Question to the Ministry of Housing, Communities and Local Government:

To ask the Secretary of State for Housing, Communities and Local Government, what national formula will be applied in calculating national distribution of the debt from county councils that are disbanded; and by what date that will be published.

On 5 February 2025 I formally invited unitary proposals from all the councils in two tier areas and their neighbouring small unitaries. It is for councils to develop robust and sustainable proposals that are in the best interests of their whole area. It is the responsibility of councils to manage their budgets, and it is standard for councils to borrow and to hold debt, which they will do in the normal course of business. Local government re-organisation does not change this.

As set out in the invitation, the default position is that assets and liabilities remain locally managed by councils. In general, as with previous restructures, there is no proposal for council debt to be addressed centrally or written off as part of reorganisation. For areas where there are exceptional circumstances where there has been failure linked to capital practices, proposals should reflect the extent to which the implications of this can be managed locally, including as part of efficiencies possible through reorganisation.