I WONDER how many readers of the Guardian realise the extent of our borough council’s borrowings and question whether its level of debt may be sustainable in the future.

Borrowing is being made for two separate purposes: for the traditional financing of capital expenditure and, more controversially, for the council’s optimistically-named ‘Invest to Save’ programme.

More than quarter of a million pounds has so far been borrowed for that programme, mainly for purchasing businesses such as Birchwood Park to obtain rent income. Commercial property speculation like this has been criticised both locally (not very palatable to some of our councillors) and nationally. Meg Hillier, the Labour MP and former chair of the All-Party Public Accounts Committee, has warned that ‘a crash in the value of offices and commercial centres could have a very big impact with councils suddenly owning a lot of white elephants’.

Borrowing to help finance capital expenditure is even bigger. We are in the middle of a three-year capital programme costing £1.24 billion.

Much of this expenditure is on major town centre improvements but additional minor schemes also come into play. The council is now faced with contributing the best part of £14 million towards the cost of Chapelford train station rather than the £0.5 million it indicated in its public consultation paper but – no problem – borrowing can provide a ‘get out of jail card’.

All this borrowing does not, of course, come cheaply. The council’s credit rating has already been downgraded two notches following fears over its ‘risk appetite’ and ‘projected debt burden’. This will inevitably have increased the cost of its borrowing on the commercial money market as lenders will demand a higher rate of interest.

Forecasts of interest rate rises later this year will not help, either.

As a result, the payment of interest on its debt is fast becoming one of the biggest single items in the council’s budget. But are our council taxpayers aware of this?

CHRIS HAGGETT Penketh