Local Government: Borrowing
The question
To ask the Secretary of State for Housing, Communities and Local Government, with reference to the Local Government Finance Statement made on 23 February 2026, when he plans to publish the consultation on strengthening safeguards over local government borrowing; whether statutory limits on debt-to-revenue ratios are under consideration; what assessment he has made of the potential impact of such restrictions on housing and regeneration delivery; and whether modelling of the effect on future capital investment will be published.
Answered by Alison McGovern
Local authorities are responsible for their own borrowing and investment decisions, within a statutory framework intended to ensure borrowing is prudent, affordable and sustainable.
The government recognises the importance of local investment, including for housing and growth. Under the previous government, however, weaknesses in the system allowed a minority of authorities to take on excessive debt for high-risk investment that have not represented value for money. In some cases, this has led to serious failures requiring government intervention and significant cost to taxpayers.
The government is therefore bringing into effect the capital risk powers added to the Local Government Act 2003 in 2023. The aim is to safeguard the system to support essential investment while giving government the tools to address instances of excessive borrowing and investment risk before failure occurs.
The government will work with the sector in developing use of the powers to ensure they are effective and to avoid unintended consequences. We will consult later this year.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →