Row over Bedford council loan as Lib Dems and finance chief clash over 'smokescreen' claim

Earlier this month, the Local Democracy Reporting Service revealed that the council took out a £5 million loan from the Public Works Loan Board (PWLB) in April.

A council spokesperson said the loan was short-term and intended to manage interest rate risk.

“The council will continue to keep all borrowing under review as part of its Treasury Management practices,” they added.

But the Lib Dems have accused the council of using technical language to obscure the reality of rising debt, saying “calling the extra £5m of longer term borrowing just ‘reprofiling’ is a smokescreen for the Conservatives to hide behind”.

A group spokesperson said: “After ‘reprofiling’ the council figures show that they will borrow more, for longer – that’s bad news.

“More borrowing means higher interest rate costs, which in turn means less money to actually spend on services.”

They pointed to figures from the council’s February forecast, which anticipated borrowing of £96.5 million by 31 March 2024.

“In the end, it was £129 million,” the spokesperson said. “That’s a whopping £32.5 million above what they said it was going to be. This is just out of control.”

They also claimed external borrowing had more than doubled in two years, from £60 million to £129 million.

The spokesperson added: “Under this Conservative mayor, with all his wasteful spending, the council is heading for a financial crisis.

“And it will be local residents who pay the price through higher council tax, stealth taxes like green waste collections and services slashed.”

In response, the council’s portfolio holder for finance, Councillor Marc Frost (Conservative, Wixams and Wilstead), said the Lib Dems were misrepresenting a standard treasury decision.

He said: “The council did not take on any new borrowing. What happened was a standard treasury management decision — £5 million of existing short-term debt was moved into a medium-term arrangement to manage interest rate risk.

“This is a common and prudent step used across local government to bring more financial stability and predictability to budgeting.”

He likened the move to switching from a short-term loan to a fixed-rate mortgage, saying it helped to “smooth repayments, manage cash flow, and protect against future rate rises”.

“It is financially sound practice, not a sign of crisis,” he said.

Addressing the spike in year-end borrowing, councillor Frost said this was temporary and linked to delayed payments owed to the council.

“£23.5 million of which has now been received from government departments, and more is on the way. This income reduces our borrowing and strengthens our position.”

He added: “The administration continues to take responsible steps to rebuild Bedford’s finances after years of structural pressures and poor decision-making.

“That is why we have brought in a leading local government expert, approved a robust Treasury Management Strategy, and launched the Mayor’s Stability Plan 2025–2030 to secure the long-term future of the borough.

“It is unfortunate that some are choosing to politicise routine financial housekeeping, but rest assured, we are focused on facts, not headlines.”