East Sussex Councils Swamped With Half A Billion Pounds Of Debts - According To Analysis

Councils in East Sussex hold combined debts of more than half-a-billion pounds, analysis by the BBC’s Shared Data Unit has found.

Using figures from the Department for Levelling Up, Housing and Communities, the Shared Data Unit found the county’s six main local authorities held combined debts totalling more than £597m at the end of the fourth quarter of the 2024/25 financial year.

Debts held by East Sussex County Council accounted for a little under half of the overall figure, with the authority owing a total of £211,591,000 at the end of 2024/25. This figure comes to around £380.91 per person, the analysis shows.

Eastbourne Borough Council held debts totalling £183,497,000 at the end of the same period. This comes to around £1,767.86 per person, the Shared Data Unit said.

A spokesman for the borough council said around a quarter of this overall figure (£54m) was tied to its Housing Revenue Account — a ring-fenced fund tied to the construction and maintenance of council housing. The spokesman said the council had also invested £30m into affordable housing.

The spokesman said:

“The wider context of unprecedented financial pressures facing local government must also be considered. In Eastbourne, exceptionally high levels of homelessness resulted in the council spending up to £5 million annually on temporary accommodation — the equivalent of 49p in every pound of council tax collected.

“Across the UK, the government has sanctioned over £5 billion in exceptional financial support to 42 councils in recent years and the Local Government Association has predicted an £8 billion council funding gap by 2028. It is no surprise that there are many councils with much higher levels of debt, including some authorities where it exceeds £1 billion.

“A number of councils in the worst financial situations are now being run by commissioners appointed by the Secretary of State and in these cases many discretionary services, such as sports, leisure and cultural facilities, are at immediate risk of closure or have closed.

“In Eastbourne, swimming pools, public toilets and theatres remain open because of the steps taken by the council to find new ways of operating these services and the savings we have made.”

But the council’s Conservative opposition say the council’s debt levels are placing an unbearable burden on the authority.

Speaking to the LDRS, Conservative group leader Robert Smart said:

“It isn’t just the total external debt that is the problem but its composition: £75 million of the total is short term debt repayable in less than a year attracting market interest rates of about 6 per cent per annum.

“EBC continually rolls over these debts as imprudent borrowers might with their credit card debts.

“The overall annual interest cost is close to £7 million in comparison to annual council tax revenue of £10 million.

“Much of this additional debt arose from the mismanaged Devonshire Quarter project which overran by over £20 million and has now been leased for 25 years to Trafalgar Theatres for next to no rent.

“Its like buying a house on a mortgage, but then giving the house away but leaving you with the capital repayments and interest to pay with no income”.

The figures from the Shared Data Unit shows the debts held by Eastbourne Borough Council are significantly higher than those held by the county’s other district and borough councils. Hastings Borough Council held debts of around £64m, Lewes District around £56.67m, Rother District £28.8m and Wealden District £52.6m.

But all these debt levels were significantly lower than some found elsewhere in the UK. More than 20 UK councils had debts of more than £1bn, with the heavily indebted Birmingham City Council — an authority which has effectively declared bankruptcy — holding debts of more than £3.35bn by itself.

Other authorities, however, had no debts at all. The Shared Data Unit found a total of 32 councils had no borrowing on their books at the end of 24-25.

Nationwide, the Shared Data Unit found more than half of UK councils increased their borrowing levels when comparing the end of the 23-24 financial year to the end of the 24-25 financial year.

Overall, this resulted in a £7.8bn (seven per cent) increase to council debt levels when compared to the previous year, meaning local authorities in the UK owe a combined £122.2bn to lenders.

The Shared Data Unit says the rise is being partly driven by a near tripling of short-term lending from central government. It says this lending, in some cases, is being used to paper over holes in some council revenue budgets rather than pay for investments and town centre improvements.

Experts including Jonathan Carr-West of the Local Government Information Unit (LGIU) said the spiralling levels of debt at local authorities was “extremely worrying”.

He said:

“That is not a sustainable system. As one local government finance officer said to me, it’s essentially payday loans for local governments.

“I don’t think the government would say that’s its long-term ambition. They would say that is what we have had to do to paper over the cracks while we introduce a new funding system for local government.”

This nationwide increase in council borrowing was reflected by Lewes District Council and Wealden District Council, which both added to their debts when compared to 2023/24.

Lewes District Council added around £13m to its debt pile, with a spokesman for the authority saying its increase was largely tied to its programme of building new social housing.

A spokesman for the council said:

“The increase, which is modest compared to other authorities, is almost exclusively related to the council’s determination and long-standing commitment to building much-needed social housing in the district.

“We have proudly developed a pipeline of over 250 properties since 2019, each one a home for families and individuals on the council’s housing register.

“At a time when the country is dealing with the consequence of an acute housing crisis, we are one of the few local authorities in the UK that is developing new council homes.”

Meanwhile, Wealden District Council added £8.3m to its own debts.

A spokeswoman for the authority said: “The additional borrowing taken out by Wealden District Council was to fund housing development within the Housing Revenue Account. The borrowing was undertaken at the Public Works Loan Board (PWLB) preferential rate offered to Housing Revenue Accounts”.

Like Eastbourne, the other authorities in East Sussex each reduced their own level of debts when compared to the previous year.

Rother District Council reduced its debts from £31.662m in 2023/24 to £28.827m in 2024/25 — a fall of around £2.835m. While this was not the largest drop in cash terms, it was largest proportionally, amounting to a 10 per cent reduction in the council’s debt levels.

A spokeswoman for Rother District Council said:

“The council has reduced its debt liability through careful treasury management which has ensured a positive cashflow was maintained throughout the last financial year.

“One of the authority’s Public Works Loan Board debts has been repaid and the council has not taken out any new long-term loans. In addition, the future Capital Programme was reduced in order to limit future borrowing needs.”

East Sussex County Council, meanwhile, reduced its own debts by £5m. A spokeswoman for the council said the move was in line with its treasury management strategy, which seeks to reduce debt levels where possible.

The spokeswoman went on to say the council is currently able to fund its capital programme through internal resources, rather than applying for PWLB loan funding. The spokeswoman went on to warn how this position is expected to change as the deficit on SEND activity increases and reserves reduce as they are required to fund social care overspending.

Meanwhile, Hastings Borough Council reduced its debts by £659,000.