool Council’s debt level could be if we don’t check it.
Last week my colleague Cllr Makinson did some basic research into the Council’s debt levels. He found that if the Council invest in Everton our total borrowing will exceed £1 billion. Its already £634 million that’s £2,500 for every household in the City. The Council has already agreed a further £100,000,000 by 2020 and that’s still two years off so doubtless there will be other pressures that need funding.
Of course, the Council says that each investment it makes is sound and either saves money or makes money. It also says that each deal is scrutinised by our external auditors who are one of the Big 4 accountancy chains. Of course, that is exactly what the management of Carillion said and their books and deals were also looked over by a Big 4 accountancy practice?
Liverpool’s record is not great. On the day that details of the Everton deal were announced (there are let us not forget two different views of what that deal is one from the Mayor and none from Everton) a report went through the Council says that on just one project, the Parklife Project, the Council’s projected borrowing had gone up by 63% in just 9 months.
Parklife is also a football deal. This time with the FA. Over the course of the design and preparatory work the costs had gone up. The FA put no more money in as all the risk had been transferred to the Council so our borrowing shot up. This deal did not come to committee so that we could scrutinise it as the Council claimed it had to be dealt with as a matter of urgency some three years after the deal was first approved and 9 months after unreliable figures were put forward
The fact is that all borrowing has an element of risk. At the level of indebtedness projected one bad deal could trigger other needs to refinance deals and we could be talking about taking money as a first charge on our income. The result? Further cuts in our services.
There is no point in Corbyn lecturing the Tories on relationships with the private sector if his own mate in Liverpool Mayor Anderson is going around making deals against which we have no competence to research them and which do not share the risk equally amongst the potential partners.
We have been assured by the Mayor that we will have a full opportunity to review the prosed deal with EFC and we will take the opportunity to do so IF it is actually given to us.
In the meantime here is Cllr Makinson’s press release. All figures in this can be checked against the council’s own documents on the council’s own website
Liverpool City Council debt rocketing out of control – Press Release
Liverpool City Council’s debt has soared by 35% in less than 18 months – And that’s before any money is borrowed to finance Everton’s new stadium.
Research by the city’s Liberal Democrats reveal the Labour council has increased the city’s total debt levels by £164 Million, just in the 17 months between June 2016 and October 2017.
Liverpool’s total borrowing now stands at £634 Million as of 31st October. That’s equivalent to a £2,500 debt for every household in the city.
Future borrowing plans already committed will increase borrowing by a further £100 Million by 2020. And council borrowing is set to break the £1 Billion barrier if the council goes ahead with plans to finance Everton’s new stadium at Bramley Moore Dock.
Liberal Democrat councillors warn that the Labour council is laying the foundations for a future financial meltdown.
Their Deputy Leader in Liverpool, Councillor Andrew Makinson said, “We’ve not seen council borrowing on this scale since the 1980’s, when a Militant Labour council almost bankrupted our city with loans from Swiss and Japanese Banks. This is Carillion style borrowing and we must learn from the potential consequences of the Carillion disaster. When you borrow money it needs paying back. When you borrow money to lend it to someone else it involves risk”
“Until now, the council has been lucky to benefit from historically low interest rates. But council finance officers are now raising alarm bells that interest rates are set to rise over the next few years. These higher interest payments will result in there being even less money for basic council services.”
“All council’s need to borrow money from time to time, but this Labour council seems to have developed an unhealthy addiction to borrowing money for questionable schemes, and leaving our city’s children to pick up the future bill.”