Eastleigh and Runnymede borough councils have been issued Best Value notices over concerns about their debts.
The councils’ chief executives received letters yesterday requesting that they provide the Department for Levelling Up, Housing and Communities (DLUHC) with ‘assurance of improvement’.
Both authorities received the Best Value notices over ‘concerns’ highlighted in capital reviews by the Chartered Institute for Public Finance and Accountancy (CIPFA), which the councils received in July.
As of March 2023, Eastleigh BC had debt 45 times its core spending power, the CIPFA review found.
It said the main risk facing Eastleigh was its ‘capacity to manage the scale and ambition of its commercial and housing developments’.
The CIPFA’s review into Runnymede found its borrowing was 71 times its core spending power as of March, which was the third highest borrowing relative to size of all UK authorities.
The review also found that commercial income was a ‘substantial’ revenue source for Runnymede, exposing the council to ‘significant financial risks’.
Both local authorities have taken some steps to address these concerns, but should commission external governance reviews and agree plans to deliver the CIPFA's recommendations ‘at pace’ , the DLUHC said.
The Best Value notices will remain in place for a year, but may be withdrawn or escalated before this.
Eastleigh council leader Keith House said: 'We welcome more engagement with DLUHC.
'We look forward to explaining how local government finance actually works on the ground, and how Eastleigh’s prudent investments have protected essential public services.
'By innovating to generate commercial income, the council has been able to continue to fund services for residents, while delivering a real-terms cut in our council tax.'
Runnymede chief executive Andrew Pritchard said: 'The Best Value notice issued reflects the next step in our ongoing and positive dialogue with DLUHC.
'Most of the council’s borrowing was taken when interest rates were at a historic low, with a fixed rate for their duration.
'This borrowing enabled us to fund a mix of commercial investment, improvements to our social housing stock, and complete the regeneration of Addlestone and Egham - all of which now benefits residents.'
