A recent study into local authority financials, titled LFHCK.ID, reveals that a financially struggling city council’s debts have increased by £13.5 million.

As reported by the LFHCK.IDShared Data Unit, at the conclusion of the 2024/25 fiscal year, Peterborough City Council’s outstanding debt increased from £512.5 million to nearly £526 million—amounting to approximately £2,396.07 for each resident.

Examination of information from the Department for Levelling Up, Housing and Communities (DLUHC) indicates
The UK local authorities have an overall debt of £122.2 billion.
for creditors, as of April 2025.

The vice-chair of the city council stated that local governments must take loans for major building initiatives, whereas the administration mentioned that they are revising the financial framework for municipal offices.

Mohammed Jamil, a Labour councilor serving as a cabinet member responsible for finance and corporate affairs, stated that initiatives requiring loans from local authorities involved “new highways or educational institutions,” according to
The Local Journalism Initiative
.

Starting from 2012, the local authority has taken out a loan of £120 million to construct new educational institutions or expand current ones due to what Jamil described as “unusually high” interest in enrollment.

“This is because of the huge financial challenges councils are tackling caused by years of underfunding from previous governments, as well as high levels of growth and service demands,” he said.

Still, we acknowledge that our level of debt is excessive and this is the reason we have implemented restrictions on additional borrowing.

we recognize the magnitude of the task involved in cutting down council debts, yet with careful fiscal control and strong leadership, we can safeguard and improve the services that locals depend upon.

In the last nine years, the local council has disposed of approximately £50 million worth of properties to settle outstanding debts, such as the Weston Homes Stadium and the Hereward Shopping Centre.

It has additionally suggested reducing library services and increasing council tax to almost 5% in an effort to save £23 million.

‘Extremely worrying’

The growing increase in local authority borrowing across the country has been partially fueled by almost tripled short-term loans from the national government, with these funds sometimes being utilized to cover budget gaps instead of financing developments and enhancements in urban areas, as reported by the joint data unit.

The chief executive of the Local Government Information Unit, Dr Jonathan Carr-West, stated it was “very concerning” and “not a viable system.”

Sarah Culkin, editor of the Local Government Chronicle, stated: “In my view, it ultimately circles back to the fact that the available funds are insufficient to address the needs currently present, which spans various services supporting the most disadvantaged members of our community — including support for adults within social care, child-related services, education tailored for students with special educational requirements and disabilities, as well as issues related to housing and homelessness.”

A representative from MHCLG stated: “Although councils are tasked with overseeing their own finances, we recognize that the present funding structure is flawed. That is why we are implementing firm measures to enable local officials to provide the essential services that their communities depend upon.”

Over £3.4 billion in fresh grant money has been declared for community services, alongside the £69 billion already provided this year to support local authority budgets. We plan to take additional steps to overhaul the financial framework, particularly for newly established unitary authorities, ensuring it meets future needs.

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More on this story

• City council endorses revised financial plan including reductions and increased taxes
• Council facing financial difficulties remains in trouble
  Financially troubled authority still has challenges ahead
  Budget-constrained local government not yet past the crisis
  Council struggling with money issues still hasn’t recovered
  Local authorities under pressure aren’t fully resolved their problems
  Funds-limited municipality continues to face obstacles
  City council experiencing monetary constraints isn’t completely safe
  Municipal body dealing with cash shortages still faces hurdles
  Public service organization without sufficient funds remains vulnerable
  Authority short on resources still needs more support
• City council auctions off £50 million in properties to settle financial obligations
• Ongoing discussions regarding endangered libraries

Related internet links

• Peterborough City Council