Oxfordshire CC is to borrow up to £120m from itself to fund infrastructure improvements.
The money will be spent on improving roads and carrying out repairs to properties, including schools.
By borrowing from its cash balance instead of externally, Oxfordshire could save up to £51m in interest over a 30-year period, although it will forgo any interest it would earn by investing the money elsewhere.
Yvonne Constance (Con), cabinet member for environment, said: “Oxfordshire’s expected growth in homes and council tax income gives us the scope to borrow money to invest that will over the long term save us money.
“This growth dividend would mean serious money for serious work. Some of Oxfordshire’s roads have fewer than five years of life left.”
Bev Hindle, Oxfordshire’s strategic director for communities, said in a report due to be discussed by its cabinet today that the taxbase growth resulting from the county’s housing deal will enable the extra borrowing. The council is now projecting to receive an extra £5.7m a year in council tax by 2024.
The council’s cash balance is currently about £400m, which Mr Hindle said can be used for borrowing.
He said: “An advantage of internal borrowing is that the council does not incur the interest payment that is payable on external borrowing. The interest earned on the cash balance is foregone, however this is currently significantly less than the cost of interest payable on external borrowing. Currently an average of 1.3% is earned on cash balances compared to interest on external borrowing of 2.8%.”
Oxfordshire has about £6.2bn worth of highways assets. At present, 10% of its highways network is categorised as having less than five years life remaining, with a further 45% considered to have between five and 15 years life remaining. After last winter’s poor weather there are about 40,630 potholes that need fixing but that number is expected to increase by almost a third in the next five years. Footways are in a similarly poor condition.
About £10m is spent on highways maintenance and £2.7m on properties. Mr Hindle said: “This is insufficient to maintain the current level of condition let alone improve it.”
Poor surfaces can result in insurance claims. Oxfordshire has received 4,700 insurance claims in the last five years and paid out about £1.6m for successful claims.
“An increased expenditure in preventative maintenance could therefore significantly reduce future costs and effort in insurance claims,” said Mr Hindle.
Meanwhile, Oxfordshire has revealed that it will have stump up costs for unfinished work left by Carillion following its collapse.
“162 projects of the 602 projects undertaken by Carillion had known defects which were not complete when Carillion went into liquidation,” said Mr Hindle. “These projects range in size from small kitchen completions to school extensions. Carillion’s liquidation means that the council cannot require Carillion to rectify the defects as it no longer exists, the council will have to bear the costs itself.”
LGC reported last month how nearly 900 jobs at Oxfordshire CC could be lost within three years as it seeks to save £33m on its net revenue budget of about £422m in 2018-19. The county council is proposing a “complete overhaul” of the way it operates but said its transformation intends to protect frontline services and instead focus increasing the use of new technologies, cutting red tape and reducing back office administration.