WARRINGTON Borough Council has told taxpayers most of its borrowing is secured against property and policy driven after its level of debt was highlighted as ‘higher risk’.

Lynton Green, the council’s deputy chief executive and director of corporate services, confirmed the debt stands at just under £1.3 billion last month.

However, it is forecast to reach close to £2.3 billion in 2023.

The Chartered Institute of Public Finance and Accountancy (CIPFA) is a professional institute for accountants working in areas including public services.

CIPFA’s financial resilience index of councils is a comparative analytical tool that may be used by chief financial officers to support good financial management, providing a common understanding within a council of their financial position.

It shows an authority’s position on a range of measures associated with financial risk.

On the financial resilience index’s ‘indicators of financial stress’, the Labour-run council’s debt is highlighted as a ‘higher risk’ area.

But Warrington Town Hall chiefs say the latest figures are based on historical data and a pre-coronavirus environment.

As well as gross external debt, other areas in the ‘higher risk’ area are interest payable/net revenue expenditure, social care ratio, council tax requirement/net revenue expenditure and children social care ratio.

Unallocated reserves and growth above baseline are highlighted as ‘lower risk’.

Conservative Warrington South MP Andy Carter has expressed concerns over the council’s ‘eye-watering’ levels of debt.

Warrington Guardian:

MP Andy Carter

The council has confirmed it has noted the yearly index compiled by CIPFA which is based on a number of financial indicators including gross debt.

A spokesman said: “CIPFA themselves classify their index as being generic and not to be used for comparable purposes. The latest figures are based on historical data which take in a pre-Covid-19 environment.

“The vast majority of our borrowing is policy driven and secured against property and high credit grade assets. This means that there is good property to sell to pay the debt, if that was the right thing to do.

“Our investments also raise over £20 million per year to pay for services. If we sold off our assets we would lose that income and would have to make incredibly severe cuts to the services we provide.

“A better measure of our overall financial strength is the credit rating which is reviewed each year by Moody’s and currently stands at A2 which is one of the highest levels possible.”

Cllr Bob Barr, leader of the town’s Liberal Democrats, says councils need proper funding.

But he raised a number of questions on the issue.

He said: “How much debt is too much? What sort of debt is safe and what is too risky?

“Is investing cheaply borrowed money relatively safely for a small return justified to generate funds to support services?

“Should a local authority be investing in setting up a bank?

“Can Warrington make a success of running an energy company when most other local authorities that have tried have failed and lost money?

“These are the questions council leaders claim they have answers to, but they have failed to convince the public and the auditors.

“The Liberal Democrat opposition is not persuaded either. Borrowing over £10,000 for every man woman and child in Warrington needs more transparency, frankness, and openness.

“Councils need proper funding.”