WARRINGTON Borough Council is continuing to make headlines for investing with borrowed money during times of austerity to help protect front line services.
The latest investment of £40m relates to huge retail properties outside of the town. This follows a £67m investment in a solar energy farm in North Yorkshire on top of various other investments including £211m for Birchwood Park.
Add to that £30m invested in Redwood Bank, which has resulted in a delay in last year’s accounts being signed off and with all other borrowings the council has around a £1bn deficit.
Council leader Russ Bowden is adamant that this borrowing is a balanced portfolio providing returns which have saved the need of making an additional £30m in cuts, to protect frontline services.
Being proud and passionate about my home town I for one certainly hope these investments don’t backfire because so much good work has been going on in recent years to help make Warrington buck the national trend, with a prosperous local economy and low unemployment.
But as a person who was brought up with the policy of not spending money you haven’t got, I can’t help fear a rocky road ahead, particularly with the unknown fall out from Brexit – if it ever happens!!
None of us have a crystal ball and one does wonder if elected members would make such investments if they were personally liable?
It does beg the question – how much more money is Warrington Borough Council going to continue to invest with borrowed money?
People have relied on banks and financial institutions in the past, most recently the likes of Lehman Brothers who filed for bankruptcy On Sept. 15, 2008, With $639 billion in assets and $619 billion in debt.
Lehman’s bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. How the mighty have fallen!
The article below makes for some interesting reading!
https://www.thebureauinvestigates.com/stories/2018-12-04/councils-borrow-billions-to-buy-real-estate
2 Comments
One of the things that surprises me about all of this is that while Russ Bowden can (with some justification) argue that the council is only taking on these risks because it has been dropped in it by budget cuts, Lynton Green never stops crowing about it all on social media as if there is no risk at all. It’s this cavalier attitude about risk from the guy actually holding the purse strings that should cause the most concern.
He even does it about Redwood Bank, a controversial ‘investment’ by any measure and the one that has held up the council’s accounts for a year and counting. The fact that he’s shooting his mouth off about this every other day on Twitter as if there are no problems is amazing.
Green has no skin in this game because if it all goes wrong – and some of it definitely will – he’ll still walk off with his pension in the long term and probably into another similar role if he carries the can in the short term. And what can the people of Warrington do about having him taking on enormous risks on their behalf over the next three decades? Nothing.
Last year’s accounts still have not been signed off, which is another worry. Particularly worrying because neither the Council nor the auditors (Grant Thornton) are prepared to say why. It is to be hoped this not like the accounts of Spelthorne, another local authority which has borrowed beyond way beyond prudent limits from the Public Works Loans Board, only to find their auditors have said there are significant weaknesses (aka large risks) in that strategy.