£60m Borrowing for Eastern Villages Infrastructure “Massive Gamble” say Labour

The Swindon Labour Group have as accused Swindon’s Conservative administration of gambling £60m of Swindon taxpayers money on infrastructure as part of the Eastern Villages Development.

Contained within the Eastern Villages Infrastructure report agreed by the Conservative Cabinet on 10th July:

  • The Council plan to borrow up to £60m by 2025/26 for the NEV development

  • Even if the debt is remunerated by developers, Swindon’s tax-payers will be forced to pay up to £2.5m per year in debt charges until 2025/26, with a cumulative cost of £12m by 2032/33 that will have to be covered from Swindon residents Council Taxes.

  • The borrowing the Council is set to make is described as a “significant risk” to Council finances by the Cabinet Members who are authors of the report, while the Council

Considering the powers afforded to developers under the Growth and Infrastructure Act (2013), there is a substantial chance that developers will seek to renegotiate the amount owed to the council to pay off this £60m debt. The most recent example of this was with Persimmon at the Badbury Park estate in 2017:https://www.swindonadvertiser.co.uk/news/15225374.builders-deliver-big-housing-blow/

This £60m borrowing is also a significant risk with no knowledge of when the next housing slump might arrive. In 2008/9 when the last economic downturn arrived the Council took on a £43m debt in order to take over the Wichelstowe development from Taylor Wimpey. This debt is still being serviced with the Wichelstowe development still largely incomplete. However, whereas with Wichelstowe the Council took ownership of the land for housebuilding, with the Eastern Villages the Cabinet wish to borrow £60m while the developers still hold ownership of the land for development.

Swindon Labour Group’s Shadow Lead for Strategic Planning, Cllr Jim Robbins, said:

“The Cabinet seem to be wanting Swindon Council taxpayers to take on all of the risk of the Eastern Villages development while the developers stands to gain all of the profit.

The Cabinet has itself acknowledged the fact that there is a significant risk associated with borrowing such a large amount of money, particularly in a time of imposed austerity. At a very minimum, the expectation for Swindon’s taxpayers to pay up to £2.5m per year in debt interest until the project’s completion is unfair given we are not getting any of the profit from the development.

We have already seen developers in Swindon seek to renegotiate their S106 contributions half way through building the homes, as was the case with Badbury Park. And who knows when the next economic downturn will next happen and should it happen in 2025, the Council could be looking at massively increasing Council Taxes in order to pay for this infrastructure.

The Labour Group support the approach to build the infrastructure early for the Eastern Villages. But the answer isn’t to saddle Swindon residents with £60m worth of debt but to work with the developers to get them to deliver the infrastructure early so that they are building desirable communities people want to live in.”