It is a shame that Councillor Tim Crowley (Borrowing going up while assets going down, October 26) did not see fit to check his facts before rushing into print to try to score political points.

The reason why the council's assets fell by £49million last year was solely due a change of the rules by the Government about how council dwellings are valued.

Before the change the book value of our housing stock would have shown a £40million increase, but the new rules mean a reduction of £70million. It is purely a Government bookkeeping exercise.

Excluding the housing stock, the council's assets increased by £30million last year, partly as a result of new capital investment. Total council debt increased modestly in response to this by £3million to £66million, an increase of under five per cent. This is the sum of the long-term borrowing and also borrowing repayable within twelve months, while Coun Crowley looked only at long-term borrowing.

The reason for the increase in the average length of the council's outstanding loans is that, unusually, interest rates are currently lower for longer loan periods than for shorter ones.

Longer term loans therefore offer better value for money and the council has taken advantage of this to bring the average rate of interest payable on its borrowing down. The longer term loans will not necessarily be held to maturity. This will be kept under review as circumstances change, as part of the overall management of the council's debt portfolio.

My basic premise that the council's assets far outweigh its borrowings remains entirely valid. The reduction in the asset value of the council's housing stock is a one-off technical adjustment that doesn't affect the real benefit that our tenants derive from the stock. The council's borrowing to finance capital investment follows prudential guidelines and the first class team of officers we are fortunate to have in the council's finance team ensure that the management of both the council's financial assets and its debt portfolio is cost-effective and risk-averse.

Not only is Coun Crowley wrong about the council's financial position, he is also wrong about King Canute. Serious historians tell us that Canute was not trying to stop the tide coming in but showing his courtiers that he was not all powerful, despite their flattery.

COUNCILLOR JOHN DRAGE Lead councillor for resources