Hounslow Council's debt has climbed to £608.6 million, according to the Treasury Management Annual Report 2024-25 presented at the Audit and Governance Committee meeting on Tuesday 15 July 2025. The council plans to manage its borrowing to ensure funding of the Council's future capital programme is affordable. The increase is primarily attributed to borrowing to support the council's capital programme, in line with the approved Treasury Management Strategy.
The council aims to use cash to delay the need to borrow while balancing the maturity profile of debt based on market conditions. The report states that interest rates are currently high, and the economic outlook is that borrowing should be taken short-term as rates are on the downward trajectory. In turn this would provide greater value for money to the Council and its residents as long-term debt is not taken at high interest rates.
The council's external debt rose from £548.6m on 31 March 2024 to £608.6m on 31 March 2025. The Treasury Management Annual Report 2024-25 noted that the council replaced internal borrowing, previously used to delay taking on external debt, with external loans in line with the approved Treasury Management Strategy.
The report also outlines several risks associated with the council's debt, including liquidity risk, interest rate risk, debt affordability, budget pressure and savings gap, refinancing risk, and geopolitical risk. The report details specific risk management tools and strategies used to mitigate these risks, such as setting operational boundaries and authorised limits, monitoring interest rate movements, and diversifying the investment portfolio.
As of 31 March 2025, internal borrowing for the Housing Revenue Account (HRA) was £87.0m, a decrease from £106.0m the previous year. This reflects the ongoing transition toward more externalisation of previously internally funded capital activity. The report notes that the Housing Revenue Account's (HRA) capital borrowing requirement changed significantly during the year, primarily due to the review and reprofiling of several projects. These adjustments are reflected in the financing variances and align with the revised HRA Business Plan approved by Cabinet in February 2025. The changes are largely driven by timing considerations within the self-financing framework. The ringfenced HRA remains dependent on continued capital investment to ensure its long-term viability, and borrowing for HRA capital expenditure continues to benefit from a 60 basis point discount on prevailing PWLB rates.
The report also mentions that the council is required to make an annual revenue charge to the Council's General Fund budget, called the Minimum Revenue Provision (MRP), which reduces the Capital Financing Requirement (CFR). This means that decisions to fund capital expenditure from borrowing may have an impact on the level of Council Tax or savings the Council must make.
The report indicates that the regulatory environment places responsibility on elected Members for the review and scrutiny of treasury management policy and activities. The Audit and Governance Committee, Cabinet, and Borough Council are involved in reviewing treasury management reports. The report also mentions that training sessions will be arranged for Members to further support them in discharging their scrutiny responsibilities.