Wandsworth Council has been awarded a Triple A rating. This means that the council’s financial management, budgetary control and resilience have been judged to be among the best in the world – and on a footing than the United States Government. Securing this top rating from credit agencies Moody’s and Fitch means that the council will find it easier and cheaper to raise funds from the money markets if it needs to finance big capital projects. This could be of greater relevance with the general power of competence under the Localism Act.
“In regard to its budgets, LBW (London Borough of Wandsworth) is well positioned to manage the spending reductions necessary to offset funding reductions from the UK government in the next few years.
“While the Comprehensive Spending Review (CSR) will reduce grant funding to LBW by approximately £45m over the current and the following three fiscal years, contributing to the council's requirement of over £70m of budgetary adjustments, Moody’s is encouraged by the borough's sound track record of keeping expenditure within budget and implementing significant cost reductions, whilst maintaining good levels of services for its residents.”
In its assessment Fitch said:
“The ratings reflect Wandsworth’s almost debt free position, solid record of conservative budgeting, prudent investment policies and its financial precaution.”
“Wandsworth’s budgetary planning is prudently managed…..Comparing both operating revenue and expenditure year-on-year, Wandsworth achieved significant savings in the years when the council faced a decline in revenues.
“Wandsworth has a proven track record in reducing costs……Wandsworth was able to withstand the financial and economic crisis with overall surpluses. Moreover the council was able to adequately compensate for revenue shortfalls in the budgetary years 2008/9 and 2010/11 and reduced debt from 2005/6 to 2009/10. Future performance is dependant on the council’s ability to compensate for a further decline in government transfers and to attract private investment for development opportunities. Fitch views this as achievable, given the past track record.
“The council’s longstanding policy since the late 1970s is to remain debt free if possible and to reduce debt using prudent business practices. This means that long-term borrowing will only be an option if it is financially beneficial or as a last resort.
“At end of March 2011 the council had total debt outstanding of 0.8 per cent of current revenue….so the council is virtually debt free.”
The council’s cabinet member for finance and corporate resources Cllr Guy Senior said:
“This rating is a clear demonstration of the strong and prudent financial management that has been a hallmark of this council for many years.
“Having a Triple A rating opens up new revenue streams to the council should we need them. If we have to raise funds for big capital investment projects like the extension of the Northern Line to Nine Elms then we would be able to do at the best rates of interest.
“Investors and lenders will be prepared to invest money into the borough at low rates of return because they know that we are a safe and solid bet. This means our council tax payers will be getting the best deal available on big capital projects that make Wandsworth a better place to live.”
“Underpinning everything we do is achieving the best possible financial return for our residents.”