Councils clock up mounting debts

PEMBROKESHIRE County Council has debts of nearly £200m, amounting to more than £1,500 a person, BBC research has said.

For more than a decade, town hall chiefs across the UK have been encouraged to borrow funds to invest in local schemes and commercial properties.

But after recent high-profile failures and with their combined debt level UK-wide now standing at £97.8bn there are fears that many authorities will go bust.

BBC Shared Data Unit analysis of data by the Department for Levelling Up shows UK councils owe a combined £97.8bn to lenders, equivalent to £1,141 per resident, as of September 2023.

Taking into account all types of local authorities, such as police and crime commissioners and combined authorities, the debt pile rises to £122bn.

Based on the figures analysed by the BBC Shared Data Unit, Pembrokeshire has the 14th highest level of council debt per person in Wales, and the 100th highest in the UK; neighbouring Ceredigion in 15th and 104th place respectively, while Carmarthenshire occupies sixth and 59th positions.

Pembrokeshire, with a population of 123,669, had a total amassed debt of £192,064,000, or £1,553 per person.

Ceredigion, population 70,658, had a total amassed debt of £106,867,000, or £1,512 per person; Carmarthenshire (population 188,191) had a total debt of £402,424,000, or £2,138 per person.

All financial data refers to quarter two of the 2023-’24 financial years.

The Wales total (population 3,105,410) was £5,684,341,000; with Swansea the highest and Bridgend the lowest of the 22 authorities.

For the past decade, councils UK-wide have been encouraged to make commercial investments to provide an alternative source of income aside from the usual mix of grants, council tax, rates and fees and charges.

Town halls across the country have bought hundreds of commercial assets, from shopping centres, to office parks, cinemas, energy companies and housing developments.

But council leaders, who have seen government grant funding reduce by 40 per cent in real terms since 2010, have had to borrow increasing amounts to pay for those investments.

In recent years, various commentators have warned that the debts held by councils – which must balance their budgets every year – are unsustainable. In 2020, chair of the Public Accounts Committee Dame Meg Hillier said the Government was “blind to the extreme risks” of council borrowing levels.

Pembrokeshire County Council has declined to comment on the BBC figures.

Ceredigion has been approached to comment.