A mid-year treasury management review presented to Medway Council’s Audit Committee showed net borrowing had grown to £710.6 million by 30 September 2026, with short-term borrowing rising sharply as long-term Public Works Loan Board rates climbed above 6%.
Medway Council’s net borrowing position stood at £710.6 million as of 30 September 2026, up from £684.4 million at the start of the financial year, according to a treasury management mid-year review considered by the Audit Committee on 29 October 2026.
Borrowing position
The council’s total borrowing reached £742 million at 30 September 2026, compared with £713.5 million at 31 March 2026. Short-term borrowing increased by £71.4 million over the six months to reach £255.9 million, while long-term borrowing from the Public Works Loan Board fell by £27.9 million to £413.2 million. The council also held £31.4 million in investments at 30 September 2026.
The Capital Financing Requirement — the underlying need to borrow for capital purposes — stood at £676.9 million at 31 March 2026, against a strategy forecast of £833.5 million for the full year. A revised round-two forecast put the figure at £778.5 million.
Rising borrowing costs
The report noted that long-term gilt yields were very high, with the PWLB certainty rate for 10-year maturity loans rising from 5.62% at the start of the period to 6.17% by the end of September 2026. Rates for 20-year loans moved from 6.13% to 6.61%, and 50-year loans from 6.01% to 6.37%.
The cost of short-term borrowing from other local authorities ranged from 3.8% to 5.5% during the period. Officers attributed the high demand for short-term borrowing to many local authorities avoiding more expensive long-term rates, alongside low cash levels and the non-receipt of SEND grants.
The Bank of England’s Monetary Policy Committee maintained Bank Rate at 3.75% throughout the period, though voting patterns became more hawkish over the summer, with three members preferring an increase to 4.00% by July and September. The council’s treasury adviser, Arlingclose, expected Bank Rate to remain at 3.75% but noted increased near-term upside risks from higher energy prices linked to ongoing international conflicts.
Next steps
The report was scheduled to be referred to Cabinet on 17 November 2026 and to full Council on 21 January 2027.
The council had not published the minutes of the meeting at the time of writing, so the committee’s decision is not yet on the public record.
Sources
- Medway Council — Audit Committee, 29 October 2026 (agenda and papers)
- Treasury Management Strategy Mid-Year Review Report 2026/27 — report to Audit Committee (Medway Council)
Top image: illustrative, computer-generated. Illustrative AI-generated image. This is not a photograph of Medway Council or any real building.