BCP Council has just taken on a new £49m loan as it continues to find itself under financial pressure.

Increasing costs in children’s services has resulted in meetings now being held every two weeks to monitor the situation and try and put the brakes on spending.

Pressures have also continued in other areas and the authority is struggling to meet savings targets this financial year.

Costs from Covid are also continuing with losses for leisure services, less income from business ‘rates’ and additional hardship payments of £2.5m to help residents unable to meet their council tax bills.

The council now has borrowing of £208m, including a £49m loan from a Phoenix Life which was drawn down in May and was taken on as a legacy agreement from the former Bournemouth Borough Council, the agreement for it set up three years ago.

Cllr Tony Trent questioned why the new council, set up in 2019, should take on borrowing agreed by the previous authority. He was told that much of it was linked to assets, primarily the Bournemouth housing stock transferred to the new council and along with it the financial agreements tied to those assets, including debt.

The loan was drawn down, according to senior accountant for strategic finance, Matthew Filmer, because it had been known the council would be relatively low on cash at this time.

But he said the council had greater capacity to take on more debt, up to £212m more, should it need to do so.

He said that planned improvement in the area under the council’s ‘Big Plan’ would need to be financed mainly from borrowing, but would result in the authority owning a greater number of assets. He said, even if extra debt was taken on, the council would still be at the lower end of the ‘league table’ for debt compared to other councils as a proportion of its net budget.

The committee heard that while the council was increasing its debt, at the end of June it held investments of just over £98m, although much of it was earning less than previously in interest payments.

Of the investments global figure more than a third of it, £37m, is held in instant access accounts at 0.01% interest which Cllr David Brown said could earn an extra £90,000 in interest rates of 0.25%, could be achieved.

Other issues for the council this financial year include education funding; the cost of the next pay round which might be more than the 1per cent the council has allowed for and the target of £7.5m in ‘savings’ for this year which has not been achieved under the council’s transformation programme – with the target figure £10m higher for each of the next two years.