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Last updated February 2023
By investing in assets, mostly in bricks and mortar, we have acquired debt – in the same way you would have debt when paying off a mortgage.
Our current level of borrowing is £1.8 billion, with the current value of our assets estimated to stand at more than £2.1 billion. We could decide to sell our assets, if we thought it was the right thing to do, but we would lose the benefit of the money generated from the assets. It would, however, mean that our overall borrowing and therefore debt costs would reduce.
Ultimately, it is important to remember that many of our investments directly generate income that we can use to fund vital services, which would otherwise need to be cut because we simply don’t receive enough funding. It’s absolutely vital that we do everything we can to protect those services, which some of our most vulnerable people rely on.
These include social workers providing life-saving care and interventions, environmental services keeping our streets clean and well-maintained, and preventative services that keep families together and offer support to ensure people are as happy, healthy and independent as possible.
It’s important to note that our debt isn’t purely caused by borrowing to invest and create a return. A proportion of the debt we have is historic, and we have also invested in Warrington’s infrastructure. During the last few years, for example, we have invested in Time Square, affordable housing, highways, schools, social care services, Warrington Youth Zone, tackling the climate emergency, street lighting and many other projects and services. This approach is one of the reasons why Warrington is experiencing one of the highest rates of economic growth in the country.
All of our investments are made in accordance with corporate policies.
There are some particular initiatives and projects that we have invested in for policy reasons which often attract a lot of attention, including Redwood Bank, for example.
A common, and completely understandable, point that people raise, is that if we can spend and invest in buildings and projects, why can’t we just spend that money directly on day to day services instead?
The answer is down to two types of funding – capital and revenue.
Capital funding is money that we can borrow at a low interest rate to invest in projects, schemes and buildings.
The rules around using capital funding are very strict – we legally cannot borrow capital funding to spend directly on funding day-to-day services. We can, however, use capital to make investments which produce an income. The money left over, after the running costs have been taken out, can be then be added to revenue funding for our services.
This means that when you hear about the council giving loans to other organisations, or investing in projects, this is through a different pot of money we can’t access to directly fund services, but we can use the proceeds of income from these investments to fund our services.
Simply put, revenue funding is money that we use for day-to-day services and which has been subject to extreme cuts due to austerity, with 60p in the £1 of funding being lost since 2010.