Brighton and Hove City Council has £380 million in debt

Data from the Department for Levelling Up, Housing and Communities (DLUHC) found that Brighton and Hove City Council had a total debt of £378,713,000 as of September 2023.

The debt equates roughly to £1,370 per resident in the city.

The amount is the highest of any city, borough or district council in Sussex.

The figures also revealed that Crawley Borough Council had amassed a debt of almost a quarter of a billion pounds, amounting to £2,103 per resident of the town.

Three councils across Sussex - Chichester, Horsham and Mid Sussex, reported no borrowing as of September 2023.

It comes as councils turn to commercial investments for an alternative source of income amid cuts in government grant funding since 2010.

Council borrowing to pay for such investments has forced several councils to effectively declare bankruptcy in recent years, including Birmingham, Croydon, Nottingham, Slough and Thurrock.

Sussex councils by total amassed debt (Q2 2023/24)

• Brighton and Hove City Council: £378,713,000
• Crawley Borough Council: £249,325,000
• Adur District Council: £153,527,000
• Worthing Borough Council: £141,692,000
• Eastbourne Borough Council: £112,557,000
• Hastings Borough Council: £65,094,000
• Lewes District Council: £47,673,000
• Wealden District Council: £44,312,000
• Arun District Council: £35,460,000
• Rother District Council: £26,827,000
• Chichester District Council: £0
• Horsham District Council: £0
• Mid Sussex District Council: £0

Brighton and Hove City Council has warned of tough decisions ahead (Image: Sussex News and Pictures)

Councillor Jacob Taylor, lead councillor for finance for Brighton and Hove City Council, said that while they do not “currently expect” to issue a section 114 notice, effectively a declaration of bankruptcy, he said that “nobody should underestimate the scale of the financial crisis we are facing”.

Cllr Taylor said: “All councils borrow large sums of money to pay for things like housing services and capital investment programmes.

“The borrowing periods for capital investments can be as much as 50 years.

“Our level of borrowing, sometimes also described as debt, is roughly average for English councils.

“It is this level of borrowing that is reflected in the overall ‘debt’ figure published by DLUHC.

“Repayment of all our borrowing is fully provided for in our budget.

“Like other councils across the country, we are facing an unprecedented financial challenge.

“This is due to the funding we get from the government not keeping pace with inflation, and growing demands for council services - particularly across social care and homelessness.

“We do not currently expect to issue a section 114 notice, but nobody should underestimate the scale of the financial crisis we are facing.

“We already know that we will have to take some very difficult decisions when setting our budget for next year.”

DLUHC said that a funding package worth more than £64 billion is being offered to councils for the year ahead and said a “small number” of councils had taken on “excessive levels of risk with debt and investments”.

A spokesman for the department said: “Councils are ultimately responsible for their own finances, but we are very clear they should not put taxpayers' money at risk by taking on excessive debt.

“The Levelling Up and Regeneration Act provides new powers for central government to step in when councils take excessive risk with borrowing and investment.

“We have also established the Office for Local Government to further improve accountability across the sector, which will help detect emerging risks and support councils to continue delivering key public services.”

The Local Government Association (LGA), which represents councils across England and Wales, said that councils had faced a choice of either cutting services or making investments to try and protect them - an approach they claim was “encouraged by the government”.

A spokesman for the LGA said: “While councils have made investment decisions to help them replace funding shortfalls, the majority of council borrowing is focused on investing in projects that contribute to their local economies or help them provide core functions, such as housing and transport schemes.

“When making investments, councils are required to follow strict rules and assessments to ensure they invest wisely and manage the risk of their investments appropriately.

“The government needs to come up with a long-term plan to sufficiently fund local services.”