Debts of more than £1 billion have left Barking and Dagenham Council paying between £20 million and £30 million a year in interest. However, town hall leaders insist the borough’s regeneration investments generate more income than they cost.
The figures were confirmed by the council’s cabinet member for finance, Cllr Rocky Gill, during a meeting of the full council on 22 July, as opposition members challenged the long-term sustainability of the authority’s borrowing.
According to the council’s latest treasury management report, the authority owed around £1.6 billion by the end of March, with the majority borrowed to fund major housing and regeneration projects through its former Investment and Acquisition Strategy (IAS). The strategy, launched in 2016, was designed to finance large-scale regeneration while generating income through commercial property and housing investments.
Cllr Gill said annual interest payments of between £20 million and £30 million were expected on borrowing exceeding £1 billion, but argued the council’s investments generated significantly more revenue. “There are significant investments, including the Travelodge in Dagenham, that bring in significant income to the council,” he said.
However, Reform UK group leader Ben Suter questioned whether the borrowing model had succeeded, asking if the IAS had “always been completely financially unsustainable” and had ultimately failed.
Councillor Gill rejected the criticism, saying the scheme had delivered more than financial returns. He said it had funded regeneration projects across the borough and helped deliver new homes while generating investment income.
The finance chief also blamed years of government austerity for forcing councils to rely more heavily on borrowing and commercial investment, saying Barking and Dagenham had lost more than £100 million from its budget over 14 years.
Green Party leader Moin Quadri also raised concerns about whether debt repayments could reduce spending on frontline services including housing, community safety and street cleaning.
Cllr Gill said the council had established reserves to absorb higher-than-expected costs associated with the regeneration programme, meaning repayments did not come directly from day-to-day service budgets. He acknowledged that some commercial developments still needed work before they could generate their expected returns, saying occupancy levels of around 80 to 90% were needed for some buildings to deliver the required income.
That additional revenue, he said, would help support council services in the future. “This is taxpayers’ money, we need to be held accountable for it,” he said.
“We need to maximise the income from our assets. That’s what’s going to help us.”
Cllr Gill also confirmed the council is actively considering selling some regeneration assets if required to help meet short-term debt obligations.
