Revealed: Local Authority liabilities hit £180bn
Jun 2014 26

Shocking new research conducted by our team over recent months demonstrates that Britain’s local authorities have long-term liabilities of more than £180bn, saddling future generations with today’s debt burden.

We found that local authorities in the UK had more than £180 billion in long-term liabilities on 31 March 2013, an increase of 8 per cent on the year before. Worryingly, this is almost seven times the amount raised in Council Tax in that year, meaning that those revenues are being used to service debt interest, rather than paying for essential frontline services.

On the positive side, some 214 councils decreased their long-term borrowing between 2012 and 2013, but some 105 councils increased their borrowing. 62 local authorities had long-term liabilities greater than or equal to their long-term assets. This is a real worry; it’s hard to see how those liabilities, often in the form of pensions, are going to be paid without increasing the amount that local authorities borrow. That means more of your council tax being spent on servicing debt interest rather than crucial frontline services.

Unless local councils take a hard look at their finances, and are honest about what they can afford, too many of our children and grandchildren are going to be left with a substantial bill. There is also a desperate need to wage a war on waste; with these huge liabilities to pay, councils can’t continue to fritter taxpayers’ money away. As if we didn’t need reminding, our debt clock offers some sobering numbers on the national debt – it’s terrifying to think that local councils are digging themselves into a £180bn hole as well.

Among the key findings of the research are:

  • Local authorities in the UK had more £180 billion long-term liabilities on March 31 2013 – an increase of 8 per cent on the year before
  • This is almost 7 times the amount raised in Council Tax in 2012-13
  • Some 62 local authorities have long-term liabilities equal to or more than the value of their long-term assets, including Birmingham City Council and Liverpool City Council.
  • The long-term liabilities add up to £2,828 per person in the UK
  • 38 councils had long-term liabilities of more than £4,000 per resident, 11 more than £5,000 and 4 had over £6,000 of liabilities per resident
  • Birmingham City Council, the largest local authority in the country, had the biggest long-term liabilities at almost £6 billion. On a per resident basis, these numbers are still amongst the highest in the country
  • Scottish councils have by far the biggest liabilities relative to their size, with average long-term liabilities of almost £4,200 per resident
  • Much of the long-term liabilities are related to the partially funded Local Government Pension Scheme, but 40 per cent take the form of long-term borrowing. This borrowing is mostly from the Public Works Loan Board (PWLB) and market lenders such as commercial banks.

Full data for each local authority across the UK can be found here.

Why slightly better news on public finances isn’t nearly good enough
Jun 2014 20

Public finances data released this morning shows continued but slow improvement in the state of government accounts. Net borrowing in 2013-14 was just £107 billion, down from the £107.8 billion estimated in March for Budget 2014, the £111.2 billion in December last year for the Autumn Statement and also the £119.8 billion estimated in March last year for Budget 2013. Continue Reading

The Stamp of Tax
Jun 2014 20

Today saw yet another blow for potential homeowners in Britain with news that the Government collected almost £1 billion more from home buyers in Stamp Duty in 2013-14 than it did in the previous year. The total soared by 19 per cent from £4.7 billion to £5.6 billon, according to Lloyds Bank. The average homeowner is therefore set to pay £12,000 in stamp duty over their lifetimes, with this figure skyrocketing in London to £38,000.

The rise is due in part to a combination an overall increase in the number of properties sold as well as the ratchet effect of more homes being dragged into higher bands. The ‘slab rate’ design in particular has been criticised by the TaxPayers’ Alliance amongst others. This means that buyers pay the higher rate on the full value of a transaction, not just the value over a threshold. The Institute for Fiscal Studies has called it ‘a strong contender for the UK’s worst-designed tax’.

London Central Portfolio and Cass Business School estimate that 13,866 people a year are reducing the asking price of their house to get under a threshold.

Much of the help given to buyers under George Osborne’s Help to Buy scheme will simply be taken back through increased Stamp Duty receipts thanks to higher prices. To me, this sounds like yet another seat for administrators on the whimsical carousel of Whitehall bureaucracy, where money is handed out by one administrator only to be taken away again by another.

The long term solution is clear: abolish Stamp Duty entirely. But in the mean time, home buyers desperately need relief now and the Chancellor should follow one of the three options in our 2013 proposals: halve the rates, reform the structure or double the thresholds.

If you haven’t signed up yet, add your voice to the StampOutStampDuty campaign with our quick tool to send a message to your MP. Go to

Peter Bazalgette, the Arts Council and their awesome responsibility to spend taxpayers’ money wisely
Jun 2014 19

Sir Peter Bazalgette, the chair of the Arts Council England, yesterday told a Centre for Policy Studies conference that the Government should continue give taxpayers’ cash to his organisation because the money is necessary to spend on ‘risky’ art projects. In other words, there are projects that profit-seeking companies and arts charities funded by charges and donations would see as a waste of their scarce resources. But this poor value for money isn’t a concern if it’s only taxpayers who will have to pay. Continue Reading

Manston Airport’s closure is sad, but we can’t subsidise it
Jun 2014 19

Thanet District Council in Kent has come under pressure to issue a compulsory purchase order (CPO) for local Manston Airport, which closed on 15th May, with the loss of 144 jobs. This marks a low point in the airport’s recent turbulent history, which had seen it host a James Bond movie and target 6 million passengers a year.

Manston Airport’s closure has proved contentious. A petition launched by Roger Gale MP has already attracted attention, and even Nigel Farage has waded in, describing the closure as “economic vandalism”.  This support for the reopening of Manston Airport has culminated in the council’s consideration of a CPO.

That Manston Airport has closed is disappointing, not least for those who worked there. But it isn’t surprising. The airport has seen a series of owners, and none succeeded in making it viable. It is reported that Manston Airport had been losing £10,000 a day before its closure. Thanet taxpayers would therefore face a bill for £3.65 million a year if it were to reopen – and that’s before factoring in its price tag and necessary investment.

It would not be the first public body to purchase an airport with taxpayers’ money. Prestwick and Cardiff airports were bought by the Scottish and Welsh Governments respectively. Both have gone on to eat up millions of pounds. These examples should serve as a warning to Thanet District Council – a local authority not known for its aviation expertise – to focus on essential services.

If that’s not enough, then it should remember its other bad investments. Dreamland, a derelict theme park, was subject to a CPO in 2011. £6.8 million of taxpayers’ money has since been ploughed into the site without generating a single penny in return. The port at Ramsgate, meanwhile, has seen its revenue plummet under council ownership – yet still consumes millions of pounds in investment.

Central Government learnt the hard way in the 1970s that ‘picking winners’ becomes a game of subsidising losers. Thanet District Council, unfortunately, is yet to accept this. Losing Manston Airport would be sad, but throwing millions of pounds of taxpayers’ money at a white elephant would be tragic.

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