A debt-laden council has voted to spend an extra £154m on a housing project – despite being ordered to reduce its debt levels by the government.

Eastleigh Borough Council’s budget for the One Horton Heath development has jumped exponentially.

The current figure for the project – set to bring nearly 3,000 new homes which are yet to be built – now stands at £476.8m.

It comes after the Liberal Democrat-led council approved the motion to increase their borrowing on Thursday.

Daily Echo: Works take place on new link road for One Horton Heath scheme Works take place on new link road for One Horton Heath scheme (Image: Eastleigh borough Council)

But two days prior to the successful vote, the authority was told to stop borrowing in a government notice.

Council leader Keith House said: “We have delivered infrastructure first, as promised, and now move on to the first main home-building contract with homes of all tenures including the first large delivery of council houses, all in line with our business plan.

"The government is aware of our strategy and has supported it with infrastructure funding for One Horton Heath.”

The council is acting as the developer, which has resulted in the infrastructure for the development being put in before any houses are built.

A spokesperson told the Echo the £154m is the total capital budget being approved and this sum will not all be borrowing.

It will be funded in part by sales and rental income.

READ MORE: Ambitious housing scheme costing council £300,000 in monthly interest

In light of the notice issued by the government last week, Conservative MP for Eastleigh Paul Holmes said he is pleased the council’s debt is being taken seriously.

He said: “The council has a debt to spending ratio of over 40 per cent which is just dangerous for Eastleigh. I think that’s deeply unsustainable.

“There is only one person to blame for this and that is Keith House.

“The debt level must come down. There has to be a strong plan to reduce that level of borrowing and debt, and the council has 12 months to do that.

“I will be pressing the government for that debt level to come down.”

The best value notice sent to the council by the government said the authority has "significant debt relative to its size".

"As of 31 March 2023 it had debt 45 times their core spending power," it reads.

The notice urged the council to put in place a "moratorium on new debt-funded asset investment with a view to ensuring that the overall debt burden does not rise".