BARNSLEY Council has cut its overall debt by more than £12m in the last year - going against the national picture of spiralling local authority borrowing.

At the end of the 2024/25 financial year, Barnsley’s debt stood at £566m - down from £578m the year before or a 2.1 per cent reduction.

According to the figures, local authority debt across the UK rose by almost £8bn in the last 12 months to £122.2bn.

It represents a seven per cent increase, with experts warning that some councils are relying on short-term loans to cover day-to-day spending.

A number of authorities - including Croydon, Birmingham and Woking - have already effectively declared bankruptcy by issuing Section 114 notices.

Across South Yorkshire, Barnsley was one of only two councils to cut its debt. Sheffield reduced borrowing by £36.5m, while Rotherham added nearly £40m to its total and Doncaster increased its debt by around £17m.

Coun Robert Frost, cabinet spokesperson for core services, said the figures show Barnsley’s ‘long track record of sound financial planning’.

“In Barnsley we’ve made the conscious decision to invest in long-term projects which benefit our local residents and businesses,” he added.

“We don’t borrow money to fund day-to-day front-line services.

“However, we do invest in long-term infrastructure and development projects, like the 11 new schools we built a decade ago, and our town centre which attracted over nine million visitors last year.

“No borrowing is agreed unless it can be demonstrated that it can be fully repaid over the longer term.

“The cost of those investments is already taken into account in our long-term financial planning.”

A 2.99 per cent hike in basic council tax and an additional two per cent for adult social care were given the seal of approval as part of this year’s budget, although an extra £35m on day-to-day running costs has been anticipated for this financial year.

Barnsley remains in a ‘sound position’ - but it has been warned by town hall finance bosses that the way local authorities are financed is ‘not sustainable’.

A council report added: “Sustainable funding for the local government sector, especially with the lack of longer-term funding certainty as a result of damaged national public finances, heightens the risk of future public sector spending cuts.

“Furthermore, more and more councils across the country have issued Section 114 notices.

“While Barnsley Council is not at this position, the plans implemented need to be delivered.

“The council has set a balanced budget which includes an assessment of future cost pressures and proposals to make efficiencies.

“These will be monitored closely throughout the year and furthermore the 2025/26 and 2026/27 position is constantly under review.”

Local authorities’ external debts - which refers to the amount councils owe through either short-term or long-term loans - is capped at just over £1bn through the Local Government Act and Barnsley’s figure reached a high of £836m at the end of the 2022/23 financial year.

Council leader Sir Steve Houghton said: “Barnsley’s overall financial position remains sound.

“Our focus in Barnsley is to deliver excellent services while investing in the borough - we do this because we want the town and its communities to thrive.

“We have a balanced budget and our financial position is well-managed but things are difficult.

“We’ve had to make some tough decisions, but we can, for this year, keep delivering the services people need./

“We estimate that we’ll spend £35m more on day-to-day running costs.

“We predicted that this would be the case, and we’ve set aside some money to help pay for this extra pressure.”

The government said there were ‘no illusions’ about how precarious some councils’ finances are after several issued Section 114 notices - effectively bankruptcy - as debt levels grew due to squeezed funding packages.

“We won’t shy away from the challenge,” a spokesperson added.

“We know that the demand for, and cost of, services has increased significantly and that this has made the job for councils in recent years much harder.

“The current system for funding local authorities does not represent best value for taxpayers, and without action this will get worse.

“After years of delays to much-needed funding reform, we will reform the local government finance system to put councils on the road to recovery.

“This is about spending taxpayers’ money as efficiently as possible making sure that funding reflects local need and demand for services, and an area’s ability to raise income locally.

“We cannot continue to operate in a system that has seen some councils increasing their level of reserves and others struggling to deliver essential services and balance budgets.

“We are therefore committed to fixing the basics to enable local government to focus on its priorities delivering for residents and providing high quality, vital frontline services that people rely on every day.

“This year’s settlement will begin to put us on the right course, spending taxpayers’ money efficiently, and ensuring that funding goes to the places that need it most.”