I REFER to the article headed “Interest rate rise could cripple debt laden council” (Hereford Times, August 22).

Readers will be interested to know the background to this subject and why we borrow The current debt is one that has been accumulated by all previous administrations. The highest interest currently being paid (11 per cent) is on a loan taken out by a previous administration in the 1990s.

Loans taken out by this administration are at fixed rates which are at an all time low, so subsequent rate rises will not affect repayments. It is disappointing to note that nobody bothered to check the accuracy of statements and opinions before going to print. A simple phone call would have done it.

We have borrowed money for the following : Leominster swimming pool; the new crematorium; Yazor Brook flood alleviation; Master’s House, Ledbury; Rotherwas Relief Road (with associated jobs); the city centre refurbishment; new cattle market; the Local Transport Plan; school maintenance, etc.

Are today’s critics suggesting we should not have undertaken these projects?

Like every council in the land, we both borrow and lend to each other for cash flow purposes because it is convenient, safe and cheaper for short term purposes than going to the Public Works Loan Board. This is part of the responsible day-today management of taxpayers’ money. We currently have more than £50 million invested – some with other authorities – producing valuable income.

Future borrowing is planned for economic regeneration including infrastructure, housing and business expansion which will bring jobs and prosperity to the county. Without this investment there will be stagnation and the continued drift away from the county of young folk in search of opportunity. That would leave a higher proportion of an ageing population needing support and fewer taxpayers to provide it.

That is why we borrow – not as Councillor James misleadingly suggests, with no evidence or logic provided, to secure our own future.

The article and comment were based on the opinions of the councillor whose own administration made its contribution to the accumulated debt. Those opinions included one that we should bring work back in house at a time when councils everywhere are currently having to outsource work and reduce services to cut costs. We have to reduce costs by £53m between 2010 and 2015.

There are no easy ways out of the present financial difficulties. Given that council tax provides no more than approximately 25 per cent of council income, options are limited: Cut costs, do less, raise taxes – or borrow at fixed, low rates for investment in our future.

We are concentrating on cutting costs which has involved losing many managers and staff and will also involve doing less in future.

The inescapable truth cannot be overstated – the money is no longer available to continue to do everything as councils have in the past. To make up the fall in central funding by raising council tax alone would require significant increases and put further pressures on an already stretched taxpayer. But as difficult as times are, we must still invest for the future of Herefordians and their children.

This administration considers the effects and benefits to taxpayers first and last in its decision-making against a background of drastically reduced funding. We will keep taxes down where we can. Where it is possible, we will encourage communities to take on services which you value but which we no longer have the money to support.

We will borrow prudently for the present and future benefit of Herefordians and continue to manage cash flow as we presently do. If anyone has any other workable suggestions, we are all ears.

TONY JOHNSON, Leader, Herefordshire Council.