A finance chief has issued a “don’t panic” message amid growing concern about the record scale of Highland Council’s £1billion-plus debt.
SNP opposition councillors took officials to task on the matter at yesterday’s resources committee meeting.
They are drafting a motion on the issue for next week’s full council meeting when members will debate what the coalition administration has billed as a “strategic approach to an uncertain and challenging five-year financial outlook.”
Opposition councillors have sought a “limit” on the extent of debt that would be deemed acceptable.
The move was made after the Press and Journal revealed earlier this week that the authority’s total debt had topped £1billion for the first time, having almost doubled in a decade.
Finance director Derek Yule attempted to reassure colleagues that the situation was under control but indicated the council was facing an inevitable policy review.
Speaking after yesterday’s meeting, he said: “It’s a conscious decision that the council has made, probably successive administrations, to increase capital expenditure.
“I guess it follows the policy of the UK and Scottish governments that, at the start of the financial crisis in 2008 in particular, was to boost capital investment.
“It was seen as an opportunity to help the local economy manage its way through the financial crisis.”
However, he added that while he supported investment in the past five or six years, he said that was predicated by additional budget on the revenue side.
“Given that our revenue grant was cut last year and this year in real terms, I don’t believe the council can sustain that commitment to increase its revenue budget by £2.5million each year to fund a level of borrowing.
“That, to me, is the big issue rather than the absolute value of current debt.”
The council last year stumped up £37.2million to service a £1.0486billion debt.
Its most recent projection, in June, was for a “budget gap” of “about £160million” over the next five years.
