Powys explains £283million debt
The Local Democracy Reporting Service is reporting that councils across the whole of Wales are currently more than £5 billion in debt according to a report released by the Public Accounts Committee this month, with Cardiff alone owing nearly £900 million.
The report showed the massive amount of debt owed by local authorities right across the UK to lenders, which some say could leave residents facing an “extreme and long-lasting” impact on local services.
It came after Reach Shared Data Unit analysis of data by the Department for Levelling Up showed that councils across the UK owe a combined £97.8 billion to lenders as of September 2023, a sum that is equivalent to £1,455 per person.
It added that the number rises to over £122 billion when other authorities such as police and crime commissioners are taken in to account, with Birmingham said to have the highest levels of debt in the UK at £2.9 billion.
As a result, some council leaders across the country have described issues from years of under-funding from government which has forced them to take out loans and invest in commercial properties just to keep services running.
Dame Meg Hillier is chair of the Public Accounts Committee and said: “Some of the outlier examples of high local authority debt are staggering, and the impact on services for residents is liable to be extreme and long-lasting.”
In Wales, a total sum of £5.6 billion worth of debt has been reported across all of its 22 authorities. In comparison, Scotland has a total of £14 billion, while England has a staggering figure of £102 billion.
Powys County Council explains its £283,180,000 debt:
“The council is required to operate a balanced revenue budget which broadly means that cash raised during the year will meet cash expenditure. Part of the treasury management operation is to ensure that this cash flow is adequately planned with cash being available when it is needed.
“The second main function of the treasury management service is the funding of the council’s capital plans. These plans provide a guide to the borrowing need of the council, essentially the longer-term cash flow planning, to ensure that the council can meet its capital spending obligations.
“This management of longer-term cash involves arranging short or long-term loans or using longer-term cash flow surpluses. On occasion, when it is prudent and economic, any debt previously drawn may be restructured to meet risk or cost objectives.
“The council’s debt relates to capital investment in council assets, including, but not limited to, highways improvements; investment in the school’s estate; council buildings such as libraries and museums; sports and leisure centres; improvements to the existing council housing stock and the construction of much needed social housing.
“The cost of funding the capital programme is closely monitored due to the impact on the budget and the ongoing funding constraints. The council aims to minimise the cost of borrowing on the revenue budget and other funding sources need to be maximized such as capital receipts and external grant funding.
“The council’s Statement of Accounts and Treasury Management Strategy are published annually which include the council’s debt position, forward estimates, prudential indicators and the impact of the debt on the revenue budget. The Governance and Audit Committee receive quarterly reports on the council’s treasury management activity. All of these documents are available on the council’s public website.
“The Head of Financial Services (Section 151 Officer) reports that the council complied with this prudential indicator in the current year and does not envisage difficulties for the next few years. This view considers current commitments, existing plans, and the proposals in this budget report.
“The projected increase in the Capital Financing Requirement (simply the total historic outstanding capital expenditure which has not yet been paid for from either revenue or capital resources) over the medium and longer term must be reviewed annually to ensure that the capital investment plans remain affordable, prudent and sustainable.”
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