All of England's councils with more debt than 'bankrupt' Birmingham - full list

13 September 2023 , 08:30

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There is uproar after Birmingham City Council was effectively declared bankrupt (Image: Nick Wilkinson/Birmingham Live)

Almost 100 local authorities in England have a higher debt burden than ‘bankrupt’ Birmingham council, according to the latest budget data.

Birmingham council issued a section 114 notice last week, effectively declaring itself bankrupt. This puts a stop to all new spending with a few exceptions. These include funding statutory services, safeguarding vulnerable people, paying staff and honouring existing contracts.

The council has been forced into the action due to not not having the funds to pay its bill to settle historic equal pay claims. But while Birmingham’s troubles may raise questions about the governance of the council, Jonathan Carr-West, chief executive of the Local Government Information Unit (LGIU), said that the existing funding system “is driving dozens of councils across the country to financial ruin.”

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Incredibly, 98 local authorities' finances are in an ever worse state (Birmingham Live)

“LGIU has been supporting councils for 40 years, but our members tell us that they are experiencing the most acute crisis they can remember. Not only has the amount of funding been slashed by government but councils have been made to rely on short term, piecemeal funding that inhibits effective financial management.

“Central government has kept councils living from hand to mouth and from year to year for far too long. Birmingham is the biggest council to fail so far, but unless something changes, it won’t be the last.” A total of 192 local authorities in England have debts that are more than twice the size of their spending power. Some 98 of those had ratios worse than that of Birmingham council.

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Birmingham is one of them, with the council’s debt being 4.4 times greater than their spending power in the 2021/22 financial year, the latest available. However, 98 councils have greater ratios. Woking council - which itself issued a section 114 notice in June - had debts 146.4 times its spending power in 2021/22.

That’s followed by Spelthorne (93.4), Runnymede (73.7), Eastleigh (45.9), and Stevenage (31.9). In all, a total of 45 local authorities have debts that equate to more than 11 times their spending power. Those are the extreme cases though.

There are 86 local authorities which have debts equal to between twice and four times their spending, another 50 where it’s between four and 10 times spending, and 38 between 10 and 20 times of spending.

Some of England’s biggest councils are among them. Watford has debts that amount to 22.1 times the council’s spending power. Ipswich’s debts are 14.4 times its spending power. In Oxford the ratio is 12.7 times spending power, in Warrington it’s 9.7 times, in Leeds 4.9 times, in Barnsley 4.8, in South Tyneside 4.8, in Nottingham 4.4, in Newham 4.4, in Westminster 4.1, in Reading 3.9, in Newcastle 3.7, and in Manchester 3.2.

Cllr Pete Marland, Chair of the Local Government Association’s Economy and Resources Board, said:“Councils have faced a choice of either accepting funding reductions and cutting services or making investments to try and protect them. This was an approach that was encouraged by government.

“While some councils have made investment decisions to help them replace funding shortfalls, the majority of council borrowing is focused on investing in projects that contribute to their local economies or help them provide core functions, such as housing and transport schemes.

“When making investments, councils are required to follow strict rules and assessments to ensure they invest wisely and manage the risk of their investments appropriately.”

The 98 local authorities whose debt to spending power ratio is greater than that of Birmingham’s:

Woking: 146.4 times greater

Spelthorne: 93.4