Debt to hit £626 million at Staffordshire County Council

A cabinet meeting report revealed the council will be in £626m of debt come March 31 next year, the end of the 2016/17 financial year.

The debt has built up following years of council borrowing for general maintenance of the county, such as roads and schools, as well as bigger projects such as the Rugeley bypass.

It comes as council bosses consider a 3.95 per cent in council tax for this year.

However, the council insists that none of the extra money raised will go toward paying off the debts.

Ian Parry, Staffordshire County Council's deputy leader and cabinet member responsible for finance, said: "Every day hundreds of thousands of people in Staffordshire use our roads, schools, business parks, footpaths and other structures that the county council has put in place over the decades.

"This essential infrastructure, which enables people to live and work, has been mainly paid for by long-term loans, similar to the way people have a mortgage. More recently the county council has used its own cash reserves to fund this type of investment which has generated significant savings through lower interest payments.

"Major infrastructure works such as road improvements or business developments bring in significant investment and jobs to Staffordshire which is a top priority for the county council."

After 2017 the debt is forecasted to slowly decrease. It is estimated to reduce to £621m by March 31 2018 and £616m by March 31 2019.

Councillor Parry said: "The UK economy has improved in the last few years but

we will continue with our sensible approach of investing carefully and using cash instead of borrowing to save money." However the council may be forced to take out more loans because of the option some LOBO loans lenders have. They have the option to amend the interest rate on a pre-determined date to a higher rate.

Despite this being 'judged unlikely' the report states the County Council will have to either 'take up a shorter term and cheaper loan, say with the Public Works Loan Board (PWLB)' or 'finance the balance from cash' if this situation arises. It is not the only council with £600m debt.

Wolverhampton council also hit the mark late last year.