Council tax debt reaches £156.4 billion
Brits have been warned that local authority debt in the UK has soared to £156.4 billion, a 4% increase from the previous year. New research from The TaxPayers' Alliance reveals this represents a £6 billion rise compared to 2025. The net debt of the public sector has also climbed to over £2.9 trillion, equivalent to 93.7% of GDP.
England bears 80% of local authority debt
According to the findings, England accounts for 80% of the local authority debt, totalling £127 billion. This sum is now equivalent to more than 53 million council tax band D bills on average. Per resident, the debt stands at £2,232, double the figure recorded in 2009-10.
Warning from The TaxPayers' Alliance
A briefing published by the group states: 'In recent years, rising interest rates and growing service pressures in parts of the local government sector have brought renewed attention to the sustainability of council finances, with seven councils issuing 11 section 114 notices between 2018 and 2023, effectively declaring bankruptcy. Taxpayers ultimately stand behind these obligations, therefore transparency over the scale and distribution of council debt is essential.'
John O'Connell, chief executive of The TaxPayers' Alliance, said: 'The mountain of local authority debt is a ticking time bomb for taxpayers who will ultimately be left holding the bag. Decades of speculative investments, reckless borrowing and statutory obligations from Westminster have left councils stuffed to the brim with debt, while basic services like fixing potholes have been neglected. Local authorities need to urgently get a grip on their debts before even more end up going completely bust.'
Political reaction
Shadow Housing Secretary Sir James Cleverly commented on the research, telling GB News: 'Labour promised to strengthen local government, but the reverse has happened. Their top-down reorganisation plans are causing chaos. West Surrey, for example, will have to spend 40% of its income on debt. And with Andy Burnham promising more devolution, Labour Mayors could be hiking taxes even more to plug the gap. Labour have their heads in the sand. The Conservatives are the only party with a plan to get spending under control, cut debt and deliver a stronger economy and stronger country.'
