As quoted in the Swindon Advertiser, Matthew Courtliff appeared to be suggesting that the extra borrowing for the council’s Housing Revenue Account would mean higher rents for council tenants. He asked
“Is it prudent for Labour-run Swindon to borrow £150 million when the council is on the edge of bankruptcy, overspending by £15 million this year?”
He said that 89% of this year’s council tax increase is needed to pay debt interest and
“Council tenants now face a similar situation with their rents – £250 million is £25.000 on each of the council-owned residential properties.”
This is wrong. Tenants do not face a similar situation. The rent that council tenants pay is unaffected by the borrowing. Rent levels are determined by national government. They set a maximum annual increase which is unrelated to the borrowing that individual councils have.
Matthew also said “We borrowed £395 million over 20 years. This included investing in the HRA…” In fact the borrowing which the council took on in 2012 wasn’t taken on the for the benefit of tenants. The extra ‘debt’ of £138.6 million was imposed on it by central government as part of the new finance system introduced. It was the result of financial manipulation by the Treasury which fleeced tenants through the cost of servicing the so-called debt. Swindon only had £11.8 million outstanding historic debt associated with borrowing for previous building programmes.
Kevin Small was certainly right when he said that if that £5m had been used every year for repairs and maintenance, the council would be borrowing much less.
In fact the £5 million payment was not used to pay off HRA debt. The £138.6 million wasn’t borrowed as one lump sum. There were 22 loans over different timescales. These were ‘maturity’ loans from the Public Works Loans Board, meaning that the borrowing is repayable at the end of the loan period.
The first of the loans was not due to be repaid until 2023, so the transfer of £5 million from the HRA to the General Fund was not necessary. The reason the council did it was to provide extra finance for the General Fund. It had to pay the interest of £166,000 a year for each £5 million, but It was cheaper than taking on new borrowing from the Public Works Loans Board.
By the end of the 2023/24 financial year £60 million has been transferred from the HRA to the General Fund compared to the £4.3 million debt that was due to be repaid to the Public Works Loans Board by then.
The transfer of the £5 million was for the benefit of the General Fund to the detriment of the tenants. The Council told us that it would save the HRA £166,000 interest, but at the cost of losing £5 million which could have been spent on the homes! Not exactly a good deal.
I might also add that the council was originally proposing to start with transferring £8 million a year from tenants rent, which would have meant very little renewal of components taking place. Tenant representatives argued forcefully that £8 million would leave very little available for our homes. We managed to persuade them that the transfer should be no more than £5 million, securing an extra £3 million a year.
If the annual transfer hadn’t taken place then, taking account of the interest payments, the council could have spent more than £58 million extra on the homes.
Your readers should also be clear that borrowing by the HRA is serviced by the council tenants alone, through their rent.
Martin Wicks
Printed in the Swindon Advertiser March 1st 2025
Martin Wicks 