A report from the Taxpayers Alliance shows that councils across the UK had a combined pension deficit of £53 billion in 2008-09. This is up from nearly £42 billion in 2007-08 – an increase of 27 per cent.

According to council's own actuarial estimates, the value of council pension assets fell by more than £21 billion during 2008-09 – a loss of 20 per cent on the previous year. Birmingham City Council had the largest deficit in 2008-09 – £1.05 billion.

15 councils had a deficit of over £500 million in 2008-09, up from 10 councils in 2007-08.

After Birmingham comes:

  • Fife: £835 million
  • Lancashire: £748 million
  • Kent: £740 million
  • Surrey: £729 million
  • Hampshire: £728 million
  • Leeds:  £715 million
  • Liverpool: £609 million
  • Hertfordshire: £589 million
  • Devon: £586 million
  • Oxfordshire: £558 million
  • Essex: £550 million
  • Nottinghamshire: £542 million
  • Newcastle upon Tyne: £513 million

I'm not sure these Councils are particularly to blame for having bigger deficits than others – it is largely a reflection of their size. But it does bring home the huge scale of the black hole.

John O'Connell, Policy Analyst at the TaxPayers' Alliance said:

"These deficits are a huge ticking time-bomb. Investment portfolios will have taken a beating in the credit crunch, but that is only part of the problem. No matter how good the markets get, the inescapable fact is that local authorities are running unsustainable final salary schemes that are now all but extinct in the private sector. Swift and firm reforms are essential to stop this deficit escalating further out of control in the long-term, and lighten the load on council budgets in the short-term. Local taxpayers already pay a fortune for these pensions, and it would be grossly unfair for local authorities to try and plug this gap with yet more tax rises.”

What is to be done about it? I was pleased that the report highlighted the important post on this site by Glyn Gaskarth last month which set out proposals for reform.

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