Izzy Lepone 19 August 2025

Council debt costs over £4bn annually

Council debt costs over £4bn annually  image
© Tanoy1412 / Shutterstock.com.

There has been a 60% increase in council debt over the last 10 years, figures have revealed.

Freedom of Information (FoI) request responses from 254 councils found that roughly a fifth of council tax revenue is being spent on payments for debt interest.

The data indicated that local authorities jointly owe £148.5bn or more, with interest bills equating to around £12.8m annually.

The figures from The Times found that emergency housing spending was valued at £2.2bn, with a further £1.1bn dedicated to libraries, culture, heritage and tourism.

Across the 317 local authorities in Britain, the research estimated that above £4bn is being spent annually on debt service.

According to the data, projects such as transport investment, town regeneration and infrastructure have accounted for much of the long-term borrowing, with £10.8bn of the debt owed to local authorities, and the Government being owed almost three quarters.

The Local Government Association’s Cllr Pete Marland highlighted the ‘fragile position’ of council finances, ‘the impact of which has been cumulative for some time’.

‘A sustainable, long-term financial model for local government must lead to all councils having adequate resources to meet growing cost and demand pressures’, he added.

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