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SALFORD COUNCIL DEBT MOUNTAIN TIMEBOMB HORROR

Star date: 11th July 2013

A Salford Star Exclusive

£500MILLION SALFORD DEBT COULD WRECK THE CITY

At £516million, Salford City Council has the highest total debt of any council in Greater Manchester – five times that of Bolton and Trafford, over three times that of Oldham and Rochdale, and even higher than big bourgeois spending Manchester.

Salford Council's excessive borrowing for prestige projects like bridges, fountains, MediaCityUK, Chapel Street and Salford City Stadium could wreck the city's spending on public services for years to come if interest rates rise by only 1%, according to a Council report.

Full details here…

click image to enlarge

Salford is sitting on a debt timebomb, where even a 1% rise in interest rates would cost the city millions of pounds – which would be paid back from its `revenue' account, or money that should be spent on public services.

Salford Council has borrowed huge amounts of money that's been spent on prestige `capital' infrastructure projects like bridges, fountains, `aspirational walkways', MediaCityUK, Chapel Street and Salford City Stadium.

Indeed, according a report by the Council's Chief Financial Officer, Neil Thornton, "The City Council has made clear policy choices to continue to support affordable investment in infrastructure throughout the significant downturn experienced over recent years".

Currently, Thornton explains, the Council has been "able to take advantage of low interest rates but will need to be mindful of upwards movements of interest in future…"

However, he adds that "as interest rates increase, so will the charge to the revenue budget. To illustrate, had the interest on net debt been an average of 1% higher in 2012/13, the net interest charge would have been £4.169m greater." Interest rates are currently forecast to rise to at least 2% by 2017.

Salford Council currently has the highest amount of debt than any other council in Greater Manchester, with `total debt' standing at £516,097,000. This is five times greater than Bolton Council (£97.761m) and Trafford Council (£103.126m, over three times greater than Oldham Council (£150.663m) and Rochdale Council(£174.414m) and more than twice as great as Bury Council (£207.364m).*

Big spending Manchester Council comes closest at £503.065m, followed by Wigan Council (£470.824m) and Stockport Council (£336.842m).

Salford City Council's `net debt' (`total borrowing less short and long term investments, cash and cash equivalents') of £416,885,000 is also the highest of any council in Greater Manchester.

Meanwhile, figures that probably mean more to accountants than average residents, appear frightening…

Salford Council's `net assets' (total assets, less total liabilities), which give the organisation's value or true worth, are just £16.045million, the lowest in Greater Manchester - over a hundred times smaller than Manchester Council, and over twenty times smaller than Bolton, Bury and Wigan councils.

While Salford Council's assets are currently worth £1,117,493,000, its debt is 46% of this figure, again the highest of all Greater Manchester councils. The figure for Manchester Council, for instance, is 16%, while the average for the county is 26%.

Salford Council's `net assets' as a percentage of `total assets' is just 1%, compared to a Greater Manchester average of 32%.

Salford Council's Chief Finance Officer states, with no irony, that "It can be seen…that Salford has a relatively high ratio of debt to assets" and that this "might be expected given the level of regeneration and other capital investment across the city over the past few years".

He explains that a proportion of the borrowing has been "match funding capital investment in regeneration areas on works that are not directly related to City Council assets" - which the average person might interpret as Salford Council using public debt to back projects that the public won't own. To which the average person might ask `Why are they doing it then?'

This financial year, Salford Council will be spending a further £118.972million on `capital’ projects, and will be borrowing a greater proportion of it than any other Greater Manchester council, almost £63million. Any money the Council makes from flogging off its buildings (capital receipts) will go towards paying off the debts.

The picture emerging is that Salford Council is hocked up to its eyeballs to pay for "clear policy choices" to plough finance into prestige infrastructure projects "throughout the significant downturn experienced over recent years".

The finance report says that there is only a `Medium Risk' of anything going wrong with this strategy and the Council "only undertakes borrowing to support its capital investment strategies that it considers to be prudent, affordable and sustainable".

However, it adds that "The main financial risk is of movements in interest rates increasing the burden on the council's revenue budget".

In other words, if the interest rates begin to go up the city is goosed. But we'll have some nice bridges, fountains, piazzas and a stadium to ponder…

* Figures are based on all councils' latest accounts - only Salford and Oldham have 2012-13 accounts completed. All others are based on 2011-12.

New signs wrote
at 21:37:21 on 19 July 2013

Waiting for the new pink Salford signs announcing "TWINNED WITH DETROIT" (Detroit has gone bankrupt)

NIGEL wrote
at 04:47:43 on 18 July 2013

@Bernard, to say of UKIP they are a "one policy party" is laughable, have you read anything on their site or in the manifesto??? No probably not, from what I see in the archives on this site you do have problems reading articles on websites. Try READING the policies of your opponents before making a show of yourself. As for workers rights, we had those before the EU came along, in previous posts you have claimed the Tories under Thatcher removed and destroyed these, so what is it did the Tories do that or are UKIP intending to do that?

tony blair, say's wrote
at 04:46:01 on 18 July 2013

Bernard Brough. salts away what money, he lost on it. getting out of Europe, fucking great, bring it on, then we can have controlled borders more job for us British instead of foreigners forcing down our own workers wages. bernard so where doe's the racism come in to it, or doe's protecting this countries boarders and looking after our own constitute racism. I'd ask you to read there manifesto but as you have trouble reading web sites and then slating others for not being able to read I'll give this a miss.

The Fat End of The Wedge wrote
at 20:21:28 on 17 July 2013

In reply to Bernard, women of a child bearing age can be a great strain on small businesses should they have children, due to the amount of time they can have off at the expense of the business. If they want to work, fine, if they want babies, fine - but do that first, then go to work. Also, nice to see tony blair's comments about the real fascists not being censored by the Star.

Bernard Brough wrote
at 18:36:28 on 17 July 2013

For fucks sake it's simple. UKIP are a one policy party, get out of Europe. The trouble is that if we scrap existing EU employment laws then workers have no rights. Got it yet? "The party for working families" with a leader who salts away a small fortune in an off shore tax haven and an MEP who believes that small businesses should not employ women of child bearing age. Yes they sound like a party for working families, families like the Saxe Coburg Gothas down at Buck House maybe. Oh and Mr Felse give my regards to Santa Clause & the Easter Bunny when you see them will you?

NIGEL wrote
at 15:59:28 on 17 July 2013

@Bernard Brough, where did you hear about these UKIP policies? I can't find them mentioned on their website or in the manifesto. I think if you read about their policies you will find out that UKIP are very much the party of the working family.

Michael Felse wrote
at 15:59:20 on 17 July 2013

Bernard, it only takes one stone to cause a ripple. I would be happy to be the first same sex married MP in Salford standing for UKIP with a signed pledge to not take pay for the job. Some beliefs are worth making a sacrifice. What we need is more representation of the diversity within Salford to bring better society.

tony blair, say's wrote
at 15:58:38 on 17 July 2013

@Bernard Brough. I'll leave the argument about their racist tendencies, meaning your talking bull shit as usual and you have no prof as usual. like I have said I know as many labour voters and unionists who are just as racist so by your own way of judgement of organisations and parties the labour party and socialists are by definition racists, and on slating ukip in this way you only make your self look like a fascist which is what I really believe you are underneath, it's like all socialists when they don't like other parties or organisations lets throw the racism card in that will stop the debate, thing is Bernard, people are not falling for it any more, especially from left wing fascists like your self

Bernard Brough wrote
at 05:28:11 on 17 July 2013

Mr Blair, you obviously think that anything UKIP is all sunshine and light. It is a party that would return this country to the Victorian era, no workers rights, no womens rights, no NHS, no sick pay, holiday pay. I'll leave the argument about their racist tendencies and appeal to every working man and woman in this country to keep this bunch as far away from power as is humanly possible. Mr Felse, beautiful dreams do not a reality make. The time and effort it takes to do an MPs work is far beyond that of a part time volunteer. I do admire your optimism.

wrote
at 06:47:59 on 16 July 2013

In these austere times Salford City Council needs to get its priorities right. It makes no sense subsidising what can only be described as fads and follies, bridge competitions, fountains, biosperic projects et al. Who will the bridge benefit, who will the fountain benefit, who has the time or space to grow their own veg? Taxpayers money handed over to subsidise or match fund private investments is just wrong.

Michael Felse wrote
at 06:44:59 on 16 July 2013

I see my call for Councillors and MPs to get no pay for their honored posts has fallen on doubters. It is my belief that with a re-structure of committee time tables, more use of advanced technology (like internet and webcams) and greater trust in Officers in the council that are paid to do the work we can have good volunteer Councillors and MPs. Rather is like the many hours devoted by parent governors or volunteers in our community art centres, carers in the community and pools of social enterprise folk workers that do not take profit. These would all make great Councillors or MPs. I say again it is best to take the Paul Massey idea and welcome those in our City that are willing to volunteers to do so and for each ward Councillors and MPs money to go to the needy good causes that ordinary folk see in danger. I would willing vote for such a person.

tony blair, say's wrote
at 15:43:07 on 15 July 2013

@Bernard Brough. I know as many racists who are labour supporters and unionists than ukip, you seem to believe that you have to belong to a right wing party to be a racist, bernard wrong, open you eyes instead of looking through your left wing rose tinted socialist glasses. there's only one party to tackle the real issues effecting this country and that is ukip, your socialist organisations and parties are unelectable to the electorate, so get over it.

Bernard Brough wrote
at 11:30:12 on 15 July 2013

Mr Felse, with respect sir you are talking complete and utter bollocks. If councillors & MPs were not paid who would take those jobs? I'll tell you those who can afford to do it for nothing, the rich and the privileged. The problem lies in the fact that these people are unaccountable. The financial shenanigans they keep from us using bullshit like financial sensitivity, they come up with Alice in Wonderland ideas like fountains and bridges while ignoring the fact that the most vulnerable in our are penalised through no fault of their own. We need an alternative to rid us of this bunch or grinning idiots as soon as is possible. And please do not offer those racist pillocks UKIP as an alternative.

Cath wrote
at 11:29:39 on 15 July 2013

I take Michael Felse's point and while I'm sure he means well, the result would be that the only councillors able to do the job totally free of charge would be those with private incomes - and that could cast suspicion that they might favour their own vested business interests. It would deter well-meaning but poorer citizens from becoming councillors. Everybody has to eat.

White wrote
at 05:54:26 on 15 July 2013

Paul Massey! Is that a joke?

Michael Felse wrote
at 21:56:38 on 14 July 2013

BFK thank you for the question. Sorry but I do not believe any Councillor or MP's should get paid. It should be a voluntary post. I know many that share this opinion. If I was elected I could not take any pay for the honor bestowed by the people. Fact is the money should instead go to a local good cause. In Ordsall I would name the Salford Lads Club, I am sure others standing under a united banner can kick the crap out of those that prove they are only in the game of politics for the money. I recall Paul Massey offered to do the Mayor job for free and on serious reflection he does have a valid point.

Stewart Merry Spicer wrote
at 21:56:06 on 14 July 2013

Try this Divide £516,000,000 (size of debt) by 218,000 (population of Salford) and see what that debt works out as for every man, woman and child in Salford. If you divided it by the number of council tax payers, it is even worse, approximately 5 times the yearly council tax for each person. You may not think that is bad but if you put it in mortgage terms, would you be happy with a mortgage at 5 x earnings? That would be a 30 year mortgage.

Brian F Kirkham wrote
at 19:14:47 on 12 July 2013

Wow. A Net DEBT of 416 MILLION Pounds. I've No Doubt Our Nations Chancellor is Smiling. He wins no matter what the Local authority is doing. On one hand - the Debt Figure Drops and its him being hard on big spending labour councils (also, an example of LA Reformation working!) On the other, its an example of the Conservative idea of Mayors running everything under the Labour helm...whether you like it or not its still a DEBT - and due to the nature of the political make up of this city it will still be a DEBT. Where are the instigators of this glorious scheme? They've gone West or are intending on leaving the city I live in in the near future - A VERY Poor State of affairs. Q. Mr Felse - have you had another experience in the Rotating door? I'd love to see YOU elected to the post YOU Created (as Labour Candidate Maybe?...) then again the wind has changed, much like your mind if articles on here are to be believed.

Michael Felse wrote
at 15:11:47 on 12 July 2013

Congratulations must go to our elected Mayor. The press reported £600million debt when Mayor Stewart came into office. Facts in this report show a net debt now of only £416million. George Osborn must be inspired by the Labour Council cuts and savings in Salford. The downward trend on Debt enables a wipe out of Salford Council's net-debt by the time our Mayor is up for re-election. Inspired but I appeal to ending of cuts to vulnerable people. If the debt has genuinely reduced by almost 30% it must be now time to put some funding back into people services.

joe oneill wrote
at 18:49:43 on 11 July 2013

Steve i suggest when i raised the debt issue months ago the leader of the council at the time argued the fact the city as assets,if you story is correct perhaps you should ask him where they are? i don't think Barbara spicers pay packet counts.

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