Kent councils with the biggest debts

Several Kent councils have significantly increased their debt levels in recent months, raising concerns about the potential impact on local services and the local economy. Data reveals that four councils have added to their borrowing since September 2024, contributing to a combined Kent local authorities borrowing burden of £2.3 billion across the county.

Ashford Borough Council (ABC) has boosted its borrowing from the Public Works Loan Board (PWLB) by £33 million to £273 million as of February 28, 2025. This figure stood at £240 million in Q2 2024, and significantly lower at £157 million in Q2 2023.

Folkestone & Hythe District Council (FHDC) initially decreased its borrowing from £102m in Q2 2024 to £99m in Q3 2024. However, as of February 28, 2025, their debt has now risen to £104 million.

Medway Council has also increased their borrowings substantially, adding £40 million in February 2025. This brings their total borrowings to £592 million, up from £530 million in Q2 2024 and £552 million at the end of Q3 2024.

Thanet has joined the trend, adding £20 million to the £17 million they borrowed at the end of Q3 2024, bringing their total borrowings to £37 million.

According to MHCLG and PWLB data, these are the only Kent councils to have borrowed money between Q3 2024 and the end of February 2025. The total debt of Kent councils has risen from £2.2 billion at the end of Q3 2024 to its current level of £2.3 billion. The borowing has increased by 6% in five months, or rather by £126.5m.

High levels of council borrowing inevitably cause a sustained impact on local services. The debt has to be repaid through each council’s Minimum Revenue Provision (MRP).

The MRP is the amount a council must set aside from its day-to-day budget to repay borrowed money. This funding traditionally comes from Council Tax income, potentially reducing the resources available for crucial front-line services.

The rising borrowing is compounded by the impact of inflation and interest rate hikes, which have eroded the value of the public pound and further increased the MRP. It’s estimated the combined MRP for this £2.3 billion debt will exceed £220 million. As borrowing rises so doe the MRP; which means less disposable income for Kent councils, which in turn could lead to less activity in the local economy.

Since 2010, local authorities have faced a 42% reduction in government grant funding in real terms. This has led them to explore commercial investments as alternative income sources. However, the current debt levels raise questions about the sustainability of this strategy.

Looking ahead, Local Government Reorganisation is set to take place, and some unitary authorities will likely inherit larger sums of borrowings than others. The long-term implications of this debt burden are still to be seen, but it is clear that Kent councils face significant financial challenges in the coming years; which means all new untiary authorities in 2028 will be born with debt. There will be solemn ceremony for the debt in May 2028.

The Shepway Vox Team

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