TOWN hall chiefs are now borrowing more than £780 million after council debt almost doubled in just 18 months.

Figures put together by the Bureau of Investigative Journalism show that Warrington Borough Council’s outstanding borrowing soared from £400,688,000 on March 31, 2017, to £780,104,000 on September 30, 2018.

It comes as the authority has embarked on an ‘invest to save’ scheme – borrowing money to pay for commercial properties, from which the financial returns can be used to fund front-line council services.

The scheme has been hailed as a way of generating income despite Government funding cuts – but now the national organisation which provides guidance to councils on controlling their purse strings has spoken out about the risks involved.

Don Peebles, from the Chartered Institute of Public Finance and Accountancy (CIPFA), said: “There are at least two substantial risks.

“There’s the potential for the dependency on commercial income. Commercial income itself is volatile. There’s no guarantee that it will continue at a stable rate.

“The second concern is the extent to which local authorities can be overexposed by taking out debt over a long period of time relative to the assets they are procuring.

“What that means is council services are directly related to the vagaries of the commercial property market. It means services have a built-in instability, which was never intended within the design of local government finance.”

Warrington Borough Council will stop receiving the Government’s revenue support grant in 2020 – an annual pot of money which has been cut each year since 2010.

This has led to the authority looking for new ways to generate income, including its ‘invest to save’ scheme – which includes the £211 million purchase of Birchwood Park.

Other properties in the council’s investment portfolio include the Matalan site, off Winwick Road, which was bought for £6.3 million in December 2016.


The council also spent £4 million in September 2016 on the DW Sports site, in Bank Street, and £1.85 million on the PureGym site, in Fennel Street, in February 2016.

At an executive meeting in July, outgoing leader Cllr Terry O’ Neill praised the ‘invest to save’ scheme.

“What we’ve done as an administration, despite the austerity measures, we have delivered a lot of regeneration in this town,” he said.

“And a lot of regeneration means that we’ve got funding in place to offset the austerity measures, and that’s very important – it’s absolutely massive.”


But CIPFA is specifically concerned about councils that are saddling themselves with debt beyond their spending power.

In its budget for 2018-19, Warrington Borough Council’s net current expenditure is £329,165,000.

That means that as of September 30, the council was borrowing 237 per cent of its spending power.

Lynton Green, the council’s director of corporate services, told the Guardian in May that he expects the council to be £1.6 billion in gross debt by 2021 as the council continues its ‘invest to save’ scheme.


But the local authority insists its borrowing is based on sound advice and regularly monitored.

A spokesman at Warrington Borough Council said: “We take advice from a number of different market-leading advisors on our borrowing, depending on the particular investment, and carry out rigorous due diligence.

“Our key advisors over the past decade have been Link Group. We also continue to build up our own internal experience in this field and are now recognised has a lead authority in this area.

“The council follows the CIPFA Prudential Code, and the risks associated with its borrowing and procedures are covered in the council’s annual Treasury Management Strategy and Capital Strategy – which is agreed by full council with the budget each year.

“The external auditor and Moody’s [credit agency] review the council’s borrowing exposure annually.”

Dozens of councils across England are borrowing massive sums of money to invest on the property market, the Bureau of Investigative Journalism has revealed – with one council, Spelthorne in Surrey, racking up £1 billion of debt.

The Government has raised concerns about the ‘unprecedented’ level of spending on the property market by local authorities.

A spokesman at the Ministry of Housing, Communities and Local Government said: “Councils are responsible for managing their own finances and making the right decisions for the communities they serve – including making appropriate investments.

“All local authorities must properly consider the risks and opportunities before making commercial decisions.

“Updated guidance on council investments came into effect in April and these new codes, developed in conjunction with councils, strike the right balance between allowing them to continue to be innovative while ensuring that taxpayers’ money is properly protected.”