By Lee Trewhela

Cornwall Council has the 12th largest debt out of 382 local authorities according to new data concerning growing council borrowing across the UK this year.

The unitary authority’s total debt at the end of the 2024/25 financial year stands at just under £1.375 billion – an increase of almost £110 million on the previous year.

The BBC’s Shared Data Unit has found that the combined borrowing figure for the 382 councils across the country has now reached £122 billion – and it rose by seven per cent last year alone. Councils in the UK added £7.8bn to their growing debt pile in the space of a year.

Analysis of data from the Ministry of Housing, Communities and Local Government (MHCLG) shows UK councils owe a combined £122.2bn to lenders, equivalent to £1,791 per resident, as of April 2025. That is up seven per cent from a total of £114.5bn, the equivalent of £1,677 per resident, a year ago.

Councils can borrow funds to invest in projects such as schools, leisure centres and theatres – they can also borrow to invest in property that will bring in an income over and above repayments on the debt.

The recent rise is being partly driven by a near tripling of short-term lending from central government, which in some cases is being used to paper over holes in some council revenue budgets rather than pay for investments and town centre improvements.

Experts including Jonathan Carr-West, of the Local Government Information Unit (LGIU), said the spiralling levels of debt at local authorities was “extremely worrying.”  He said: “That is not a sustainable system. As one local government finance officer said to me, it’s essentially payday loans for local governments.

“I don’t think the government would say that’s its long-term ambition. They would say that is what we have had to do to paper over the cracks while we introduce a new funding system for local government.”

The data results for Cornwall Council:

Total debt at the end of 2023/24: £1,265,029,000

Total debt at the end of 2024/25: £1,374,685,000

Difference: £109,656,000

Percentage rise in debt: 8.67 per cent

Total debt per person 2023/24: £2,187.41

Total debt per person 2024/25: £2,377.02

Debt rise per person: £189.61

A spokesperson for the local authority said: “Cornwall Council is the fifth largest unitary authority in the country and it’s important to note that council borrowing can only ever be used for long-term investment in things like housing, schools and roads, and not for day-to-day services.

“The headline debt figures being reported don’t take into account council assets, our reserves or our ability to repay. Cornwall Council’s borrowing is affordable, regulated and matched by investment.”

Cornwall Council’s Liberal Democrat / Independent cabinet was asked about the council’s level of debt at its meeting on July 30.  Deputy leader Cllr Adam Paynter, who is also the cabinet member for resources, said that in his 24 years as a councillor on Cornwall Council and Cornwall County Council before it, the authority had never been on the Government’s “naughty step.”

He said: “Generally, Cornwall Council and its predecessor have been well-run financially.”

The cabinet backed a comprehensive Cornwall Council spending review and will now work on next year’s 2026/27 budget, which it will present to the full council in February. Cllr Paynter has said that a maximum 4.99 per cent council tax increase is almost inevitable over the next three years.

Cornwall Council’s Lib Dem leader Cllr Leigh Frost responded to concerns about the level of debt at a meeting of the council’s corporate finance scrutiny committee on July 15, likening it to a ‘mortgage.’  He said: “Cornwall Council borrows money to help fund major capital projects, things like housing, infrastructure, regeneration and facilities, much like a mortgage. This spreads the cost over the life of the asset. For example, borrowing helped part fund the new recycling facility and transfer station at Hallenbeagle.

“To be clear, borrowing cannot be used to cover day to day spending. This isn’t an overdraft to pay bills – it’s long term borrowing for long term assets.”

He added: “The council measures what is called the net debt – total borrowing minus the council’s cash investments. As of March 31, 2025, the net debt is £1 billion; £1.375 billion in borrowing offset by £354 million in investments. Both sides of that equation matter as the investments help reduce the overall interest costs for the council.

“Cornwall Council is the fifth largest local authority in the country, which means we have a very large and complex budget. Our net debt sits at £1 billion against a property and equipment portfolio worth around £3 billion.”

The councils with the largest level of debt are:

Birmingham – £3,352,457,000

Leeds – £2,640,673,000

Woking – £2,155,641,000

Edinburgh – £1,977,032,000

Glasgow – £1,671,812,000

Manchester – £1,608,568,000

Warrington – £1,575,609,000

Barking & Dagenham – £1,523,750,000

Aberdeen – £1,518,257,000

Croydon – £1,459,601,000

Newham – £1,448,894,000

Cornwall – £1,374,685,000

Graham Smith adds:  The council’s enthusiasm for enriching money-lenders is currently the subject of a comprehensive spending review.

A new financial strategy is due to be considered by the council’s cabinet on 12^th November.

Unless there is a change in policy, net debt is set to increase by £260 million this financial year, a rise of 26%.  It will cost an extra £250,000 per week in interest charges.

The pre-election promise of new council leader Leigh Frost to “get back to basics” was followed immediately by him repeating the contrary slogan of chief executive Kate Kennally that his administration would “unleash Cornwall’s potential.”

Challenged by Cornwall Reports to set a limit on borrowing, councillor Frost declined to identify what he called “an arbitrary number.”

The chutzpah of senior council officials is not shared in the financial services sector.  The credit rating agency Moody’s is no longer prepared to offer an opinion about Cornwall Council.  This fact alone exerts upward pressure on interest rates whenever County Hall asks for a loan.

The council’s own auditors have warned of a lack of transparency in the funding arrangements for arms-length companies like Corserv, Treveth and Celtic Sea Power.  The auditors are also worried that officials have an over-optimistic value of the council’s assets.

The £1.9 billion capital programme, which in future looks as if it will be starved of government grants unless County Hall softens its hostility to local government reform and regional devolution, is frequently used to hire consultants, and pay council officers’ wages, developing business plans for projects which then over-run, over-spend or are simply abandoned.

Cornwall’s taxpayers currently pay around £1 million a week in interest charges alone to the assorted moneylenders who finance the capital programme.  That £1 million a week comes from revenue and impacts on core council services.