Salford City Council is proposing to borrow £25m to fund fire safety improvements to high-rise buildings – but is putting pressure on the government to meet some of those costs.
Borrowing that amount of money is set to cost the council £1.25m a year in interest which “would create significant pressure upon the council’s budgetary position”, according to a report due to go before a special council meeting on 23 August.
Salford is proposing to carry out works on nine tower blocks it owns in Pendleton, although deputy mayor John Merry (Lab) said the local authority “is not accepting liability for the works”. This is because Salford entered into a PFI contract with Pendleton Together Operating Ltd (PTOL) in 2013 to manage works on the council’s housing stock which was completed at the beginning of this year.
However, Cllr Merry said “we do believe… it is crucial that legal disputes do not prevent essential works being carried out”.
LGC previously revealed how councils are struggling to fund fire safety improvements to buildings as part of the response to the Grenfell Tower fire disaster.
Data supplied to the Department for Communities & Local Government showed Salford had only £2.5m of reserves in its housing revenue account at the end of March 2017.
In the report due to go before full council next week, Salford’s head of financial management Joanne Hardman said charging the £25m borrowing to the housing revenue account “would breach the debt cap set by the government and would exacerbate existing budget pressures within the long term HRA business plan”.
She added: “If charged to the general fund the additional cost would increase the revenue budget funding gap in 2017-18 and future years unless significant reductions were made to existing capital investment plans.”
As a result the DCLG has been asked “to provide assistance in meeting any costs associated with essential works”, the report said.
City mjayor Paul Dennett (Lab) said: “We have called on government, as a city council and through the work of the Greater Manchester high rise taskforce, to financially support councils and housing associations so that they can respond swiftly to legitimate public concerns. Residents must be able to feel safe in their home, whatever their tenure.
“This is not an easy time for local authorities – government cuts have taken a severe toll on council budgets. This will be a strain on our resources but it is important that we respond effectively to address safety issues raised by the Grenfell Tower tragedy and we must do all in our power to ensure that a fire such as this never happens again.”