Kent Council Debt: Borrowing Reaches £2.45bn as Medway Overtakes KCC Ahead of Local Government Reorganisation

New Government figures show nine of Kent’s 14 councils borrowing more than two years ago. With four new unitary councils due in 2028, those liabilities aren’t simply going to vanish when the old councils disappear.

Kent’s council map is about to be torn up and redrawn. Its borrowing won’t disappear with the old logos.

The latest Government borrowing figures give us a clean two-year comparison. The ShepwayVox Team’s analysis of the Q1 data shows the combined outstanding borrowing recorded for Kent County Council, Medway and Kent’s 12 district councils rising from £2.177883 billion at 30 June 2024 to £2.448884 billion at 30 June 2026. That’s £271 million more — an increase of 12.44%. Nine councils increased their borrowing, three reduced it and two remained at zero.

And the biggest change isn’t Kent County Council.

It’s Medway.

Medway’s outstanding borrowing jumped from £515.229m to £746.519m, up £231.290m, or 44.9%. KCC went sharply the other way, cutting its figure from £748.343m to £607.814m, a reduction of £140.529m, or 18.8%. Back in June 2024, KCC had £233.114m more borrowing than Medway. Two years later, Medway has £138.705m more than KCC. That’s quite a turnaround.

There’s plenty going on underneath Medway’s headline figure. Its Public Works Loan Board borrowing — essentially long-term lending provided to councils through the Government — rose from £281.124m to £516.024m, an increase of £234.900m. Its short-term borrowing from other councils also rose by £62.955m. Against that, longer-term council-to-council borrowing fell £56.555m and bank borrowing fell £10m.

Thanet is the real percentage outlier.

Its borrowing went from £19.582m to £90.466m — up £70.884m, or 362%. That means the figure is now more than four-and-a-half times what it was two years ago. Maidstone increased from £45m to £85m, Ashford from £249.285m to £286.171m, Gravesham from £150.345m to £171.856m and Folkestone & Hythe from £102.801m to £117.741m. Tonbridge & Malling and Tunbridge Wells recorded zero borrowing on both dates; that means zero in this particular borrowing dataset, not that either council has no liabilities of any kind.

There’s another way of looking at it. The nine councils whose borrowing increased added a combined £432.425m. The three going the other way removed £161.424m. KCC alone supplied £140.529m — about 87% of all those reductions. So Kent’s £271m net increase actually conceals a considerably bigger build-up among the councils heading in the opposite direction.

Ashford shows why it’s worth getting underneath the headline number. Its total borrowing increased £36.886m even though its PWLB borrowing fell £4.186m and £36.428m of short-term central-government borrowing disappeared. Short-term borrowing from other local authorities, however, leapt from £67m to £144.5m — an increase of £77.5m.

Here in Folkestone & Hythe, borrowing increased by £14.940m, or 14.5%. PWLB borrowing rose from £71.321m to £80.501m, while short-term borrowing from other councils climbed from £21.480m to £37.240m. At the same time, £10m of longer-term council-to-council borrowing disappeared. In other words, it isn’t simply the amount that’s changed; the mix has changed as well.

Across Kent as a whole, PWLB borrowing increased by £251.362m, from £1.322662bn to £1.574024bn. Short-term borrowing from other councils almost doubled, from £226.090m to £436.905m. Long-term bank borrowing, meanwhile, fell £100m and longer-term borrowing from other local authorities fell £59.155m. It sharpens a trend The ShepwayVox Team identified last November: KCC was deleveraging while Medway and several districts were moving the other way.

There’s an important caveat. These are gross outstanding borrowing figures, not a measure of everything a council owes and not “net debt” after cash, investments and other assets have been taken into account. Short-term borrowing can also be used for everyday treasury and cash-flow management, while longer-term borrowing commonly funds capital spending. So a large borrowing figure isn’t, by itself, proof that a council is in financial trouble.

Then comes local government reorganisation.

The Government has chosen Option 4B, subject to the remaining Parliamentary process. From April 2028, North Kent is planned to combine Dartford, Gravesham and Medway; East Kent will comprise Canterbury, Dover and Thanet; Mid Kent will bring together Ashford, Folkestone & Hythe and Swale; while West Kent will combine Maidstone, Sevenoaks, Tonbridge & Malling and Tunbridge Wells. Kent County Council itself will disappear.

Put the latest borrowing into those four future footprints and the starting imbalance is stark. Before allocating any of KCC’s £607.814m, the councils making up North Kent currently carry a simple combined gross borrowing figure of £941.719m. Mid Kent stands at £420.912m, East Kent at £375.257m and West Kent at just £103.182m.

If KCC’s £607.814m were divided equally between the four new authorities purely as an illustration, each would receive another £151.954m. That would take North Kent to roughly £1.094bn, Mid Kent to £572.866m, East Kent to £527.211m and West Kent to £255.136m. But there’s currently no sound basis for assuming KCC’s borrowing will actually be carved up 25% each. How KCC’s assets and liabilities are divided will be determined through the formal reorganisation process.

Nor should those footprint figures be mistaken for forecasts of the new councils’ opening balance sheets. Investments, reserves, property, other liabilities and outstanding capital programmes matter too. Some council-to-council positions may also disappear on consolidation if a lender and borrower ultimately end up inside the same successor authority. What the figures show is something narrower, but still important: the four new councils are being assembled from predecessors carrying very different levels of gross borrowing.

What reorganisation doesn’t provide is a magic rubber.

In response to a Parliamentary question in January 2026, the Government said that, in general, council debt won’t be centrally written off as part of local government reorganisation and that debt held by existing councils is expected to transfer to successor councils. LGR finance guidance provides for assets and liabilities to be allocated through the formal arrangements establishing those successor authorities. In other words, changing the council boundaries doesn’t make the underlying financial obligations evaporate.

That doesn’t mean every individual KCC loan can simply be matched to a road, school or building and handed to whichever unitary gets it. Local-authority borrowing is generally managed corporately rather than loan-by-loan against particular assets. The eventual division will therefore be a substantial piece of financial work — and one worth watching very closely before four new councils open their doors in 2028.

The council signs can change overnight.

The loan book can’t.

The Shepway Vox Team

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