County council to loan more money to development company
- Credit: Archant
Cambridgeshire County Council has said it expects to loan more money to its arms-length development company This Land than originally anticipated, with more than £100million already handed over.
The council said it is "confident" it will get all of its money back with interest from the loans, and said the revenue it generates will increase the money that can be spent on services.
In theory the deal allows the council to use its capital expenditure, which is money reserved for investment in its assets, to loan to This Land to create revenue to fund services, by collecting interest on the loans.
The council said that because £78.8m out of the £100m loaned results in a capital receipt, the net extra borrowing caused in total is £22m.
A report providing an update on the loans said the last of those currently issued should be paid back by 2029, but that more are expected to follow.
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As well as an increase in the amount expected to be loaned, the report also said the council's exposure to risk is set to increase.
Chairman of the commercial and investment committee, Josh Schumann, explained that the "slight increased risk" is because the new loans will mainly be for construction, whereas previous loans were mainly for land, where the asset price is less susceptible to unexpected changes, such as problems in the planning stage.
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Addressing potential concerns he said: "By loaning this money to This Land we are creating income for frontline services."
And addressing a question on the risk, he said: "We present less risk to our frontline services because we can generate more income."
On the need to increase the amount loaned the report says: "There will be significant further loan financing requirement going forward to enable the company to meet its overage obligations to the council, to enable development and construction of sites within its ownership and to service the interest arising on the total loan book advanced."
Speaking at the committee on September 13, Councillor Ian Bates made an indirect reference to a newspaper report published earlier this month, saying he understood possibly confidential information about This Land had been "leaked".
"This council needs to take a very robust approach," he said, and called for the incident to be investigated.
During the meeting he also asked for the ramifications of leaking confidential information to be made clear.