Many Derbyshire councils feel they have borrowing debt under control despite ‘worrying’ UK increase

Many of Derbyshire’s local authorities feel they have their borrowing debts under control despite the UK’s overall councils’ combined debt to lenders amounting to over £122.2 billion with a seven per cent increase during the last financial year.

A BBC Shared Data Unit team’s analysis of information from the Ministry of Housing, Communities and Local Government found the combined borrowing for the 382 principal councils across the UK has now reached over £122.2bn owed to lenders after it rose by £7.8bn when comparing the 2023-24 and 2024-25 financial years.

Derby City Council’s debt increased from £564,335,000 in 2023 to £587,909,000 in 2024 and NE Derbyshire District Council has seen its debt increase from £142,809,000 in 2023 to £161,305,000 in 2024, while Derbyshire County Council’s £402,674,000 debt in 2023 has actually come down to £401,429,000 in 2024, according to the study.

Despite Derbyshire’s combined increase in debt across all its principal ten councils of £27,477,000 in a year, the county’s local authorities do not feature near the top ten councils in the UK with the worst debt by the end of the 2024-25 financial year, or among 30 councils who have had to seek exceptional financial support from the Government in 2025-26, or among the top ten councils with the largest rises in overall debt.

A Derbyshire County Council spokesperson said: “The county council borrows to invest in services and major projects, including buildings and infrastructure, for the people of Derbyshire, it doesn’t borrow to fund everyday spending.

“Our borrowing is in line with our treasury management strategy which is agreed as part of the council’s annual budget setting process.”

Many of Derbyshire’s councils explained they borrow to invest in projects, services and growth or that the majority of their debt is made up from supporting housing.

A Derby City Council spokesperson said: “Derby borrows to fund major capital projects, such as housing, schools, infrastructure and regeneration – because these assets are costly and long lasting.

“Borrowing allows the cost to be spread over the asset’s life, ensures affordability within annual budgets and enables investments that supports local services and growth.

“Through continued responsible financial leadership and careful spending, Derby is in a positive position and ensures that all capital spend is affordable, prudent and sustainable.

“While continuing to invest in capital projects across the city, we are, for the first time in several years, projecting a revenue underspend at the end of Quarter 1 and rebuilding our general reserves to their strongest level in years.”

However, Local Government Information Unit spokesperson, Jonathan Carr-West, said he thinks councils have been ‘systemically underfunded’ for the past 15 years and councils have had to generate money through local taxes or through return on investments.

He added that the spiralling levels of debt at local authorities across the UK were ‘extremely worrying’.

The BBC study says the rise in borrowing debt has been driven by short-term lending from Central Government which in some cases has had to be used to support council revenue budgets rather than pay for investments and town centre improvements.

Many councils in the UK have said they have had to invest to fill the gap in income they previously received from Government under the Revenue Support Grant, according to the BBC study.

NE Derbyshire District Council has stated that nearly all of its debt relates to its Housing Revenue Account debt without which its overall debt can be judged as ‘negligible’.

A NE Derbyshire District Council spokesperson said: “External debt at North East [Derbyshire District Council] has increased in 2024-25 mainly because we have refinanced existing loans, mostly for the Housing Revenue Account, using external loans rather than internal resources which have depleted over recent years.

“The need to borrow has not increased significantly it is more the way the need has been financed. All debt is within the parameters of our treasury management strategy and the CIPFA Prudential Code.”

Some of Derbyshire’s councils are better off than most in the UK, according to figures released in the BBC study, and appear to be managing their finances well despite any existing debts and the difficulties faced by local authorities elsewhere.

The study revealed Chesterfield Borough Council’s £137,818,000 debt from 2023 has decreased by £6,067,000 to £131,751,000 in 2024.

Chesterfield Borough Council’s Deputy Leader and Cabinet Member for Finance and Asset Management, Cllr Amanda Serjeant, said: “We always take a prudent approach to borrowing and only do so where it enables the council to assume greater control over the delivery of services, supports the council’s ambitious growth programme or helps generate additional income to enable us to deliver even better services.

“We do not use borrowing to fund the delivery of our services directly.

“The majority of our debt sits within the Housing Revenue Account, which records expenditure and income relating to the council’s 8,700 homes.

“In 2012, the council paid £117m to free itself from a system which required us to pay over to the Government every year millions of pounds of housing tenants’ rents for re-allocation to other parts of England.

“The Government gave the council no option but to make this payment. However, it means that every pound of rent that our housing tenants pay to the council now stays in Chesterfield for re-investment in the housing service.

“Our other borrowing relates to the General Fund revenue account and to prudent investment decisions we have made in support of the council’s ambitious growth agenda. In this regard, the council’s internal financial rules only allow borrowing to be taken out where we can afford it or where it is going to deliver additional income to enable us to deliver even better services.

“We routinely implement measures to consolidate and manage down debt as part of the council’s strategic approach to balancing its budgets and building reserves, whilst continuing to ensure that we protect those services that the most vulnerable people in our communities rely on.”

Amber Valley Borough Council and Erewash Borough Council, who were among 32 councils with no borrowing on their books at the end of 2024-25, according to the study, both boast a recorded debt position of 0 per cent for 2023 and 2024.

Erewash Borough Council Leader James Dawson has recognised times have been tough for cash-strapped local authorities but says Erewash has been ‘laser-focused’ on putting people first.

It claims to have taken ‘robust financial stewardship’ with some hard decisions to stop the council going into the red but its mission to remain debt-free is paying off and it is ploughing £2m into improving lives with a new Erewash Investment Fund.

An Amber Valley Borough Council spokesperson also said: “Amber Valley Borough Council can confirm that we currently have no external borrowing and we take a prudent approach to managing our finances to protect services for our residents.”

The study also revealed Derbyshire Dales District Council has stayed static with a debt of £5,450,000 in 2023 and 2024.

Bolsover District Council’s £88,533,000 debt from 2023, according to the study, has also decreased by £7,763,000 to £80,770,000 in 2024.

High Peak Borough Council has only seen a £500,000 debt increase from £63,777,000 in 2023 to £64,277,000 in 2024, according to the study, and the study reveals South Derbyshire District Council has seen its debt of £37,512,000 in 2023 reduced by £18,000 to £37,494,000 in 2024.

Prime Minister Sir Keir Starmer has announced a planned overhaul of council central grant funding to simplify the complicated funding formula used to distribute funds with plans to redistribute grants to focus on the most deprived areas.

The Government has stated that £3.4bn is to be delivered to councils between 2026-27 and 2028-29 on top of £69bn already made available for 2025-26 which is the equivalent of a 6.8per cent cash terms increase in councils’ core spending power on 2024-25.

Mr Carr-West said the ‘billion dollar question’ is whether the changes the Government is making around multi-year settlements and a new funding formula will make enough difference?

He highlighted many councils across the UK are selling assets off to repay their debts with concerns that public value is passing into private hands and it will not come back.

Mr Carr-West also questioned what will happen to the debt and assets under the Government’s Local Government Reorganisation plans to introduce single, unitary councils in two-tier areas, by merging district, borough and county councils, and whether the debt will risk making any new unitary council financially unsustainable.

Sarah Calkin, Editor of the Local Government Chronicle, believes very few senior finance officers or chief executives would say the current system is sustainable and that there will be winners and losers under funding reforms which will change the way money is distributed but new multi-year settlement arrangements will help councils plan and manage their budgets.

Ms Calkin suggested funding has not been adequate for councils to meet demands across services for the vulnerable including adult social care and children’s services which have been pushing up councils’ costs.

A Ministry of Housing, Communities and Local Government spokesperson said even though councils are responsible for their own budgets it knows the current funding system is broken which is why it is taking action with more funding to boost council finances and it will also reform the funding system.

The top three councils in the UK with the worst debt by the end of the 2024-25 financial year, according to the BBC study, include Birmingham with £3,352,457,000, Leeds with £2,640,673,000, and Woking with £2,155,641,000.

Since 2020, six councils in the UK have had to issue section 114 notices declaring themselves effectively bankrupt including Croydon, Slough, Thurrock, Birmingham, Woking and Nottingham.

Derbyshire’s relevant councils in the BBC study include: Amber Valley Borough; Bolsover District; Chesterfield Borough; Derbyshire Dales District; Erewash Borough; High Peak Borough; North East Derbyshire District; South Derbyshire District; Derby City; And Derbyshire County.