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Councils in crisis: Town Hall debt levels staggering, MPs warn
The Public Accounts Committee warns of an "extreme and long-lasting effect" on public services.
www.bbc.co.uk
Councils in crisis: Town Hall debt levels staggering, MPs warn
The debt mountain at UK councils has reached staggering levels, posing a risk to local services, the Public Accounts Committee has said.
BBC analysis shows UK councils owe a combined £97.8bn to lenders, equivalent to around £1,400 per person.
Committee chair Meg Hillier warned of an "extreme and long-lasting effect" if more councils go bust.
Council leaders say years of under-funding have forced them to invest in commercial ventures.
The 2012 report - 50 ways to save: Examples of sensible savings in local government, signed by then Communities secretary Eric Pickles, encouraged town hall chiefs to pursue investments in order to stave off cuts.
Most of the borrowing for investment comes from the Public Works Loan Board (PWLB), an arm of the Treasury, which uses public money to hand out long-term loans at a low rate of interest.
Some councils have millions of pounds worth of debt related to a legislation change in 2012 that allowed them to effectively buy out the social housing stock in their area.
But it is commercial investments, assets bought solely for the purpose of returning an income, that have proved the most controversial use of the loan money.
Jonathan Carr West, chief executive of the Local Government Information Unit (LGiU), said such investments were not always "reckless" in intention.
"Many people have accused councils of gambling with public money," he said.
"It's certainly true we've seen some high-profile failures, the most obvious being Woking.
