THE scale of local council debt in Cumbria and the rest of the UK has been revealed this week.

Research by the BBC Shared Data Unit has shown that Cumberland Council’s total amassed debt, by the second quarter of 2023/24, was £254,015,000.

With a population of 273,300, this equates to £929.44 per person.

According to Cumberland Council, the debt was inherited from the previous district councils and Cumbria County Council before the local government reorganisation last year.

Councils can only borrow or use capital receipts to pay for capital funding such as new roads, schools and leisure centres, according to a statement from the office of the council leader.

The debt inherited by Cumberland Council ‘stretches back many years’ and “was used to pay for these community infrastructure investments which provide economic and other benefits to our residents and businesses,” it said.

The statement adds that in recent times, some councils have borrowed to invest and provide them with a new revenue stream. However, where these investments have failed, they have left those councils with a large amount of debt which they are struggling to service.  

The statement adds: “Cumberland Council is not in this position. Any borrowing is carried out in compliance with the prudential code and ensures that our capital expenditure and investment plans are affordable and proportionate and that all external borrowing (and other long-term liabilities) are within prudent and sustainable levels.

"Our approach to borrowing also ensures that risks are proportionate.

“We constantly monitor our borrowing requirement and report current and future proposed borrowing in our Medium-Term Financial Plan which is scrutinised by our Audit Committee and external auditors.

“We have been open and transparent about the fact that, like many other councils, our revenue budget remains challenging particularly due to high demand for adults and children’s services.

"We are currently in the process of developing a transformation plan which will put the council on a more sustainable financial footing in the coming years.”

Speaking on the council’s financial position, the council leader, councillor Mark Fryer (St Johns and Great Clifton, Labour), said: “We have made no secret of the fact that we have a challenging financial position, but we are working on a plan which will see us be in a better position in future years.

“These challenges are not caused by any careless borrowing in capital investments like many councils up and down the country – although government policy once encouraged local councils to do this.

“We are facing significant demand on our children’s and adults services – these are essential support services for our most vulnerable people, but the increasing complexity of cases, the cost of living crisis, and profiteering by parts of the private sector are creating a perfect storm of pressure on those budget areas.

“Recent high inflation and years of cuts to government council grants have added extra pressure on council’s budgets, whilst the government has limited the amount that council tax can be increased.

“We are also still waiting for the promised Fair Funding Review, which should have been implemented in 2020, and which should have provided new baseline funding for all councils based on properly assessed needs – something which Cumberland would benefit from.

“Overall, local government funding really could benefit from a complete rethink to ensure it does work for the communities who rely on the services we provide.”

A spokesman from the Government’s Department for Levelling Up, Housing and Communities said: “Councils are ultimately responsible for their own finances, but we are very clear they should not put taxpayers’ money at risk by taking on excessive debt.

“The Levelling Up and Regeneration Act provides new powers for central government to step in when councils take excessive risk with borrowing and investment.

“We have also established the Office for Local Government to further improve accountability across the sector, which will help detect emerging risks and support councils to continue delivering key public services.”

A spokesman for the Local Government Association, which represents councils across England and Wales, 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 the government.

“While 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 Government needs to come up with a long-term plan to sufficiently fund local services.”

The figures show that Westmorland and Furness Council owed a total of £192,279,000, or £853.11 per person as it has a population of 225,385.

And councils across the UK owe a total of £122,196,977,000 – £102,042,591,000 in England, £14,068,618,000 in Scotland, £5,684,341,000 and £401,427,000 in Northern Ireland.