Newcastle Council will spend its way out of recession

May 12 2009 by Adrian Pearson, The Journal

CITY leaders have pushed council debt past the £1bn mark as they increase borrowing by £150m to spend their way out of the recession.

Newcastle Council leader John Shipley has given officers the green light to increase borrowing to pay off debt and hand out cash for a housing and regeneration programme.

Mr Shipley’s plan to beat the recession has pushed the council’s overall debt passed the £1bn mark, although most of this includes long-term borrowing spread out over decades.

Debt at Newcastle Council is now equal to more than £3,700 for every person in the city, a figure built up over past Labour administrations.

Projects such as the £22m bid to buy the Gosforth Northern Rock Tower are now being funded out of the latest borrowing pot, which aims to tap into historically low interest rates.

When debt repayment and other commitments are taken into account the city’s Liberal Democrats have up to £70m still spend on pet projects over the next 11 months. Cash will be spent on capital projects, but the council did not want to go into details about which buildings it is interested in buying for fear of pushing up the price.

The hope is the property market has now bottomed out and the council will be able to buy buildings for regeneration projects at knock-down prices.

Opposition councillors said the council was embarking on “a handful of unjustified schemes with no long-term value” and warned the city would pay the cost of any reckless spending.