‘Trump’s War’ putting pressure on Powys finances

By Elgan Hearn, Local Democracy Reporter

The rising cost of fuel, materials and transport costs caused by Donald Trump’s war with Iran could force Powys County Council to borrow more money to fund its capital building projects.

At a meeting of Powys County Council’s Finance Panel next Wednesday, councillors will receive an update on the Capital Budget as it stood at the end of February.

The report shows that the council has earmarked £83.19 million to be used on building and maintenance projects. By the end of February, only £44.21 million – which represents 53% of the budget – had been spent.

The report said: “Because grant funding often arrives part way through the year, sometimes very late, services do their best to spend it before the year ends.

“This usually means a lot of the spending happens in the final months, and that’s exactly what we’ve seen again this year. The spend remains low against budget but substantial spend is expected through to the year end.”

To finance the programme, the council needs to borrow £26.68 million, which equates to 32% of the £83.19 million total. The interest accrued on this sum is charged onto the revenue budget.

The council “anticipates” that this amount of borrowing will drop but the conflict in the Middle East is causing an issue.

The report said: “Since the end of February, the conflict between the United States and Iran is already causing major disruptions to global energy markets, shipping routes, and wider supply chains, all of which may have implications for the council and schemes in the capital programme.

“Higher fuel, transport, and materials costs could increase the overall price of delivering schemes, while an increase in interest rates will make it more expensive for the council to borrow to fund its capital expenditure.”

The council says it will continue to monitor the impact the conflict has on its plans and “act where necessary”.

Director of Corporate Services and s151 Officer, Jane Thomas, said: “Borrowing to support investment in the council’s assets is essential to maintain services.

“Investment has to be disciplined, and our limited resources prioritised to ensure the effective and affordable management of the council’s assets whilst ensuring that the servicing of our debt remains prudent, affordable and sustainable.”

Comments from the Finance Panel will be added to the report which is expected to go before a meeting of the Liberal Democrat/Labour cabinet on Tuesday, May 19.