City of York Council’s debts are equivalent to £1,602.91 for each of the city’s residents, analysis of the latest figures has shown.
Council debts stood at £331.45m at the end of the 2024/5 financial year, up from £325.05m 12 months previously, according to figures analysed by the BBC’s Shared Data Unit.
Cllr Katie Lomas, finance spokesperson for the council’s Labour administration, said its below-average debts were prudently managed with borrowing helping to invest in the city’s future.
But the council’s Liberal Democrat and Conservative opposition groups said they were concerned about the way debts were being handled in light of the increase.
It comes as Government figures showed UK council debts grew by seven per cent in the year up to April, from £114.5bn to £122.2bn.
The total debts owed by UK local authorities was equivalent to £1,791 per resident as of April, up from £1,677 a year earlier.
BBC analysis showed the national increase was partly driven by a near-tripling of short-term lending from central government to cover gaps in council revenue.
Jonathan Carr-West, of the Local Government Information Unit (LGIU) think tank, said the growth in such borrowing was unsustainable and worrying, likening it to payday loans for councils.
A Government spokesperson said the current system of council funding was broken and it is aiming to reform it to make it fit for the future.
Work on a Fair Funding Review looking at how government money is allocated to councils remains ongoing but this has sparked concerns that York could lose out.
£6.4m rise in a year
Figures from the Government show that York’s debts rose by £6.4m year-on-year, a rise of 1.98 per cent.
Its debt-per-head figure rose by £30.95 year-on-year, from £1,571.96 at the end of 2023/4.
York and other councils’ debt totals include both short-term borrowing from both public and private creditors such as the Government or banks as well as long-term loans.
Councils take out long-term loans to fund public works projects, purchase buildings or assets or finance other investments expected to bring in returns.
York’s debt figures compare regionally to North Yorkshire Council’s, whose debts stood at £466,934,000 by the end of the last financial year, up by almost £34.6m in 12 months.
North Yorkshire Council’s debts equated to £743.96 per person, up from £688.89 at the end of the 2023/4 financial year.
In Yorkshire and the Humber, Leeds City Council had both the largest overall debt and highest figure per head as of April, almost £2.65bn and £3,183.79 respectively.
The council with the lowest overall debt and per person equivalent was Calderdale in West Yorkshire, with £147,616,000 and £707.19 respectively.
Birmingham City Council had the largest overall debt of any in the country, owing more than £3.35bn as of April.
Financial problems at the council culminated in September 2023 with it issuing a Section 114 notice, effectively declaring bankruptcy.
Woking Borough Council, in Surrey, had the largest debt-per-person figure of any local authority nationally by the end of 2024/5, totalling £20,601.33.
The council issued a Section 114 notice in June 2023 in response budget deficit of more than £1bn.
Surrey County Council saw the largest rise in its debt of any nationally, with the amount it owed increasing by almost £346.6m to around £1.07bn by April.
Almost half of the 382 UK councils with figures available, 49 per cent, saw their debts increase year-on-year.
The proportion of those which maintained their debts at existing levels was 14 per cent, while 37 per cent saw theirs fall.
‘No cause for concern’
Commenting on York’s figures, Labour Finance Executive Member Cllr Lomas said its debt levels were not a cause for concern and were in line with approved budgets.
The executive member said: “Borrowing is taken on to fund major capital schemes that deliver on our key priorities and which invest in the city’s future, providing facilities for services supporting residents and maintaining value in our assets.”
But Cllr Nigel Ayre, leader of the Liberal Democrat opposition, said the Labour administration’s dither and delay over projects such as the York Outer Ring Road were driving borrowing up.
The estimated cost of dualling the ring road has risen to £164m compared to £66.4m when it was approved in 2024 due to inflation and other factors.
Cllr Ayre said: “York’s debt is rising because Labour have failed to control costs, leaving residents paying more for less, instead of properly investing in the infrastructure we need.”
Conservative group leader Cllr Chris Steward said they had been concerned about the rise in council debts for some time.
Cllr Steward said: “Whilst some is due to tangible projects like the York Central development, which we support, there is all too often poor oversight of such projects and a perception amongst some councillors that capital spend is cheaper than revenue as only a proportion is accounted for each year, when it is borrowed money and therefore works out more expensive.”
The Government’s spokesperson said that although councils were responsible for managing their own budgets, decisive action was being taken to help deliver local public services.
The spokesperson said: “We have announced over £3.4bn of new grant funding for local services on top of the £69bn already made available this year to boost council finances, and we will go further to reform the funding system.”
