Factsheet: Local Government Capital Expenditure and Stock 

Key Takeaways 

• In 2022-23 English local authorities spent a third of their capital expenditure on housing and about a quarter on highways and transport. In 2022-23 capital expenditure, which was down by 7% in real terms on 2018-19, was mainly used for new constructions, conversion and renovations. 
• The main source of revenue to finance capital expenditure were capital grants, followed by prudential borrowing. The sources of revenue have remained relatively stable between 2018-19 and 2022-23. 
• The net capital stock of local government in the UK increased from 8% of GDP in 2000 to 14% of GDP in 2022. Other buildings and other structures make up the bulk of the net capital stock. 

Capital expenditure by service 

In Fiscal Year (FY) 2022-23 local authorities in England spent £27.5bn on capital expenditure. Of this spending, a third was on housing, just more than a quarter on roads and transport, and just less than a tenth on education. Planning and development services, central services, culture and related services and trading (i.e. the maintenance of civic halls, retail markets and industrial estates etc) together made up nearly a quarter, with the rest spread across services such as police, environment and fire and rescue.

In real terms, the £27.5bn spent on capital expenditure in FY2022-23 represents a 7% decline from the 2018-19 level, with capital spending on education and central services falling by nearly a quarter. Local government capital spending on highways and transport dropped only slightly less (-15.3%). By contrast, local government capital spending on housing increased by nearly 50%, taking its share from 20% of the total in 2018-19 to a third in 2022-23.

Capital expenditure by category 

Of the £27.5bn spent in FY 2022-23, £17.2bn was spent on new construction, conversions and renovations, a further £1.9bn on the acquisition of land and existing buildings and £1.6bn on the purchase of vehicles, plant, furniture and other equipment. £6bn was given in the form of grants, loans and other financial assistance to other organisations to invest on behalf of the local authorities.

Over the period 2018-19 to 2022-23, the most notable development was the decline in investment in land and existing buildings. Amounting to £5bn in 2018-19, this more than halved over the following years, explaining the overall decline in local authority capital expenditure. 

Revenue sources 

The capital expenditure and revenue statistics do not fully match up, with the published expenditure data around £1.5bn lower than the revenue data. 

In FY 2022-23, 40% of the resources used to finance capital expenditure came from capital grants, around 20% from revenue resources (including from the housing revenue account, major repairs reserve and CERA) and 10% from capital receipts (incl 

uding money received from the selling land, buildings or other capital assets). The remainder – just under a third – was in the form of prudential borrowing. These shares remained relatively stable between 2018-19 and 2022-23. 

Local authority net capital stock

The Office for National Statistics publishes capital stock data for the UK only. As a share of GDP, the net capital stock of local government, that is the market value of fixed assets once deprecation is taken into account, increased from 8% in 2000 to 11% in 2010 and then 14% in 2022. 

This is a much more notable increase than that for central government, which increased from 15% in 2000 to 20% in 2022. Other buildings and other structures have made up around 90% of the total net capital stock for local government throughout that period. The remainder is split between land improvements, ICT and other machinery and transport. 

Why does it matter? 

Local authorities play an important role in providing essential public services such as housing, transportation, and education. Capital expenditure and capital stock trends help to understand how this role is changing over time. Combined with local authority revenue trends they also illustrate the financing gap to be filled by prudential borrowing.  

If you would like to discuss what insights and lessons you could take away from local authority capital expenditure and revenue trends in England, please talk to us.  

Suggested further reading 

(external links, accessed 21 March 2024) 

Capital expenditure and receipts local authorities in England 2022-23 

Local authority capital expenditure receipts and financing 

Local government finances: Impact on communities 

UK national accounts: Capital stock and consumption of fixed capital 

Factsheet: UK Public Finances

Key Takeaways 

• In 2022-23 public-sector net borrowing excl. public-sector banks amounted to 5.1% of GDP. Central government is responsible for the overwhelming share of public-sector net borrowing. 
• In 2022-23 public-sector net debt was close to 100% of GDP – about average for an advanced economy. Public-sector debt jumped sharply during the financial crisis and increased further because of the Covid pandemic. 
• Long-term projections show that net debt could increase to around 300% of GDP by the 2070s due to population ageing. It could be higher once other potential challenges are factored in. 

Public-sector borrowing and debt 

The UK public finances are generally reported on the level of the public sector excluding public-sector banks. This covers central and local government, public corporations, funded public-sector pensions and the Bank of England.

Public-sector net borrowing excluding public-sector banks (PSNB ex) amounted to £119.1bn in the first three quarters of the 2023-24 financial year (FY), the fourth highest on record for that period. In the second half of the last decade PSNB ex was generally around half as high in the respective periods. 

PSNB ex for the full FY 2022-23 amounted to £130.1bn, equivalent to 5.1% of GDP, marginally lower than in 2021-22 but significantly smaller than the 15% recorded in 2020-21 as a result of the Covid pandemic. The share is also lower than in any FY between 2008-09 and 2013-14. 

Central government is historically responsible for most of the public-sector net borrowing. In 2022-23 central government and local government borrowed £127.8bn and £10.7bn respectively on a net basis, with non-financial public corporations and funded public-sector pensions reporting small surpluses. In previous years the Bank of England also recorded small surpluses. Transfers between the sub-sectors are netted out of the statistics.

The UK government’s preferred measure of debt is on a net basis excluding public-sector banks (PSND ex). In December 2023 PSND ex stood at 97.7% of GDP, a level last seen in the early 1960s. PSND ex increased from ~35% of GDP at the end of 2007-08 to ~85% of GDP mid last decade because of the financial crisis. It jumped to nearly 100% of GDP in 2020-21 as a result of the Covid pandemic. 

International public finance comparisons are commonly made on a general government gross basis. As a share of GDP, UK gross general government debt was lower in 2022 (at 101.9%) than in France (at 111.1%), the United States (at 121.3%) but higher than in Germany (at 66.1%). The G7 average was 128%, much of it reflecting Japan’s high debt level (at 260.1% of GDP). 

Fiscal plans and targets 

The government announced in its 2023 Autumn Statement to reduce public-sector net borrowing from an estimated ~4.5% of GDP in 2023-24 to below 2% of GDP by 2027-28 so that net debt could start falling as a share of GDP within the next five years – one of the government’s fiscal targets. In 2023-24 social protection and health spending should make up nearly half of total managed expenditure, while debt interest payments account for around 10% – only marginally less than education spending.

Fiscal sustainability 

The Office for Budget Responsibility (OBR), the UK’s official independent fiscal watchdog, regularly assesses the long-term sustainability of the UK public finances. The OBR projects the PSND ex to GDP ratio to fall slightly over coming years but then to increase sharply over coming decades as a result of population ageing. In the OBR’s baseline scenario PSND ex reaches 150% of GDP by mid-century and more than 300% by the early 2070s. According to the OBR, this is probably an underestimate as many potential risks are not considered in the baseline. For example, reasonably assuming that debt interest rates rise as the government becomes more indebted could take PSND ex to around 375% of GDP by the early 2070s. 

Why does it matter? 

The UK public finances are a crucial part of the economic and financial environment within which local authorities operate. Fiscal pressures are on the increase at all levels of government, while raising sufficient revenue remains challenging. Local authorities will need to learn to operate within tight fiscal constraints for years to come, making it ever more important to prioritise and seek efficiency gains.

If you would like to find out more about the topics discussed in this factsheet and what these might mean for your operations, please talk to us. 

Suggested further reading 

(external links, accessed 26 January 2024) 

Fiscal risks and sustainability (Office for Budget Responsibility, July 2023) 

Public sector finances December 2023 (Office for National Statistics) 

Fiscal Monitor October 2023 (International Monetary Fund) 

Autumn Statement 2023 (HM Treasury) 

The UK’s fiscal targets (House of Commons Library) 

2025 Autumn Budget will provide few positives for local authorities

The Chancellor, Rachel Reeves, will present the Autumn Budget on 26th November. This is an unenviable task given weak growth, geopolitical uncertainties and mounting spending pressures.

Recent developments have offered an additional boost. Updated fiscal assessments suggest the Budget “black hole” in public finances is smaller than previously feared, prompting Rachel Reeves to signal that she will not need to raise income tax after all.

For local authorities the autumn budget is unlikely to bring major positive surprises. In mid-October the government confirmed that it would postpone the publication of its eagerly-awaited SEND reform white paper until early-2026, however we remain hopeful that meaningful policy interventions will emerge to address the current shortcomings of the system. Local authorities are not navigating this landscape alone – Camdor Global Advisors continues to support councils with identifying sustainable strategies despite constrained budgets, help to strengthen resilience, and position themselves to take advantage of opportunities as they arise.
https://lnkd.in/eRAjM6AJ

On 21 July 2025, the UK Government made its first major announcement with the establishment of a new pensions commission that could reshape the country’s approach to retirement saving.

Amid the usual political noise from Westminster, this stands out for its potential to deliver lasting structural change and to redefine the state’s role in securing adequate incomes for future pensioners.

It will also feed into a parallel review of the State Pension age, which will look at international models where pension age automatically adjusts in line with life expectancy. Bob Swarup and Frank Eich analysed similar proposals in 2009, in the wake of the first pensions commission, and their work may be worth revisiting.

Sir Jon concludes that this framework has failed to deliver and recommends a fundamental “reset” of the sector. Central to his proposals is the replacement of Ofwat with a new, more integrated regulator and supervisor. This new body would combine oversight of investment, daytoday operations, and longterm resilience.

These policy announcements come at a time when public finances are under sustained pressure. In this context, the Government is focused on two priorities. The first is to contain growth in state pension expenditure, since large increases in annual spending would add strain to the national budget. The second is to fix problems in struggling private utilities by improving regulation and management, thereby avoiding the high costs of taking them into public ownership.

However, the return of parts of the rail network to public ownership illustrates a gradual shift in the balance between public and private provision.

Whether the pensions commission and water sector reforms deliver meaningful change or remain at the level of consultation will hinge on political will and fiscal space.

For now, they are clear signals of where government priorities may be heading and will be closely watched by markets and policymakers alike.

On 21 July 2025, the UK Government made its first major announcement with the establishment of a new pensions commission that could reshape the country’s approach to retirement saving.

Amid the usual political noise from Westminster, this stands out for its potential to deliver lasting structural change and to redefine the state’s role in securing adequate incomes for future pensioners.

It will also feed into a parallel review of the State Pension age, which will look at international models where pension age automatically adjusts in line with life expectancy. Bob Swarup and Frank Eich analysed similar proposals in 2009, in the wake of the first pensions commission, and their work may be worth revisiting.

On 29 April the Pension Schemes Bill received Royal Assent and became law. It brings to a close a policy initiative which started in late 2024 with Chancellor Reeves’ first Mansion House speech.

According to the Government, this is a landmark bill, which will help more than 20 million people better save for their retirement and will boost UK growth. It aims to achieve that by reducing costs and boosting returns. It will also make it easier to consolidate smaller individual pension pots and allow the creation of multi-employer defined-contribution ‘megafunds’. Importantly, after much back and forth with the House of Lords, the Government agreed to tone down its original plans. These would have given it the power to mandate UK pension schemes to invest in private markets, half of this investment being in the UK.

It is good to see these proposed powers watered down. While we can see why the Government might want to steer pension investment to what it might consider to be “good causes”, it really should be for the schemes themselves to decide what is best for their members.

The Bill also put the finishing touches to the consolidation of the Local Government Pension Scheme into a few pools, which the government hopes will lead to economies of scale and generally better outcomes. This consolidation is nearly complete now, with pools already doing most of what they are expected to do. But as local authorities move from trusted and established arrangements involving appointed fund managers and independent advisors to new arrangements centred around powerful pools, they need to remain extra vigilant. Governance issues may emerge as the relationships between stakeholders change.