Plymouth's £750 million debt is good for city, council claims

Leaders say money is used for investment

Plymouth City Council leaders have referred to the authority’s debt of around £750 million as “good debt” and asked people “to get their head around the figures” if they want the city to progress.

Leader Tudor Evans (Lab, Ham) has hit back at “naysayers” who he says are putting posts on social media criticising the council for debt levels which are rising year on year.

Last year the city had the highest borrowing levels of any council in Devon but Cllr Evans said the authority was buying and building things to invest and bring in an income so it was less reliant on council tax and business rates in the future.

The level of debt is set to decrease in the coming years as many major projects in an “ambitious” capital programme to regenerate and improve roads and leisure facilities are completed and more funds come in from external investors and partners like Homes England to build 10,000 homes in the city.

The city council wants to be a leader in these projects rather than a direct developer. 

During the opening session of the 2026/27 budget scrutiny meetings Cllr Evans said the figures to run a council, provide services for the city and grow a city were “gargantuan” and a far cry from what people were used to at home.

“We employ 2,500 people, the city has 275,000 residents and 116,000 households, it’s huge and so of course these sums of money are quite alarming to people but you have to get your head around it and we do.

“The gross budget for the council every year is over half a billion pounds so when people talk about we are £750 million in debt a lot of that is mortgages and we all understand what that is. We are buying and building things and for every £1 we spend in economic development we bring in £4.”

He added: “Do these people who are complaining, the naysayers, want the city to shrink, houses to disappear, factories to not be built and businesses not to come, that is not the future… it is calamity.”

“The people we employ are experts in their field and have legal obligations. Their careers are on the line if they get it wrong. As an authority we manage risk and we manage it well and we have confidence in the staff, that the finances in this city are sound and we have a cunning plan to deliver jobs and prosperity for this city. We want it to be greater in every sense of the word.”

Councillors heard that the city council was building on “15 years of investment” and was at “a tipping point” with the greatest opportunity it had had in decades.

Cllr Evans reeled off a series of announcements over the past year that would “provide this city with a platform for the most sustained period of economic growth in 50 years.”

Included in that was the £4.4 billion defence deal, Plymouth being named as the National Centre of Marine Autonomy, £33 million of investment from Homes England for the Bath Street development and the Civic Centre, plans for Babcock’s head office and logistics hub in the city centre, a City College campus in the heart of the city, ambitions to be City of Culture in 2029 and £3.5 billion of investment in the health sector in and around Derriford.

Economic developer officer David Draffan said 28 properties purchased for employment purposes including construction and “safe sectors” some years ago with money that was borrowed at a low interest rate was making over £3 million a year as an income for the council.

And he spoke about the historic estate of Mount Edgcumbe, which is owned and managed by Plymouth and Cornwall Councils, being “cost neutral” thanks to innovative property work and the introduction of several holiday lets. Before that it cost £200,000 a year to both councils.

The council’s cabinet member for finance Cllr Mark Lowry (Lab, Southway) said: “A lot of the debt is really good debt and we are doing good stuff. We buy properties, invest and make money, that is what we do.

“And we must remember that although we have an ambitious capital programme (£320 million) £145 million of that is going to be financed by other people

“Over the next few years the debt will start to drop as a lot of the heavy lifting has been done. The programme going forward is solid.”

The council has produced a draft capital strategy and treasury management strategy to show how capital projects are funded and what savings can be made. It will go to the council’s cabinet for approval in February.

The same month the final budget and council tax will be discussed and set.