County borrowing set to grow

The council maintains it has to borrow, after years of being debt-free, to help provide services and keep council tax at an affordable level, because it gets the lowest Government grants of any county in the country.

However, a report by finance director Richard Hornby prepared for the council's policy and resources select committee shows that interest charges paid by the council, as a proportion of its spending, are still well below the average in a group of similar local authorities.

"This is largely due to the county's debt-free position up to 2000-01, compared to most of the other authorities, which have been borrowing for considerably longer," said Mr Hornby.

West Sussex debt financing as a percentage of net spending was 6.48 per cent, compared with 9.98 per cent in neighbouring East Sussex and 7.41 per cent in Hampshire. The Kent figure was 11.7 per cent.

The report shows that total West Sussex borrowing was 334m as at March, 2008- equivalent to 430 per head of the population.

A county council spokesman said a figure for 2009 was not yet available, as accounts were still being finalised.

The report said the council aimed to keep 'core borrowing' at a relatively low level relative to other authorities, planned at 27m in 2009-10 and 30m in each of the following three years.

This core borrowing was supplemented where necessary by additional borrowing to meet specific exceptional service need, such as the materials resource management contract, which required 122m of additional borrowing over the period up to 2012-13.

Extra borrowing to meet exceptional service need would total 18.3m in 2009-10, 51.6m in 2010-11, 4.9m in 2011-12 and 55m in 2012-13.

The waste contract deals with 'black bag' rubbish that is not currently recycled or composted and is ending up in landfill sites.

Mr Hornby said that if the county council continued to borrow 30m a year, and including investment for the waste contract, borrowing would reach 988m by 2025-26.

This borrowing would require annual payments of 84m, equivalent to 12 per cent of the projected 2025-26 non schools budget.

Borrowing 30m a year required 2.7m to be added to the revenue budget every year, which was equivalent to 0.7 per cent on council tax.