Powys County Council is slowly sinking in a sea of red ink.

According to data obtained by the BBC’s Shared Data Unit, Powys owes £2,734.39 for every man, woman and child living in the county now.

Between the end of March in 2024 and 2025, Powys piled on more than £40 million to its massive debt pile – an increase of some 12.5 per cent.

As things stood at the end of March this year, the county council owes a third of a billion pounds - £367.6 million – compared to £327.4 million in the previous 12 months.

Over the same period, the council put every person in the county a further £299.41 in hock.

But believe it or not, Powys is by far the worst performer in the 22 local authorities in Wales. Together, the Welsh councils owe a combined £6.4 billion, and all of the local authorities in the United Kingdom together carry a debt burden of more than £122 billion.

A spokesperson for Powys County Council said: “The council continues to face increasing demand for services, particularly in social care, price inflation, provider costs and national pay awards, many beyond our control meaning that the council will face a significant budget gap for many years to come.

“The Council in its current form is not sustainable for the longer term, it has embarked on ‘Sustainable Powys’ programme to ensure it can remain financially stable and provide sustainable services.

“Planned budget savings will focus on transforming our services, increasing efficiency, driving down costs and raising more income. We will continue to invest in some capital schemes which improve key council assets supporting the delivery of statutory services and delivering budget savings.”

The council said it could not provide specific details of the cost of servicing the debt because of the bank holiday and publication deadlines. It did not provided details of any levels of reserves, meaning that the overall debt burden cannot be put in context with its current finances.

Across the UK, councils added more than £7 billion to their total debts, the Shared Data Unit found. A total of 32 councils had no borrowing on their books at the end of 24-25. There were no Welsh authorities on that debt-free list. There are 382 local authorities in the UK.

In neighbouring Gwynedd, the council there managed to reduce its debt burden from £203 million at the end of the 2023-24 financial year, to £198.3 million. While the reduction of 2.27 per cent might not seem much, the council did so at a time when it and every other local authority faced severe inflationary and cost pressures.

Over the year, Gwynedd Council managed to reduce the individual debt burden for every county resident from £1,703.03 to £1,664.40 – a reduction of £38.63 per capita.

A spokesperson for Gwynedd Council said that the cost of servicing the county’s debt burden was £10.9 million in 2023-34, and this increased to £11.4 million in 2024-25.

The decrease in Gwynedd’s overall debt was as a result of three loans maturing over the course of the fiscal year.

While the current overall debt total of £198.3 million in Gwynedd seems high, the council has on hand £127 million in reserves.

A Gwynedd spokesperson said: “We have a long-term plan to repay the individual loans as they mature and sums are set aside as is required by accounting standards, legislation and when it is prudent to do so. We will only look at paying debts off early if this is financially advantageous to do so, since most long-term loans have early repayment penalties.”

If Gwynedd seems to be handling its finances and debt burden well with the debt to reserves ratio standing at about 62 per cent, it’s a far different picture at Ceredigion County Council.

There, overall debt increased by 18.4 per cent at the county piled on nearly £20 million in red ink. At the end of fiscal 2023-24 the council owed £106.3 million. By the end of fiscal 2024-25, it owed £125.9 million. The total debt per person in Ceredigion went from £1,455.10 to £1,713.13 over the same period as the council failed to get a grip on its spending and finances.

According to figures provided by the Ceredigion at the end of March, it has just £41 million in reserves – about 31 per cent of the money it owes.

Only the urban and densely populated local authorities, in Merthyr Tdyfil (21.2 per cent), Newport (24.5 per cent), Torfaen (26.8 per cent) and Vale of Glamorgan (18.5 per cent) managed to increase their percentage of borrowing more than the rural and sparsely populated county of Ceredigion.

There are four councils controlled by Plaid Cymru in Wales.

Anglesey managed to reduce its overall debt by 0.3 per cent, from £121.5 million to £121.1 million. Carmarthenshire marginally increased its county debt by 1.4 per cent from £410.1 million to £415.8 million. As detailed above, Gwynedd reduced its debt by 2.27 percent – leaving Ceredigion as the fiscal black sheep in the party’s local authority ranks.

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.

But 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.

Experts including Jonathan Carr-West of the Local Government Information Unit (LGIU) said the spiralling levels of debt at local authorities was “extremely worrying”.

He said: “That is not a sustainable system. As one local government finance officer said to me, it’s essentially payday loans for local governments.

“I don't think the government would say that’s it’s long-term ambition. They would say that is what we have had to do to paper over the cracks while we introduce a new funding system for local government.”

According to the Shared Data Unit, local authorities in the UK ‑ excluding Police and Crime Commissioners and Chief Constables, Fire and Rescue Authorities and Combined authorities ‑ owed a combined £122.2billion, equivalent to an average of £1,791 per resident as of the end of March 2025 - the close of the last financial year. In Wales, the local authority debt per capita is £2,034.

More than half of councils increased their borrowing levels comparing the end of the 2023-24 financial year to the end of the 2024-25, while 37 per cent managed to reduce their debt burdens.

Under UK law, local authorities cannot go bankrupt in the same way a company or individual would. They are instead placed under special measures after issuing a Section 114 notice. The insolvent council issues the 114 notice saying its forecast income cannot cover any shortfall, forcing Westminster to intervene.

Since 2018, Northamptonshire County Council, Croydon Borough Council, Slough Borough Council, Nottingham City Council, Thurrock Borough Council, Woking Borough Council and Birmingham City Council have issued Section 114 notices.