Grant Thornton auditor assessing Barking and Dagenham Council’s finances claims town hall is “nowhere near” position of other authorities that went bust, reports Nick Clark, Local Democracy Reporter
Finances at Barking and Dagenham Council “have stabilised” despite its huge debt, the town hall’s external auditor has said.
Paul Dossett, a key audit partner at Grant Thornton, said the council’s property, and its control of temporary accommodation spending, have left it better equipped to deal with challenges than some other local authorities.
He said: “The council’s in a good position – nowhere near those authorities in terms of where they are.”
The council currently has around £1.6billion in debt, of which £1bn was borrowed to fund housing and regeneration projects.
It uses the money it makes from these projects – such as rent from the homes it has built – to repay the debt.
However, construction delays and rising inflation mean it has made less than planned, putting its ability to repay the debt “at risk” according to recently-approved budget papers.
Budget papers say the town hall expects to make £1million from its investments in the coming financial year – but this is almost £4m less than in the current year.
Speaking to councillors last week, Dossett insisted the council’s properties put it in a better position than other local authorities whose borrowing had left them bankrupt.
He said: “The council obviously has borrowed quite a lot of money for its investments and its regeneration. Unlike some of those other places there are actual assets to back that up, which does make a difference.”
Dosset was speaking at an audit and risk committee last Wednesday (25th). He warned that rising demand for services meant that there are “challenges for councils down the road”.
He highlighted adult social care, children’s special educational needs and temporary homelessness accommodation.
Councils across the country are struggling to make their funds cover rocketing demand for these services, coupled with rising costs of providing them.
However, Barking Town Hall’s housebuilding projects have meant it has had to spend less on temporary accommodation than other local authorites.
The number of families the council houses in temporary accommodation is also falling.
The town hall’s director of housing John Knight told councillors earlier this month said this was down to the council’s new homes, but also because of its work to prevent homelessness.
Dossett said last week that this had left the council better prepared.
He said: “Other councils have really struggled with temporary accommodation and the costs with that whereas you have been able to manage that.
“If you look at all the big things that are challenging local government in totality – adult social care, children’s special educational need, temporary accommodation is absolutely up there.”
He added: “You’re in a good position and that sort of mitigates the risks there to some extent of future financial challenges.”
