By Richard Johnstone | 26 June 2014
The Taxpayers’ Alliance has been criticised by councils and CIPFA after the group published an examination of town hall finances that found authorities had liabilities of more than £180bn.
The group’s Council liabilities report, published today, said the total liabilities at March 31 2013 represented an increase of 8% on the year before. The liabilities are made up of commitments within the funded Local Government Pension Scheme as well as almost £72bn of borrowing from the Public Works Loan Board and other sources.
However, responding to the report, the Local Government Association said that to simply state the total liabilities of town halls was ‘misleading’. According to the report, only 62 local authorities have long-term liabilities equal to or more than the value of their long-term assets. An LGA spokesman said: ‘Unlike central government, councils can’t borrow money to meet their day-to-day running costs.
‘Instead, council borrowing is used to meet the cost of long-term investments, such as key infrastructure projects including new schools and transport links, which ensure taxpayers are able to continue benefitting from high quality services.’
A spokesman for CIPFA told Public Finance the report showed that local authorities hold £274bn of long-term assets against their long-term liabilities of £180bn.
‘To focus only on liabilities is unhelpful and doesn’t show the whole picture of local government finance,’ he said.
‘In addition, the two main areas they have focused on for their liabilities figure are the Local Government Pension scheme, which is the only significant pension scheme in the public sector that is funded.
‘And long-term borrowing by local government that can only be used for investment in capital assets. So that every pound borrowed is put into asset such as a road, a home or a school. Much of this borrowing is also at a very low market rate through the Public Works Loans Board.
‘We need an informed debate about the funding of local government which we hope will be assisted by the new independent commission into local government finance.’
For the Taxpayers’ Alliance, chief executive Jonathan Isaby said it was ‘nothing short of immoral for councils to pile further debt on the next generation’. He added: ‘Britain’s public finances are in real trouble, and local authorities can no longer avoid tough choices by putting the bill on taxpayers' credit card. Councils must look again at overgenerous pensions and wage a war on waste, or Britain's debt burden may soon become too heavy to bear.’
