Council accused of ‘pleading poverty’ while investing £21m in bonds

Caerphilly Council has raised a few eyebrows by investing millions in government bonds at the same time it allegedly “pleads poverty” in its budget proposals.

Plaid Cymru councillors have questioned how, and why, the local authority could afford to enter a total of £21m in various investment schemes in recent months, yet propose a 6.9% council tax bill rise for residents.

“I fully accept that our investments bring in revenue,” Plaid councillor Gary Enright said. “But these investments are long- term financial commitments, which in the current state and climate is, in my opinion, financial negligence. 

“This council has a duty to protect the public purse.”

The local authority has defended the investments, arguing they were previously approved by full council and are “fully compliant” with regulations.

Eluned Stenner, the cabinet member for finance, said returns from investments “make an important contribution to the council’s finances and support the wider revenue budget and delivery of services”.

Plaid, however, argues the multi-million-pound investment is difficult to reconcile with cabinet members’ statements about the council’s financial pressures.

The draft budget proposals for 2024/25, which are currently out for consultation, show Caerphilly Council is anticipating a £46m funding shortfall over the next two years.

As a result, a raft of cuts and reforms have been proposed, as well as a 6.9% council tax rise.

Plaid councillor Colin Mann said residents were “being asked to dig even deeper into their pockets”.

“Are residents being misled?” he asked. “What sort of organisation pleads poverty whilst at the same time investing huge sums of money in long-term investments? 

“People have said to me that they feel that the council is taking money under false pretences.”

“In light that the council needs to save £46.7m, what would you rather do with that £21m plus? Cllr Enright added. “I’m all for saving but I come back to the council as an organisation that is overly reliant on saving too much of the money we have.”

He said the impact of the budget shortfall could be seen through the controversial proposal to shut the Coffi Vista site, which critics argue also serves as a valuable community space.

Cllr Stenner, however, said the money invested had come from reserves “earmarked for specific purposes” and surplus balances arising “due to fluctuations in daily cash flows”.

“None of the £21m increase in investments between 31 March, 2023 and 30 September, 2023 was in long-term investments or gilts,” she added. 

“All the funds invested during this period will mature during the 2024 calendar year. As already indicated, investment balances change frequently and total investments are currently £162m.”