Almost 100 local authorities in England are faced with a higher debt ratio than Birmingham City Council, which effectively filed for bankruptcy last week.
Birmingham was struggling with debts more 4.36 times greater than its spending power for the 2021/2022 financial year but there are 98 councils who are facing even greater levels of debt.
This includes Woking council, with debts 146.4 times it spending power in 2021/2022. Woking, like Birmingham, was forced to issue a section 114 notice in June, stopping all but the most essential spending.
Also crippled by huge debt ratios are Spelthorne (93.4), Runnymede (73.7), Eastleigh (45.9), and Stevenage (31.9).
Jonathan Carr-West, chief executive of the Local Government Information Unit (LGIU), warned current funding is driving dozens of councils “to financial ruin”.
He said: “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.”
These are the 98 local authorities whose debt to spending power ratio is greater than that of Birmingham’s:
Local authority: Debt X times spending power
- Woking: 146.4 times greater
- Spelthorne: 93.4
- Runnymede: 73.7
- Eastleigh: 45.9
- Stevenage: 31.9
- Uttlesford: 28.5
- Brentwood: 26.5
- Basildon: 24.8
- Guildford: 23.2
- Epping Forest: 22.8
- Watford: 22.1
- South Cambridgeshire: 21.8
- Harlow: 20.4
- Welwyn Hatfield: 20.4
- Crawley: 19.8
- Dacorum: 19.2
- Ashford: 19.0
- Winchester: 18.3
- Adur: 18.2
- Surrey Heath: 17.9
- North East Derbyshire: 17.6
- Chesterfield: 17.2
- Norwich: 17.0
- Babergh: 16.7
- Mid Suffolk: 16.6
- Cambridge: 15.7
- St Albans: 15.7
- Warwick: 15.2
- Cherwell: 14.4
- Ipswich: 14.3
- Redditch: 14.1
- Canterbury: 14
- East Hampshire: 13.7
- Ashfield: 13.6
- Exeter: 13.4
- Eastbourne: 13.4
- Great Yarmouth: 12.7
- Oxford: 12.7
- Waverley: 12.1
- Mansfield: 12
- Cheltenham: 11.9
- Bolsover: 11.7
- Worthing: 11.4
- Lincoln: 11.3
- Rushmoor: 11.3
- Broxtowe: 10.92
- Hinckley and Bosworth: 10.86
- Fareham: 10.84
- Mole Valley: 10.77
- Gravesham: 10.6
- Thurrock: 10.47
- Dover: 10.13
- Newark and Sherwood: 9.86
- Epsom and Ewell: 9.83
- Warrington: 9.69
- Colchester: 9.67
- Tandridge: 9.49
- Bassetlaw: 9.16
- Tamworth: 8.74
- West Lancashire: 8.52
- Lewes: 8.5
- Gosport: 8.43
- North West Leicestershire: 8.22
- Folkestone and Hythe: 8.11
- High Peak: 7.95
- Stroud: 7.84
- Chorley: 7.83
- New Forest: 7.57
- Slough: 7.37
- South Kesteven: 7.33
- North Kesteven: 7.3
- Barking and Dagenham: 7.21
- North Warwickshire: 7.13
- South Holland: 6.67
- Rugby: 6.64
- Broxbourne: 6.58
- Nuneaton and Bedworth: 6.48
- Charnwood: 6.16
- East Devon: 6.08
- Oadby and Wigston: 6
- Mid Devon: 5.81
- Tewkesbury: 5.41
- Hastings: 5.37
- Lancaster: 5.27
- South Derbyshire: 5.21
- Halton: 4.89
- Leeds: 4.87
- Barnsley: 4.84
- Melton: 4.8
- Croydon: 4.79
- South Tyneside: 4.78
- Portsmouth: 4.78
- Castle Point: 4.66
- Wealden: 4.66
- Enfield: 4.59
- East Suffolk: 4.49
- Nottingham: 4.41
- Newham: 4.39.
A total of 192 local authorities in England are struggling with debts more than twice the size of their spending power.
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.”
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