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Cornwall Council set to borrow £600m for services

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Published by Sarah Yeoman at 8:35am 30th October 2018.

By Richard Whitehouse, Local Democracy Reporter

Cornwall Council looks set to take a £600million gamble in the hope that its ambitious investment programme will fund council services in the future.

The authority is aiming to borrow money in order to invest in projects which could provide new homes, workspace and infrastructure in Cornwall.

It has set a target of generating a 3.5% return from its investments from 2022 with the plan set to run for between 25 and 40 years.

Council chief executive Kate Kennally told councillors today that achieving that return was important as without the money the council could be forced to cut more services.

She told an all member briefing: “If you think about the next decade public services in Cornwall will not be funded by government grants, it will be through council tax, business rates and other sources.”

Ms Kennally said the challenge for local councils was how to fund services and meet the increasing demand for those services.

She said: “The investment programme is saying that if we net a 3.5% return we will meet those demands.

“If the council doesn’t have the investment programme then the authority would be going into the next decade having to make more cuts.”

She said the investment programme was “in tune” with the changes which are happening in local government finance as well as being in a position to help “Cornwall in a post Brexit condition”.

The chief executive said that through the current budget consultation the council was seeing how cuts and savings are “becoming harder and harder to deliver”.

The briefing heard that the investment programme would be focused on projects in Cornwall but investing in schemes outside the county had not been ruled out entirely.

Officers involved in the project admitted that the 3.5% return target was “ambitious, difficult and challenging” and said it might require looking further afield in future.

Penzance councillor Jim McKenna said he was concerned that the 3.5% target could mean that the investment programme would steer away from projects in more deprived areas in Cornwall which may not provide such a financial return.

He said the council should not consider projects on financial benefit alone and should also consider the social impact projects could have.

Cabinet member Bob Egerton said: “The investment programme is primarily focused on those projects that provide that 3.5% return. But that doesn’t mean that we will ignore those with social benefits.”

Cllr Egerton said the council had other funding streams which could fund those projects and would continue to pursue those.

Conservative councillor Philip Desmonde asked for assurances that the investment programme would use Cornwall-based companies to work on the proposed development.

He said: “When I went to the consultation on the proposed new innovation centre in Pool the delivery team was not Cornish based. The project manager and architect are from Exeter. When I talked to them they were talking about materials being brought in from Portugal.”

Cllr Desmonde said the investment programme gave a real opportunity for the council to invest in skills and companies in Cornwall.

He also said it was important for the investment programme to work with organisations such as South West Water, Environment Agency and Western Power when planning new developments.

Councillors were told there would be a need to set up a new company to lead the investment programme and this development company would be set up by April 2019.

The company was referred to as Devco in the presentation given to councillors and Linda Taylor said the council should change the name “so that residents don’t think our neighbours are involved”.

Cllr Egerton said Devco was a working title and no name had been chosen for the company. However he did joke: “We have got an idea for a logo that is like spiky hair type of think that we found somewhere in the archives”, referring to the much-derided logo which was produced for the One Cornwall council in 2008.

A report on the investment programme, complete with a business plan, is set to go to the council’s Cabinet in December but it will be debated behind closed doors due to commercial confidentiality.

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