DEVELOPMENT of Abergavenny’s King Henry 3-19 school was one factor behind a 17.71 per cent debt increase over the last year, Monmouthshire County Council has said.

New data released by BBC’s Shared Data Unit showed Monmouthshire County Council’s debt rose in 2024/25 from £166,119,000 to £195,531,000. The new figure represents a total debt per person of £2,067.54.

A Monmouthshire County Council spokesperson said: “This increase is in line with expectations and reflects the Council's strategic approach to financing its capital programme.

“Key investments during this period include the development of the new King Henry 3-19 school in Abergavenny, essential infrastructure and highway works, and the rolling replacement of the council's vehicle fleet. These programmes of work are vital to maintaining and improving services for residents and represent longer-term value for the community.

“The level of borrowing undertaken is fully aligned with the council's actual borrowing requirement, based on historical and current capital expenditure. Importantly, the costs of servicing this debt are fully factored into the Council's revenue budgets and Medium Term Financial Plan. For the current financial year (2025/26), the total cost of debt servicing is £12.8 million, which has been planned for and incorporated into the budget.”

The news comes as councils in the UK added £7.8bn to their growing debt pile in the space of a year. Analysis of data from the Ministry of Housing, Communities and Local Government showed UK councils owe a combined £122.2bn to lenders, equivalent to £1,791 per resident, as of April 2025.

That is up seven per cent from a total of £114.5bn, the equivalent of £1,677 per resident, a year ago.

As Monmouthshire has, councils can borrow funds to invest in projects such as schools, leisure centres and theatres. They can also borrow to invest in property that will bring in an income over and above repayments on the debt.

However, the recent rise is being partly driven by a near tripling of short-term lending from central government, which in some cases is being used to ‘paper over holes’ in some council revenue budgets rather than pay for investments and town centre improvements.

Another such ‘papering over holes’ measure can be using reserves to service debt, often to create a financial buffer, however Monmouthshire County Council confirmed it does not do this.

A spokesperson said: “Monmouthshire does not fund the recurrent costs of servicing debt from its reserves. Reserves are held to mitigate specific risks or to make specific one-off investments in improving service delivery.

“Further details of the Council's approach to debt management can be found in the Capital and Treasury Strategy document, which was approved by Full Council on Thursday, March 6, 2025.”

There are a variety of reasons why councils may fall into debt such as risky investments or a reduction in funding from the central government - such as in 2010. The government grant to councils reduced dramatically and councils were encouraged to use their own resources and raise money themselves.