CONWY’S cabinet unanimously voted in favour of charging cash-strapped schools interest on bridging loans.
The cabinet met at Conwy’s Bodlondeb HQ this week to discuss the controversial plans as the council faces a £24.5m black hole next year.
The move follows education budgets being slashed by 5% across the board, council tax being upped by 9.9%, and service budgets elsewhere being slashed by 10%.
But charging schools interest on loans from the council will generate around £39,000 for Conwy.
The decision will also revise how the school bridging loan request process works, with cabinet members claiming the change will make it easier for schools to apply and loans to be processed.
If councillors were to waive interest for schools in loan arrangements with the council, Conwy could stand to lose £5,570 a year in interest per every £100,000 loaned out. On the three loans totalling £693,000 that are currently outstanding, the revenue implication would be £39,850 in lost interest.
The report implies charging interest is fair as schools can also benefit from being in the black, despite some Conwy schools already cutting staff numbers and making redundancies after the education cuts.
The report reads: “As interest is paid across to schools when in surplus, it seems reasonable that interest is charged when in deficit.
Cllr Julie Fallon is the cabinet member for education and proposed the cabinet backed the report.
“This is purely about trying to be fair across the board with schools,” she said.
“If members do approve if interest is charged, then it is also recommended that the application of the interest is determined by the school budget forum.”
Leader Cllr Charlie McCoubrey added, “It is a fair way of doing things, which hopefully will facilitate schools to manage their budget in the difficult situation we are all facing,” he said.
Cllr Fallon’s proposal was seconded by Cllr Chris Cater, and the cabinet voted unanimously in favour of the change.