A BBC Shared Data Unit has revealed the debts of each local authority in the UK, as well as the levels of debt per resident.
Local authorities across England, Scotland, Wales and Northern Ireland (councils only, so discounting fire authorities etc.) owed a combined £97.6billion as of September 2023.
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The 22 Welsh councils owed £5.6billion (5.7% of the UK total) – which is higher than our population share (~4.9%). The debt-per-resident figure (£1,794) is also higher than the UK figure (£1,455).
However, 35% of all Welsh local government debt is shouldered by just three local authorities: Cardiff, Swansea and Carmarthenshire.
Additionally, the six local authorities with the highest debt burdens – Cardiff, Swansea, Carmarthenshire, Wrexham, Flintshire and Rhondda Cynon Taf – owe more (£2.89billion) than the remaining 16 local authorities combined (£2.68billion).
What might council houses have to do with this?
The report was excellent timing because there’ll be more on this at State of Wales next week.
11 local authorities in Wales still have council housing. 8 of those are in the top half of the Welsh table for total debt.
During the 1980s and 1990s, the UK Government tried to nudge councils to transfer council housing stock to housing associations.
One of the ways they did this was by allowing the UK Treasury to claw back any surplus councils made from rents under a system called the Housing Revenue Account (HRA). This surplus was then used to cover shortfalls in other local authorities where spending exceeded expected rental income. It also subsidised rent rebates.
In the 2010s, councils that still had council housing stock could buy their way out of the HRA system and become self-financing, meaning they could reinvest any surpluses in their housing stock. In exchange, they had to take on debt from the UK Treasury’s Public Works Loan Board (which is how these figures were calculated).
Is this good for Bridgend?
As you can see in the table, Bridgend comes out of the report “favourably”. BCBC has the second lowest total debt burden and lowest debt-per-resident in Wales.
Also, Bridgend placed 231st (out of the 381 councils across England, Scotland, Wales and Northern Ireland) for total debt and 221st place for debt-per-resident.
Bridgend Council borrows to support its capital spending programme (one-off spending on new things). It’s considered bad financial practice to use borrowing to cover revenue spending (spending on day-to-day services). See more at State of Wales: How Wales Works – Capital vs Revenue Spending. That means that Bridgend Council wouldn’t be able to use borrowing to fill the £16million funding gap in the current draft budget.
Nonetheless, Bridgend Council loaned £8million to Thurrock Council. Thurrock effectively declared bankruptcy in 2023 and is placed fourth on the UK list. As far as I know there haven’t been any further updates on the record about BCBC reclaiming that money – though apparently it’s been sorted.
The full list of local authorities is available here. The methodology is available here.
