Region’s councils now owe combined £4.3bn

RISING levels of debt owed by North East councils now total more than £4.3bn.

- DANIEL HOLLAND

New data shows that the amount owed to lenders by the seven local authorities in Northumberland, ‘Tyne and Wear, and County Durham jumped by almost £200m in the 12 months to April 2025 and is equivalent to more than £2,500 per resident on average.

Analysis carried out by the BBC's Shared Data Unit found that the combined debts of all councils in the UK is now £122.2bn - an increase of £7.8bn in a year.

Councils can borrow to put money into improvements to schools, leisure centres and other critical infrastructure, as well as investing in commercial ventures such as shopping centres or energy companies with the aim of generating income that can help make up the gap left by government grant cuts over the last 15 years.

Experts say that debt is not inherently bad for councils and borrowing has “largely worked’, at a time when authorities are grappling with escalating demand and rising costs for social care and special educational needs and disabilities services.

However, there have long been serious worries about a financial crisis that pushed 30 councils to need emergency financial support from the government and some town halls racking up “unsustainable” levels of borrowing.

Councils such as Nottingham, Woking and Croydon have had to issue section 114 notices, effectively a declaration of bankruptcy, linked to failed investments and spiralling debts over recent years.

Among the councils who make up the North East's ‘LA7, South Tyneside has by far the highest debt per person at £4,947,