Bedford Borough Council’s “very cautionary” attitude to borrowing could limit the authority’s “ambitions and opportunities”.
A Local Government Association (LGA) corporate peer challenge noted that the council’s historic borrowing levels, along with the amount of borrowing required to support its capital programme, are “relatively low” compared to other authorities.
The LGA report said that raising the subject of borrowing at Bedford prompted “very cautionary reactions” – an attitude that was particularly prevalent among elected members. This could become an issue “in a context of the ambitions and opportunities that exist for the borough, for which capital investment is likely to be key”, the peer team said.
The report therefore stated that it would be beneficial for the council to “develop further its understanding of approaches to borrowing and what they bring in terms of opportunities and risks”.
Some £28m of the authority’s planned £250m capital expenditure over the period from 2023/24 to 2025/26 is to be funded from borrowing, while a “strong desire” for capital investment in the borough was noted in the report.
“Moving to a position in which these ambitions and the related investment are outlined in a more structured and connected way would be beneficial,” the report explained. This could be achieved through the development of a capital strategy, “crucially underpinned by a clear understanding of the council’s capital assets base”.
Finances at risk
Overall, the LGA report noted that the council’s future financial sustainability is “at risk” due to a combination of its financial forecasts, a comparatively low level of reserves, and a “challenging” spending situation.
Although Bedford’s financial management has been “relatively strong” historically, an £8m overspend on the 2023/24 budget was forecast in September. However, the LGA report noted that the financial pressures being experienced by the council around homelessness, social care demand and school transport were “no different to those being experienced by upper tier councils across the country”.
Steps have been taken to assess and implement measures to tackle these issues, and the £8m overspend has been reduced from an initial forecast of over £12m.
The council’s total reserves at the end of 2021/22, as a proportion of net revenue expenditure, were at around the lower quartile for unitary authorities and the same applied to change in reserves over the previous four years, the LGA report noted.
There was a reduction in the council’s overall reserves of £13m in 2022/23 and current forecasts suggest that these will reduce further again by the end of the current financial year, “thus reducing financial resilience”, the report said.
Bedford’s latest forecasted budget gap for 2024/25 is £11.4m, with a total gap over the medium term of £38m.
The LGA report recommended the “re-clarification of roles and responsibilities” across the senior political and managerial leadership, supplemented with urgent clarification for the wider organisation of the “approach, timescale and responsibilities” around the development of budget options for next year.
Moreover, the report recommended a “completely refreshed approach to budget-setting” be devised for implementation next year for the financial years 2025/26 and beyond, “founded upon collective endeavour and cross-cutting thinking”.
Bedford’s “cuts-based narrative” was also highlighted by the peer team as “dominating thinking in the organisation”. The report said this contrasted with the approach of many other councils that instead attempt to increase revenue generation through economic growth – an approach “for which Bedford is very well positioned”.
The peer challenge team, which consisted of five elected member and officer peers, based their report on information and views from more than 25 meetings at the council, in addition to further research and reading. The team spoke to more than 170 people, including a range of council staff, elected members and external stakeholders.
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