The Horsell's Mouth Politics, pedantry and personal interests

Anyone who lives in Woking and cares about what goes on should subscribe to the Woking News and Mail. It’s not expensive and although it doesn’t live in the town any more, there are some great people there who do a good job. You may have to phone up a couple of times a year when your delivery gets missed but hey, nothing’s perfect.

This week the lead story identifies a problem that has been increasingly vexing Woking’s political leadership, namely the subject of council borrowing – and where that money goes/has gone. In a recession we’ve all been told is the fault of reckless financial practises including borrowing, members of the council are now particularly sensitive to the public perception of this subject.

The figures make for blinding reading – Woking Borough Council has borrowed nearly £90m to fund various projects, studies, consultancies and other sundries. In addition, there are major capital schemes afoot, such as the Hoe Valley Scheme and town centre investment that push the total nearer £150m. Then there’s Thameswey and Woking Borough Homes, which push the figure even higher.

Understandably, many people are nervous about this. Isn’t it exactly the reason why we are where we are now? Chief executive Ray Morgan says not. He argues that as long as you can service the debt, borrowing is more or less unlimited and that we should do so to invest in our communities (or “shape the place” as the DCLG wants us to say.)

In a way both are right. What essentially has happened is that the council’s income has been squeezed by a combination of falling income in the recession, an inability to raise council tax by more than 5% and a measly percentage of business rates returned.

In addition, the government grant to Woking – and most other Tory areas – has been slashed to 0.5% increase a year. While regular inflation may be at zero, local government employees still expect a pay increase, their pension pots filled and other costs to the council (insurance, energy, fuel etc) remain high. So the council is losing money and the government is forcing it instead to use the prudential code for borrowing, which essentially says you can borrow as much money as the debt you can service.

This is a shameful admission by the government that it doesn’t have the money, or won’t spend it, to fund councils in non-politically advantageous areas properly. It knows full well that the political consequences of this will fall on those councils, not on it.

So Mr Morgan, from an economic and administrative point of view, is entirely right. Let’s borrow everything we can get away with – the government can’t moan about the council using the system it introduced to fund the Shape Your Place agenda that it brought in and it won’t let the council go bust if it can’t meet its obligations.

But Cllr John Kingsbury has to deal with the political dimension of this issue. He needs to understand whether the public cares and if so whether they would rather borrow to fund community facilities or cease borrowing and do without.

His problem is that people often say the second and mean the first. Personally, I used to favour the second but having seen the repayment details of the borrowing on 50-year terms, we have already thrown out the old local government funding model and perhaps then, we need to embrace the eternally credit-dependent economic future.

I’m not sure the News and Mail totally conveyed these complexities but frankly, how could they?