Local authorities in Wales have more than £5 billion worth of debt

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 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.

Speaking after the figures were published, a spokesperson for the Welsh Local Government Association said the lower figure seen in Wales could be because Welsh councils have not borrowed as much to support commercialisation strategies.

They said: “Unlike other local authorities in the UK, councils in Wales have not borrowed significantly large amounts to fund property or other investments as part of a commercialisation strategy.

“Local authorities in Wales strictly adhere to the Prudential Code and other guidance issued by the Chartered Institute of Public Finance and Accountancy and invest in schools and other areas of the public realm of direct benefit too their communities.”

Cardiff Council currently has the highest amount of debt in Wales with £858,277,000 million. Swansea Council is the second highest overall with a total of £693,821,000 million, while Merthyr Tydfil is currently reporting the lowest figures at £94,925,000.

Despite the data being released at a time which many councils across Wales have described as the most difficult they have ever faced financially, Cardiff councillor Chris Weaver, cabinet member for finance, modernisation and performance, said the council was confident the spend in this area was manageable.

He said: “Cardiff is by far the biggest local authority in Wales with the biggest school building programme in Wales and the biggest council-home building programme in the country. The majority of this debt relates to that capital investment in new schools and new council homes – and that can affect comparisons of the total borrowing between authorities, as many councils in Wales don’t directly own or operate council housing stock.

“We have plans to build 4,000 new council homes to help tackle the housing emergency and we are building new schools across the city to replace ones which have come to the end of their lifespan. This is the biggest school-buildings project and the biggest council-homes building project in Wales.

“These investments are helping improve the lives and the opportunities for residents and children and, in the case of the council homes programme, will bring a return on investment through rents, which will enable us to build even more council properties and affordable homes which are badly needed.

“The council is also investing in projects like the new arena and the regeneration of Cardiff Bay which will create thousands of jobs across the hospitality, hotel, tourism and retail sectors. The arena project is also on an invest to save basis with money spent being recovered by the council through a long-term lease with Live Nation who will operate the arena.

“We are also – among many other things – investing in public transport which will see a new tram/metro line delivered which will link the city centre to the Bay, serving the new arena and the new developments in the Bay. This capital spend also refers to investment in existing buildings, highway infrastructure, disabled adaptations, and other regeneration projects and includes the council’s historic capital expenditure, approved in previous budgets, set by council and its predecessor authorities many years ago.

“The council’s very detailed accounts have been audited and signed off by the Wales Audit Office. It is a manageable debt and relates to the normal workings of a functioning local authority including investment in existing buildings, highway infrastructure, disabled adaptations, new affordable housing schemes and regeneration projects.

“We know that often people are unsure of the difference between revenue and capital budgets. Right now we are consulting on cuts to our revenue budget, this is the budget for the day-to-day running of council services like social care and wages for teachers, refuse collectors and all the things that a council offers its residents on a daily basis.

“The Capital budget, which this story refers to, is about investment in the city and in its buildings and infrastructure. We are confident that the spend in this area is manageable and will only help the city grow, creating jobs, delivering affordable homes alongside council homes, while improving our schools for learners for many years to come.”

A Swansea Council spokesperson added: “Through prudent and appropriate management of finances, the council has been able to borrow at low rates of below 2per cent. This means the amount we’re repaying on the borrowing is considerably cheaper than is now available.

“Much of the debt is historic but more recent borrowing has been used to invest in key projects including major school improvements and city centre schemes which are benefiting our children, local families, businesses and visitors to the city.

“The council has fully budgeted for the cost of repaying the debt – with the costs of repaying any new borrowing covered until the end of the decade. Swansea Council has the best liquidity rating of any council in Wales, meaning we’re one of the most financially secure.”

The full list of council’s in Wales and how much debt they have are below:

Bridgend- £96,867,000

Cardiff- £858,277,000

Newport – £135,499,000

Swansea- £693,821,000

Conwy- £115,556,000

Vale of Glamorgan- £145,656,000

Torfaen- £103,391,000

Rhondda Cynon Taf- £288,639,000

Monmouthshire- £128,625,000

Ceredigion- £106,867,000

Pembrokeshire- £192,064,000

Merthyr Tydfil- £94,925,000

Caerphilly – £286,085,000

Isle of Anglesey – £119,570,000

Gwynedd – £220,593,000

Flintshire- £293,844,000

Neath Port Talbot- £279,953,000

Powys- £283,180,000

Camarthenshire- 402,424,000

Blaenau Gwent- £145,545,000

Denbigshire- £230,102,000

Wrexham- £349,839,000