Dorset County Council Councillors received a report that funds borrowed externally in March 2018 were £227m. This is £7m lower than the expected level of £234m when the annual strategy was agreed, but £14m higher than the position at the end of March 2017.
The report revealed that in November 2017 the Council entered into a two-year forward agreement to borrow £20m from a pension fund in November 2019. The agreed interest rate was 2.62 percent for a minimum period of 23 years and a maximum of 48 years.
According to Councillor Ray Bryan, the amount of money being borrowed is phenomenal. He says that the new Dorset Council would have to keep paying it back. Dorset had been debt free until 2002 when it had to borrow to carry out capital programmes, such as creating new buildings. The Council’s investments are offset against borrowings but with low interest rates the last full-year earnings for 2017 to 2018 was £110,000 net.
The committee heard that the county’s finances are about to get more complicated as it has to disaggregate existing investments and borrowings attributable to Christchurch County Council which will become part of the new unitary council in the east of the county with Bournemouth and Poole in April 2019.
What is left of the funds after borrowings and investments will be handed over to the new Dorset Council when the current borough and district councils in rural Dorset cease to exist.