Borrowing limit increased at debt-laden council

The council approved the increasing of two borrowing limits for the authority

Councillors at a debt-laden authority have agreed to increase its borrowing limits.

Spelthorne Borough Council's leader said the increase would mean there would not be another breach of upper limits, as happened on April 1.

A meeting of the council, which has borrowing of £1.1bn, agreed to increase two borrowing limits, to "deal with the changes in external economic factors".

One of the council's debt limits, called the "operational boundary, was breached by £2.6m on April 1.

Joanne Sexton, Spelthorne council's leader, said this represented less than 0.25% of the actual limit.

Before the decision was approved, Ms Sexton said: "The breach has never ever happened before, and if we agree the requested increase tonight, it will not happen again."

She said the limits were being increased to fund temporary accommodation for local people and to give the council headroom in funding a new leisure centre it was building.

A BBC report in January showed Spelthorne's borrowing was the second largest in the country with average debts of £10,415 per person.

Debt at nearby Woking was equivalent to nearly £19,000 per person, the highest in the country.

The two debt levels increased were an "operational boundary" for external debt, which is an estimate of the maximum level of external debt.

This number is lower than the other boundary to be increased, which is called the "authorised limit" for external debt.

A council's authorised limit, according to meeting documents, should give "headroom" over and above the operational boundary, in order to account for issues such as short-term council loans.

Councillors increased the operational boundary for external debt from £1bn to £1.1bn and the authorised limit for external debt from £1.1bn to £1.2bn.