A FINANCE officer credited with saving Swansea Council £45 million said he wasn’t in a rush to borrow more money for now.
Ben Smith, the council’s chief finance officer, has borrowed £90 million over the past few months and did so before the UK Government raised repayment costs by 50% with no apparent warning.
The £90 million from the Public Works Loan Board (PWLB) will help finance Swansea Central phase one, which comprises the new indoor arena, coastal park, flats, shops, two car parks and bridge across Oystermouth Road.
Swansea Council leader Rob Stewart has previously said that the timing of Mr Smith’s decision saved £45 million of repayment costs.
But the council will need to borrow another £90 million to pay for new schools and classrooms in a joint programme with the Welsh Government.
Mr Smith told a council scrutiny committee that he had wanted to borrow more than £90 million first time round, but that he had been limited by council parameters. Referring to the 50% rise in repayment costs, he said: “I don’t want to go out and borrow more money.”
The £90 million schools commitment, however, will need to be honoured in the next few years.
Mr Smith, who takes soundings from Treasury advisers, said he would sit on the sidelines for now.
Despite compliments from scrutiny committee members, he said there was an element of “waggling” his little finger in the air and hoping “you get it right” when it came to borrowing.
By 2025-26, Mr Smith said the council could be spending £45 million per year of its day-to-day budget – currently some £440 million – paying back money it has borrowed over the years for capital projects.
He said the Treasury had applied the PWLB repayment hike to “choke off” record levels of council borrowing – particularly in England – for massive investments in things like shopping centres in an attempt to generate financial returns. “I do not see our role as a property developer to make a return,” said Mr Smith.
Cllr Paxton Hood-Williams said it was his understanding that the council had a buy-to-let policy.
Mr Smith said the council had made some property investment decisions – allied to priorities like the city centre – which have been “relatively proportionate and low risk”. Asked by Cllr Jeff Jones if the council’s current debt limit of just under £682 million would need to be extended, Mr Smith said it would. “That is indicated within the medium term financial planning,” he said. Mr Smith also said, when asked, that there was “no big book of guidance” on what safe debt limits were. The key question, he said, was affordability – and he felt the £180 million to be borrowed by the current administration was reasonable.
Steps have been taken to mitigate repayment costs in the short term for Swansea Central phase one, which will also bring in some revenue, but Cllr Chris Holley wondered if the time of core council services being affected was “not far off”.
Mr Smith said in reply: “I will continue to give advice to cabinet and to council – ultimately it’s a policy decision.”
Labour leader, Cllr Stewart, has previously said that repayment costs for Swansea Central phase one have been identified and covered until 2026.
Speaking at the December 9 scrutiny meeting, Cllr Des Thomas said: “I think it’s fair to say that cabinet are fully aware of the ramifications – it’s a calculated decision that they have taken.”