Eastleigh Borough Council: Third most at risk due to debts

The Liberal Democrat-run authority is among several in the country expected to fail owing billions of pounds in debts.

Ranked in the top 20 most indebted councils in England, credit agency Moody’s has said is ‘close to issuing’ pre-insolvency warnings.

The report by Moody’s ranked the top 20 English councils for high levels of debt compared to income – with Eastleigh ranking at third place.

The council has £522m of debts, with borrowing levels 41 times its annual income.

But the claims have been disputed by the council, which states it is not at risk of failure.

Leader of the council, Cllr Keith House, has said: "We are not complacent."

But Paul Holmes, MP for Eastleigh, has blasted the figures as ‘absolutely shocking’ and accused the council of covering a ‘financial black hole’.

This comes after the authority was subjected to a government review into its finances earlier this year.

A capital review investigated what actions the council can take to reduce its financial risk.

Southampton City Council has also been under fire in recent months for its dire finances.

READ MORE: Council in 'crisis' talks with Government over state of its finances

The Labour-led council was forced to make voluntary redundancies this year as it faced a £20.9m shortfall in 2023.

Cllr Satvir Kaur, leader of the council, previously told the Echo every council in the country is facing financial hardship – regardless of their political standing.

Cllr House denies his authority is in a similar position to those who have had to ask the government for help.

Cllr Keith House (Image: NQ)

He said: “Eastleigh’s investments have protected essential public services.

"We have innovated to create commercial income, so that the council can continue to fund services for residents, while delivering a real terms cut in our council tax.

“These commercial activities have created jobs and brought investment into our area.

“A recent independent report into our finances found the overall position of our borrowing to be positive and noted that our investments have enabled us to continue to deliver a higher level of service than otherwise would have been possible.

“I can reassure residents that we are not complacent and continue to manage our investments prudently, to bring investment to Eastleigh, create jobs, and build much-needed homes.”

According to the council, 40 per cent of the authority's borrowing is related to developing ‘much-needed’ housing.

But Mr Holmes has slammed the council’s decision-making surrounding its finances.

Mr Holmes recently visited Downing Street to ‘push for new ways to regenerate Eastleigh Town Centre’.

Just been into Number 10 to push for new ways to regenerate Eastleigh Town Centre, including how we can push the local Lib Dem council to actually apply for Government Town Regen funding or levelling up funding which they won’t do. pic.twitter.com/luTMCS1y0p

— Paul Holmes MP (@pauljholmes) September 12, 2023

He said this included how to push the borough council to apply for Government Town Regeneration funding.

Speaking on the council’s finances, Mr Holmes said: “These figures are absolutely shocking.

“Eastleigh Borough Council clearly has no qualms about risking the important services that my constituents rely on by borrowing such huge amounts of money, and residents will be understandably outraged by this.

“I have had longstanding concerns about the council's fiscal position ever since I was elected, including risky property speculation and questionable financial decisions, and these figures underline how serious the situation is.

“Building hundreds of new houses in an attempt to cover the financial black hole will not work.

“I again call on the council's leadership to finally take action to put their finances on a less perilous footing, for the sake of taxpayers, and to publish a clear plan for how they will achieve this.”