Newham Council’s Mountain of Debt

3 Oct

People have expressed surprise that the mayor has proposed to borrow £40 million to lend on to West Ham United FC to part-finance their bid for the Olympic stadium. They ask how one of the poorest boroughs in London can afford to take on such debts.

What they obviously don’t realise is that Newham has already has massive debts. According to the draft statement of accounts for 2010/11, the council’s “total external borrowing at 31st March 2011 was £1,186 million.”?????? Against that, “the Council had investments of £303 million.”?????? Which leaves a net position of £883 million of debt.

That level of debt is truly shocking, but what is more alarming is the massive growth in those debts during the mayor’s reign.

As at 31st March 2002 Newham’s total external borrowing was £616 million. With investments of £91m that left a net debt of £525m.

Today’s total debt figure of £1,186 million represents an increase of 93%. Even taking the major increase in investments into account, the net debt position has increased by 69% over the past 9 years.

Although the council claims that the current debt is “well within [our] approved borrowing limit” it is a frighteningly large sum. According to the 2001 census (the most recent data on the council’s website) there are 91,822 households in Newham.

That means the council owes the equivalent of £12,916 per household.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: