Solihull Council has written off more than £3.2 million of historic debt after officers said they had “exhausted all opportunities” to collect the money, underscoring how higher living costs are making local authority finances harder to manage.
Solihull Council writes off £3.2m of historic debt
The £3,203,428 written off in the year to March 2026 spans business rates, council tax, rents and charges, sundry income and housing benefit overpayments. For investors and public-finance watchers, the key issue is not the one-off loss itself but the wider sign that collection rates at cash-strapped councils are under pressure just as borrowing costs remain elevated and household budgets stay tight.
Business rates made up the biggest share at £1.14 million, followed by £979,737 in sundry income, £749,376 in rents and charges, £256,546 in council tax and £79,296 in housing benefit overpayments. Council officers said they issue reminders, final demands and court action before considering write-offs, but acknowledged collection has changed over the past five or six years as residents and businesses face more financial strain.
The council said the amount written off in 2025/26 does not necessarily relate only to debt raised in that year, meaning it includes older balances that had become uncollectable. Officer Louise Lynch said the authority used to target 98% collection within the year, but now has to be more realistic because people may simply need longer to pay.
For local government, that matters because arrears and write-offs can squeeze already stretched budgets, force tougher cash management and reduce room for discretionary spending. For lenders and bond investors, it is another reminder that high inflation, weak real incomes and slower collection rates can ripple through the public sector even when headline debt levels appear manageable.
Councillor Dave Pinwell said the figures were broadly in line with previous years, but the trend points to a more fragile operating environment for councils across the UK if household finances remain under pressure.
| Entity | Gains | Losses |
|---|---|---|
| Solihull Council | ▲Clears uncollectable balances | ▼Loses £3.2m in income |
| Residents and businesses in arrears | ▲More time to pay | ▼Penalties, court action |
| Local services budget | ▲Less bad-debt uncertainty | ▼Less cash available |
| Other UK councils | ▲Template for collection policy | ▼Exposure to similar write-offs |
