£81m Debt and Falling Cash Flexibility: Hartlepool Council Faces Borrowing Squeeze..
Hartlepool Council Warns More Expensive Borrowing May Be Needed as Reserves Are Drawn Down...
15th September 2026
Hartlepool Borough Council has warned it may eventually have to take out longer-term borrowing at higher interest rates than originally anticipated, as its capital programme progresses and reserves are increasingly being used to support day to day spending.
The warning appears in the council’s latest Treasury Management Strategy update, which is due to be considered by the Audit and Governance Committee on 22 September.
For now, its claimed Hartlepool Borough Council's deliberately avoided entering into new long-term borrowing because of the sharp increase in interest rates seen since 2022. However, officials now acknowledge that this position may become increasingly difficult to maintain, leaving it to local tax payers to stump up the hefty repayments.
The report states that, as the council’s capital programme progresses, combined with the “likely significant use of reserves” to support both capital expenditure and the council’s in-year financial position, its borrowing strategy may have to change.
Council officers say the preference would be to use shorter-term borrowing while interest rates remain high, but warn:
the authority may need to mitigate risk by taking out some longer-term borrowing at a higher rate than originally anticipated.
The council says the position will remain under close review, with the aim of minimising borrowing costs falling on the revenue budget.
More than £81m of gross debt...
As of 30 June 2026, Hartlepool Borough Council reported that it had £81.4 million of gross debt.
This included:
£25.1m in Public Works Loan Board loans;
£15.8m in annuity market loans;
£25m in maturity market loans;
£15m in LOBO loans; and
£0.5m in non-market loans.
Against this, the council held investments of around £31.5m, leaving a net debt position of approximately £49.9m at the end of June, with no new borrowing entered into during the first three months of 2026/27, with the council’s average rate on its existing gross borrowing said to be around 3.41%, meaning much of its historic debt remains cheaper than loans that might currently be available.
Cheap historic borrowing has helped protect the budget
The council’s long-term borrowing position has reportedly benefited from historically favourable rates where as from the 31st of March 2026, total long-term debt stood at approximately £81.5m, with an average interest rate of just 3.40%.
The council describes this as a historically low rate for long-term borrowing and says the resulting interest savings have already been factored into its Medium Term Financial Plan.
The difficulty now said to be facing the troubled Teesside Council is that replacing or increasing borrowing in today's higher-interest-rate environment could prove considerably more expensive which in turn could worsen the councils overall financial position.
Kicking the Can Down the Road...
One way councils can delay external borrowing is by temporarily using their own cash balances and reserves where is claimed Hartlepool has been doing exactly that for years. .
The Treasury report explains that councils can choose to borrow externally, use temporary internal cash-flow resources instead, or operate a combination of both. However, that strategy has now become harder to sustain as what little cash reserves remain are spent.
The report goes on further to explicitly warn that the council's current investment position is unlikely to remain sustainable in the longer term, given anticipated use of reserves and progress on the capital programme.
At the same time, its claimed taking out new long-term loans while borrowing costs remain high risks increasing the amount of council revenue that has to be committed to interest payments in future years.
Another pressure on council finances
The borrowing warning therefore adds another dimension to Hartlepool Borough Council’s wider financial challenge as its claimed locals could be set to see their 2027 council tax bills rise again, as the council attempts to mitigate some of the financial impact of the cash reserves its having to use to balance the budget.
It does not mean that the council is about to immediately take out large quantities of expensive long-term debt, officers introducing tough new spending curbs which have led to the council stating that no new borrowing had been entered into during the first quarter of the current financial year.
But the papers make it equally clear that, as reserves are drawn down and capital spending continues, Hartlepool Borough Council faces fewer alternatives with little signs that a Reform led minority council has any breathing room on the prospect of an eyewatering Council Tax Rise being landed on local households in April next year.
