Government ‘Minded To Approve’ £12.9 Million Borrowing For Isle Of Wight Council

The Government has confirmed it is minded to approve borrowing of up to £12.9 million for Isle of Wight Council under its Exceptional Financial Support (EFS) scheme.

In a letter dated 23 February 2026, Alison McGovern, Minister of State for Local Government and Homelessness, said the Secretary of State had considered the council’s request for support for the 2026/27 financial year.

The proposed capitalisation direction would allow the council to borrow up to £12.9 million to help manage what it describes as “unmanageable financial pressures”.

The letter makes clear the decision is provisional and subject to further review.

However, Council Leader Phil Jordan has warned that borrowing does not amount to a long-term solution.

‘Borrowing Is Not Funding’

Cllr Jordan said the Government’s approach does not resolve the Island’s underlying financial challenges.

He said:

“Borrowing is not funding. Borrowing is not fairness.

"The Government’s letter may sound reassuring but let us be clear.

"EFS is not new funding. It is not investment. It’s not a grant. It is permission to take on debt.”

He argued that taking on additional debt will not address sustained pressures in adult social care, children’s services, SEND provision or homelessness, nor will it resolve the wider funding gap the council says it faces.

Unique Island Pressures

Cllr Jordan reiterated the long-standing argument that the Isle of Wight faces structural costs not reflected in national funding formulas, including delivering services across the Solent and managing transport and infrastructure challenges linked to its geography.

He said successive administrations have made the case to Whitehall for a funding model that properly reflects the Island’s needs, but claimed the Government continues to rely on mainland-based formulas.

The Minister’s letter refers to a transition to “new funding allocations” as part of a multi-year settlement for local government, but does not outline any Island-specific adjustments.

Conditions And External Review

Before any final capitalisation direction is issued, the council will be required to undergo an external assurance review.

This will assess its financial position and governance arrangements, with the scope potentially widened at the department’s discretion.

The Government has also said it expects councils to “avoid or minimise” new borrowing where possible and to consider using capital receipts, provided disposals represent value for money and do not involve community heritage assets unnecessarily.

If approved, the borrowing would be subject to conditions, including:

• Only capitalising expenditure incurred under proper accounting practices

• Charging annual Minimum Revenue Provision (MRP) over a proxy asset life of no more than 20 years

The support is described as time-limited and temporary.

‘Beginning Of A Renewed Fight’

Cllr Jordan said the council would comply with the review process and continue engaging constructively with Government officials, but insisted the announcement should not be seen as positive news for Island residents.

He said the offer of borrowing does not represent the fair funding settlement the authority has sought and pledged to continue pressing for a model that reflects the real cost of delivering services on the Isle of Wight.

“This is not the end of the conversation,” he said. “This is the beginning of a renewed fight for fairness.”