Bradford Council will need £470m of additional borrowing and £100m from asset disposals to become “financially sustainable” by 2030, a new report has revealed.
Following budget pressures in the last financial year, Bradford Council was granted a capitalisation direction from the government, which allows the authority to meet revenue costs through capital resources such as borrowing and capital receipts.
A recent report, which is to be presented to the council next week, outlined that for Bradford to “return to a sustainable financial position by 2029/2030”, the authority would need £573m of capitalisation.
Around £100m of this would be funded by capital receipts from asset disposals, with the remainder financed through around £470m of additional borrowing at a penalty interest rate (Public Works Loan Board rates +1%), the report explained.
By 2029/30 the financing of this borrowing will be around £41m per year, with each £10m borrowed resulting in an interest and repayment cost of £0.9m every year for the next 20 years, the report outlined.
In regard to the asset disposal programme, the authority has so far completed £0.8m but around £4.7m are with solicitors, approximately £47m are coming to the market and £13.2m are in the pipeline to be marketed, the report showed.
Budget pressures
In 2023/24 Bradford received £80m of exceptional financial support, a form of capitalisation direction, from the government and £140m for 2024/25. This is due to the council currently forecasting an overspend of £140m on its £435m budget.
The government granted Bradford a capitalisation direction due to the authority facing a structural budget gap of £120m in 2023/24, inclusive of a £73m overspend on a budget that already included the use of £48m of one-off reserves.
At the time, the council proposed a three-year cost-cutting programme, which included 113 staff redundancies and £60m of asset disposals.
According to Bradford, its financial situation is largely due to the continued increases in children’s and adult social care demand and cost pressures. For 2023/24, the authority’s projected spend on the services was 87% of the budget.
Since 2011, Bradford Council has had to find over £350m in cuts and savings due to national austerity measures, inflation and increased demand. This has also significantly impacted the authority’s reserves, with them decreasing from £299.4m in 2020/21 to £141.4m in 2023/24.
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