Local authorities have long-term borrowings totalling £180bn and risk burdening future generations with debt, according to new research from the TaxPayers Alliance.
According to LG News:
The research found large disparities in the size of councils’ liabilities and the amount they are borrowing, even among similar authorities in the same region of the country.
The largest debt lies with Birmingham City Council with over £6bn in liabilities, according to the research, and Scottish councils have an average of almost £4,200 of liabilities per resident.
Jonathan Isaby, ehief Executive of the TaxPayers’ Alliance, said: ‘It is nothing short of immoral for councils to pile further debt on the next generation. Britain’s public finances are in real trouble, and local authorities can no longer avoid tough choices by putting the bill on taxpayers’ credit card.
‘Councils must look again at overgenerous pensions and wage a war on waste, or Britain’s debt burden may soon become too heavy to bear.’
However, the Local Government Association (LGA) branded the research as ‘misleading’. A spokesperson said: ‘This is yet another misleading report by the TaxPayers’ Alliance. Unlike central government, councils can’t borrow money to meet their day-to-day running costs.
‘Instead, council borrowing is used to meet the cost of long-term investments, such as key infrastructure projects including new schools and transport links, which ensure taxpayers are able to continue benefiting from high quality services.’
Responding to the report, local government minister, Brandon Lewis added: ‘All local authorities should be making sensible savings and stopping waste while protecting frontline services. Councils account for a quarter of all public spending so it is vital that the sector delivers value for money for the taxpayer.
‘This Government has greatly improved the transparency and accountability of councils allowing local people to hold them to account for the way their money is spent. We have also reformed the Local Government Pension Scheme so it remains fair and affordable to taxpayers.’
A CIPFA spokesperson added: ‘The Taxpayers Alliance’s own documents show that local authorities hold £274bn of long-term assets against their long-term liabilities of £180bn. To focus only on liabilities is unhelpful and doesn’t show the whole picture of local government finance.
‘In addition the two main areas they have focused on for their liabilities figure are the Local Government Pension scheme, which is the only significant pension scheme in the public sector that is funded.
‘And long-term borrowing by local government that can only be used for investment in capital assets. So that every pound borrowed is put into assets such as a road, a home or a school. Much of this borrowing is also at a very low market rate through the Public Works Loans Board.’