Cornwall Council’s Liberal Democrat leader has said a spending review is under way to look into the authority’s much criticised £1-billion debt. Cllr Leigh Frost has likened the debt to a “mortgage” and stressed the money was not being used to cover day to day spending at the council.

The leader made the comments at a meeting of the council’s corporate finance scrutiny committee today (Tuesday, July 15) after being asked a public question by Graham Smith, of St Mabyn.

Mr Smith asked: “The council’s May 2025 Treasury Strategy reported ‘the external debt at March 31, 2025 was £1,374.7-million’. What is the current administration’s target figure for external debt at March 31, 2026 and what reductions, if any, does it propose to the £1.9-billion capital programme to achieve that target?”

Cllr Frost responded: “Cornwall Council borrows money to help fund major capital projects, things like housing, infrastructure, regeneration and facilities, much like a mortgage. This spreads the cost over the life of the asset. For example, borrowing helped part fund the new recycling facility and transfer station at Hallenbeagle.

“To be clear, borrowing cannot be used to cover day to day spending. This isn’t an overdraft to pay bills – it’s long term borrowing for long term assets.”

He added: “The council measures what is called the net debt – total borrowing minus the council’s cash investments. As of March 31, 2025, the net debt is £1-billion; £1.375-billion in borrowing offset by £354-million in investments. Both sides of that equation matter as the investments help reduce the overall interest costs for the council.

“Cornwall Council is the fifth largest local authority in the country, which means we have a very large and complex budget. Our net debt sits at £1-billion against a property, plant and equipment portfolio worth around £3-billion.”

He went on to criticise the previous Conservative administration, which lost the majority of its seats at the May 1 election. “The previous administration’s treasury management strategy had a net debt climbing to £1.26-billion by the end of this financial year. We need to understand why they have set it at that level. This administration hasn’t rushed to set arbitrary debt targets. Instead, we’re taking time to get it right.

“A full comprehensive spending review is now underway and we will be looking at the capital programme and debt levels to make sure we’re spending wisely, borrowing sensibly and delivering value for Cornwall.”