Revealed: Local Authority liabilities hit £180bn

June 26, 2014 12:31 PM

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.

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