Town council agrees against loan as it attempts to rebuild finances

LYME Regis councillors have gone against the advice of the town clerk and finance officer and agreed not to pursue a loan for time being.

Town clerk John Wright and finance officer Mark Russell suggested the council should put in place arrangements for a possible loan of £650,000, which could be taken out if a repeat of this year’s spring lockdown was to take place next year.

The council’s finances took a major hit earlier this year due to the effects of the first national lockdown, which coincided with a £650,000 essential project to resurface the flat roof area above SWIM, the Antiques & Craft Centre and Amusement Arcade on Marine Parade.

Once considered to be a “rich council” with reserves of £1.4million in the bank, this was depleted to £581,674 by June, and councillors were warned that the figure could further decrease to just £67,000 by the end of the financial year in March 2021.

But as facilities such as car parks began to reopen and Lyme enjoyed a busier-than-expected late summer, this figure began to increase again and the latest estimate for end-of-year reserves stands at a much healthier £503,694, which Mr Wright admitted was a “prudent estimate”.

However, the town clerk has previously told councillors that if a similar lockdown was to take place in spring or early summer 2021 – the period of the year when the authority takes most of its income – it could “wipe out” the council’s reserves.

To ensure financial security, Mr Wright has set targets to increase the council’s reserve to £800,000 by the end of March 2021, and to £1.6million by the end of March 22, while increasing income by £100,000 and reducing expenditure by the same amount.

One of the measures he suggested putting in place to achieve this was entering an agreement with the Public Works Loan Board, allowing the council to take out a loan of up to £650,000 anytime over the next 12 months, if needed.

This would allow the town council to clear its outstanding debt of £200,000 to Dorset Council – from a loan taken out several years ago to redevelop the Marine Parade shelters – leaving it with £450,000 to shore up reserves.

The council has been discussing the possibility of taking out a loan, and other measures it could implement to improve its financial resilience, for several months and Mr Wright told members a final decision would have to be made at this week’s virtual meeting, which was held on Wednesday night.

Finance officer Mr Russell confirmed details of the loan in a report to councillors. The interest rate for a loan of £650,000 over 20 years would be 2.35%; an annual repayment of £40,920. The council could agree to borrow less at the time of confirming the loan, but in this case the costs would change. The Public Works Loan Board would not confirm whether any charges would be made for early repayment.

Mr Wright added that entering an agreement with the Public Works Loan Board would not cost the council a penny at this time, but would simply act as an assurance. There would be no obligation to actually draw the loan and, if they did eventually need to do so, it would be brought back to council for final agreement.

‘False buffer’

Before councillors could discuss the matter, the issue of the loan was raised during the public forum by Lyme Regis resident Nigel Ball, who reminded members that they were dealing with the townspeople’s money – not their own.

He said he felt strongly that a loan was not needed and would provide a “false buffer” for the council, which should instead concentrate on making cutbacks and chasing debt.

“I believe you are trying to protect staff and wages, but in business you make saving by making cutbacks, not by borrowing more money,” he commented.

The Mayor of Lyme Regis, Cllr Brian Larcombe MBE, also spoke against pursuing a loan at this point, saying he did not think it was necessary with £1,019,169.11 currently in the council’s bank accounts and a “prudent estimate” of more than £500,000 for end-of-year reserves.

He also raised concerns that they did not know full terms of the loan, including possible early repayment charges.

Mr Wright emphasised that the bank balance of £1.019million would decrease over the next few months, as the council took most of its income in the first half of the financial year and, in the second half, it historically saw more going out than coming in.

Cllr David Sarson said he also felt “uncomfortable” making arrangements for a loan, especially for such a large figure, and suggested the council’s current financial position gave them time to wait until next year.

“I’m perplexed as to why we have to make a decision now,” he added.

Cllr Stan Williams said he was “very concerned” about the possibility of borrowing money, and repeated his argument that the council should instead be concentrating on chasing its debtors, in particular those who owed money for chalet/caravan licenses and use of land in the Monmouth Beach area.

“It’s ridiculous when there must be so much of our money floating about,” he commented.

But Cllr Michaela Ellis said members should be following the advice of their town clerk and finance officer, adding: “We don’t actually have to take the loan, but it will just be sitting on the table.”

Mr Wright said he thought it was unlikely that the council would actually have to take the loan, considering the latest estimates, but if there was a repeat of spring 2020 the council’s finances would be put “under pressure”.

He said that putting in place an agreement with the Public Works Loan Board at this stage demonstrated “prudent and sound financial management” and would protect the council in the worst-case circumstances.

However, after going to a vote it was eventually agreed not to pursue a loan agreement at this stage.

No further update was given on other measures previously discussed to improve the council’s financial resilience.

These have included selling the council’s offices at Guildhall Cottage and moving into St Michael’s Business Centre, and selling the cemetery lodge or the putting green in Lister Gardens, although councillors have not spoken in favour of selling any assets at this point.

To increase income, it has been suggested that the council could rent out the Jubilee Pavilion on Marine Parade, which currently stands largely empty, or the Lister Room above, and create additional car parking at Monmouth Beach. It has also been agreed to buy and sell two additional beach huts on Marine Parade.

The town clerk has also suggested that expenditure could be cut but reducing office running costs, procurement improvements, reducing professional support, and a critical review of recruitment to vacancies.

Woodmead Halls
About Francesca Evans 2648 Articles
Francesca grew up in Lyme Regis and has worked in community journalism in the area since 2011, having gained a First Class Honours degree in journalism and her NCTJ qualifications at Southampton Solent University.

1 Comment

  1. In the Lymeonline “rebuilding finances” article 19th November. Cllr. Sam Williams wants the council to concentrate on alleged debtors who own Caravan and Chalet on Monmouth beach. Why does Sam want to single out the Monmouth beach people and not pursues any and all Lyme Regis debtors? The definition of victimize is to treat someone in an intentionally unfair way, especially because of their race sex or beliefs. Does it need to be changed to race, sex, beliefs and owning a caravan or chalet. on Monmouth beach.

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