WARRINGTON Borough Council’s level of debt is forecast to rise to £2.3 billion by 2026 – but it says its commercial approach is ‘unlikely to continue in the same way’.

In a report, leading credit agency Moody’s has warned that more English councils are expected to fail owing billions of pounds in debts.

Birmingham City Council recently filed a section 114 notice, becoming the latest local authority to do so.

Moody’s has listed the 20 most indebted local authorities in England, relative to size.

Warrington is listed among them – it is placed at number 10.

The local authorities were ranked by their borrowing level versus their income.

It has been stated that Warrington has £1.8 billion of total borrowing, and a borrowing to income ratio of 9.9.

The Labour-run council has confirmed its current level of borrowing totals £1.8 billion.

It says this is currently estimated to be around £2.3 billion by 2026, but by 2026 the percentage of revenue funding spent on capital financing is ‘expected to decrease’ from seven per cent in 2023-24 to 5.83 per cent in 2025-26. Furthermore, it stated, as with all medium-term plans, this ‘remains under review’.

The council also said the 9.9 figure is a ‘somewhat oversimplified calculation as it doesn’t account for secured assets, how our debt is structured and income generated from assets’.

Deputy council leader Cllr Cathy Mitchell has issued a lengthy statement.

She said: “Financially, the entire local government sector is under enormous pressure.

“We have unfortunately seen a number of councils effectively declare bankruptcy, with it becoming increasingly clear that the national funding system for local government is broken.

“In Warrington, more people are requiring support from our various council services, in particular young people, families and elderly people requiring social care support, and the cost of delivering these services is higher than ever.

“To help keep our services running, we have borrowed money to invest in assets which we then collect rent from, generating income for us.

“Our current level of borrowing, which is made up of commercial assets, historic debt and investments to promote and support Warrington’s economy, is around £1.8 billion. All of our investments are made in line with our corporate policies.

“By commercial assets, we mean, for example, that we have invested in some business parks, supermarkets and other buildings that we generate rental income from.

“By historic debt, we mean, for example, money we have borrowed in the past to help support regeneration in the town centre that we’re paying off.

“Our approach to generating income from our investments has in recent years been valuable in keeping services running, providing us with around £23 million each year to invest in our services. Without making these investments we would have needed to cut services, because we simply don’t receive enough funding.

“That being said, our commercial approach is unlikely to continue in the same way due to much higher interest rates, although we will keep looking for opportunities to invest in services that will help to reduce future demand, and therefore limit further costs.

“We accept that our level of borrowing at £1.8 billion is significant, but we do not find ourselves in the same position as a number of other councils who have declared themselves in financial distress. We also accept that our approach may attract criticism, but it is working, and our residents and communities should be reassured that the decisions we have made to-date have helped to keep vital services running.

“We consider our investment decisions very carefully, taking on board external advice where necessary, and every decision we make to invest is based on detailed due diligence and risk assessment. We have recently been in discussions with public finance experts CIPFA about our capital and commercial strategy and, while we await a final report of their findings, we have welcomed their expertise and challenge, so that we can continue to improve our processes.

“In the meantime, we will continue to call on government to identify ways to secure long-term, sustainable funding for councils across the country, who are facing nothing short of a funding crisis.”