Posted: Fri 23rd Feb 2024

Cardiff Council to Increase Borrowing for Housebuilding and Projects by Millions of Pounds

news.wales / newyddion.cymru
This article is old - Published: Friday, Feb 23rd, 2024

Council borrowing to fund housebuilding and other projects in the city is set to increase by millions of pounds.
As part of its latest budget announcement, Cardiff Council has revealed how much money it will set aside for its capital programme and what proportion of this will be borrowed.
The capital programme sets out what one-off payments the council will make over the coming years. Documents published by Cardiff Council show additional borrowing for house building to be in excess of £400m from 2024/25 to 2028/29.
The council’s cabinet member for finance, Cllr Chris Weaver, acknowledged this as a “growing” amount of debt, but insisted that housing was a “sensible thing” for councils to invest in.
He said: “We don’t only provide homes for people… we also get he income from the rent from those homes and we get the assets. Whilst the borrowing does rise, and it is absolutely true that it is projected to rise, we need to recognise there is also that income… and there is the benefit of having those houses there.”
Additional borrowing for the council’s housing revenue account goes up from £76.5m to £120.7m (2024/25 – 2025/26) and then to £80.4m, £62m and then £65.5m in the following three financial years, according to Cardiff Council figures.
Figures for the years beyond 2024/25 are only indicative at this stage.
Major capital projects, like plans for a new 15,000 capacity indoor arena in Cardiff Bay, are also an area where borrowing is projected to be high.
Additional borrowing for invest to save projects goes up from £108.9m to £126.5m from 2024/25 to 2025/26, but then drops to £45.6m, £12.8m and £5.5m in the following financial years.
Cllr Weaver added: “When we borrow, we are very mindful of how much it will cost the council to pay that borrowing back and we have not done what some local authorities have done over the last decade… which is borrow speculatively to buy things like shopping centres and airports to see if they could make money from them.
“We have very much focused on services. The arena is a regeneration project. It is designed to bring jobs and growth to this part of the city.
“The housing revenue council housing building programme is designed to tackle the housing need this city has and every time we borrow we take into account how much it will cost to pay that back and it is very heavily scrutinised and worked on by our officers to make sure that it is an affordable programme.
“Fundamentally, it underpins the long term sustainability of the council because if you don’t invest in these things, the problems we will have with housing in 20 years time, the lack of jobs and growth we will have in 20 years time will cost the city way more.”
The money borrowed to fund the indoor arena will be repaid by the venue operator over the course of a 46-year contract.
Council data also shows that borrowing for new schemes approved in 2024/25 will gradually increase from that financial year to 2028/29. Additional borrowing will initially go from £11.5m in 2024/25 to £9.7m in the following year, but it will then increase each year up until 2028/29 from £10m to £15m and then £15.9m.
There will be £76.5m in additional borrowing between 2024/25 and 2028/29 to balance the existing capital programme, £38.3m of which will be borrowed in the upcoming financial year.
Cardiff Councl’s proposed budget for 2024/25 will go through a scrutiny process from Monday, February 26, before being brought before cabinet members at a meeting on Thursday, February 29.
If cabinet agrees with the budget proposals, they will go to a vote at a full council meeting on Thursday, March 7. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​



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