The Northampton Borough Council budget will have to be slashed by 25 per cent in four years’ time because of loans taken out to boost Abington Street and other projects, opposition councillors have said.
The claims came at a budget-setting meeting at the Guildhall tonight, where opposition parties had their say on the Conservative administration’s finance plans for the coming years.
Liberal Democrats focused on figures that show the predicted budget deficit will be £14.9m within the five-year plan, partly becuase of plans to open up Abington Street to traffic, which is being paid for with a £3m loan.
A total of £9m will be taken out in loans in the coming year alone.
But Liberal Democrats argue that by 2018/19 the projected deficit will be £6.6m, on a £35m budget, therefore they council would need to a 20-25 per cent cut in spending, with a corresponding impact, they said, on frontline services.
A possible alternative, the Liberal Democrats said, is an unthinkable rise in council tax of almost 60 per cent, big enough to raise the Council’s total budget by around 30 per cent.
Councillor Sally Beardsworth, (Lib Dem, Kingsthorpe) said: “Borrowing £9 million, most of which is unnecessary, will cost the tax payer double that. Double. For every pound of benefit, even if your plans were actually going to be beneficial, it will cost the town two.
“Projections for the level of borrowing you are suggesting show the interest payments in four years will be £2.7 million pounds.
“In my view, that fact alone is frightening. But far more important are the effects that will have.
“Anyone who believes your lie that the Conservatives aren’t putting up council tax has missed a very important point. “This loan, this absurd spending on credit cards, this action this year will necessitate a massive tax hike in years to come.
“I assume that one or more of you intend to be in other jobs by then, and this will be the next person’s mess to clean up.
“But it is this budget that you are voting on today that will hit the Northampton tax payer – even if it doesn’t hit them right away.
“And, because tax hikes are unpopular, it will hit frontline services.”
Council leader David Mackintosh said the highlights of his party’s budget included an extension of free parking, reduced spending on council managers and £1,000 business rates relief, the latter of which was supported by all parties on Monday night.
He said: “We know what the Lib dems achieved or did not achieve when they were in charge. We want to see this town go forward not backwards.”
The interest on the total loans is projected at just under £3m by 2018/19 – around eight per cent of the total revenue budget of the council.
The £9m the council are intending to take out this year will cost £900,000 a year for the next 20 years; in effect the council will pay back double what it borrows.
For the loan to reopen Abington Street alone, they council will be borrowing between £2.5m and £3m, which will cost £300,000 a year over 20 years.
The Lib Dem proposals would cancel this loan, and use the revenue to invest in the town centre in what is claims is a more sustainable way - £1m over three years, with half a million in the first year.
This would be used to renew the street scene, raise footfall and develop an empty shops policy. They say they would also repay more than half a million pounds into the budget over the next five years to strengthen the general financial position of the council.
Councillor Beardsworth said: “We would use the money to develop a far more ambitious program of specialist markets, street entertainment, and for the development of a genuinely unique town centre to support the traditional shopping offer.
“These proposals are ambitious, forward thinking and evidence-led. They are in line with what people want to see for their town centre.
“Importantly, they’re affordable.
“We want to see investment in the town centre – but it is not in the interests of the town to frontload that investment now and cripple the council’s ability to maintain it in the long term.”
In an apparent reference to council leader David Mackintosh, who is Conservative prospective Parliamentary candidate for Northampton South, she added: “It might be good for the short term ambitions of individuals, but it’s not good for Northampton.”
The Labour Group’s view on the borough council budget:
The Labour party said it wants to see a cut in councillor’s allowances to create more funds for food banks and voluntary groups, and claimed that the Conservative budget is “very high risk”.
Councillor David Palethorpe (Lab, Billing), speaking for the Labour opposition said: “The Labour group recognise that the Borough Council faces a
difficult time because of the Government’s economic policies however we also recognise that there is one group of people who have not been affected by the Conservatives cuts.
“We will therefore be proposing that Councillor Special Responsibility Allowances be restored to the 2006 level saving the Northampton tax payer over £47,000 which will be made available through the Small Grants system to voluntary groups and the Northampton Food Banks.
“This budget is financially unsound and contains too many very high risks for the people of Northampton through huge loans being taken out against future income that isn’t guaranteed and committing all of the New Homes Bonus to pay back part of the loans over the next 20/30 years.
“The ‘public finance trough’ has shrunk dramatically under the Conservatives, so it only right that councillors act responsibly and reduce the amount of money they are taking from the ‘trough’ which is why we are proposing that Special Responsibility Allowances be reduced by over £47,000”
What the Liberal Democrat’s alternative budget proposed:
Councillor Sally Beardsworth said: “We’d use the revenue you’ll be spending on interest payments to invest in the whole of Abington Street – regenerating the street scene, getting it clean, working with BID to develop an effective empty shops policy so our main shopping street doesn’t look run down.
“Regeneration that would have a real affect.
“Regeneration residents want to see.
“We’d respond to the independent town centre report, and work within the Central Area Action plan, instead of ignoring both and frog-marching down a path picked at random.
“We’d invest half a million pounds this year in the town centre – half a million pounds over two years on Abington Street itself – and a million pounds over three years.”