As the election approaches we will be told borrowing – and debt – it is a bad thing (see a potential councillor’s letter in the Frome Standard). But is that always the case? Historically Frome Town lost most of her land and buildings to Mendip when the District was created. This means we have less control as to what happens in the Town where these are concerned. We can’t earn money from rent, or save money for organisations by using our own buildings; and significant areas of land are not maintained as services from the District are reduced.
At the moment interest rates are very low and the Town Council can borrow money at a fixed rate. Borrowing money allows quite large sums to be raised for buildings like the Frome Town Hall, and paid back in small amounts over many years. Borrowing can also be used to replace an ongoing cost, a lower loan and interest repayment, as the IfF led Council did with the Cheese and Grain. Here an ever increasing annual subsidy – of around £35,000 a year – was replaced with a loan repayment of £33,000 and the loan used to refurbish the building, creating a significantly improved facilitate for Frome and a viable business – at a lower annual cost to the Town Council.
This Council has borrowed money for the Cheese and Grain; land and buildings on Saxonvale which saved youth training and also gives Frome people a stake in the future of that area; and the new Town Hall. Added to significant historic repayments from the purchase of the Cheese and Grain this results in around 10% of the current budget going on debt repayment – way less than most of us are used to in mortgage (or rent) repayments.
Importantly, none of the Town Council’s debt has been used to finance ongoing costs. Debt used to keep services ‘ticking over’ is simply unsustainable.
Careful, well managed, reasonable debt has put Frome in a much stronger position to support the organisations we believe play a central role in the Town’s life. Without ideology that tells us ‘debt is bad’, the IfF group have taken each of these decisions carefully and for the benefit of the town. Sometimes – but not always – debt can be a good thing.