Kent County Council (KCC) leader Roger Gough says measures being taken to manage severe budget pressures mean the authority is not one of those forced to have formal talks with the government to start the process of issuing a ‘bankruptcy’ notice – but service cuts will have to be made.
S114 notices are issued when an authority cannot produce a balanced budget – so technically faces bankruptcy – and results in a ban on all new spending with the exception of protecting vulnerable people and statutory services and pre-existing commitments.
Last November a letter was sent to the Prime Minister, Chancellor and Secretary of State, by Hampshire County Council Leader, Councillor Rob Humby, and Kent County Council Leader, Councillor Roger Gough outlining the drastic budget implications facing the two authorities, and the need for Government’s immediate help and a clear plan for long-term financial sustainability, if the two County Councils were to avoid filing bankruptcy notices.
Cutting costs
However Cllr Gough says management actions can reduce some of the budget shortfall
A report to Cabinet members, who will meet on Thursday (August 17), says the first revenue out-turn forecast for 2023-24 is of a projected overspend of £43.7m. The report also sets out initial management actions which will reduce the shortfall to £26.7m by cutting £10m from adult social care and £7m from capital programme financing.
The projected overspend comes on top of the £47.1m shortfall in 2022-23 which has already reduced the council’s reserves.
Kent County Council says it is facing an enormous rise in the cost of services, fuelled by inflation, market conditions and additional demands on its services from population demographic changes and complexity of need.
The most significant pressures over the last two years are in adult social care and children’s services, totalling £24.5m and £33.7m respectively. This year there are forecast overspends in Children’s, Young People and Education totalling £28.4m, and in Adult Social Care & Health totalling £25.8m, reducing to £15.8m following initial management action.
The largest adult care costs were on residential and nursing care for older persons due to a combination of market conditions and increasing client complexity. A significant increase in the use of short-term beds was also a major contributory factor.
There were also significant overspends for clients with mental health needs, learning disability and physical disability.
In children’s services the most significant overspends were on home to school transport and placement costs for children in care. In both cases these arose from increases in numbers of children being supported and increased operator costs.
In the 2022-23 financial year KCC had to spend its risk reserve of £25m with the remaining £22.1m being drawn down from the General Fund reserve.
Budget recovery plan
KCC says the priority is to deliver a budget recovery plan that secures Kent’s future, restoring and improving financial resilience. The budget recovery plan sets out immediate actions to reduce spending in the short term, as well as structural changes over the medium to long term to ensure the authority’s spending is sustainable and within the resources available from central government and council tax revenue.
The council says it will need to focus on the most essential activities and priorities until the financial position is brought under control.
This will include a review of all directorates, in particular Adult Social Care and Childrens’ Services, to make sure savings and efficiency plans are delivered.
Commissioned services will be under threat, including youth services from providers other than KCC.
Cllr Gough said: “ KCC is, like many councils across the UK, dealing with an extremely concerning financial position. However, I am confident that we can find solutions, make the necessary savings and, most importantly, secure Kent’s future.
“We are leaving no stone unturned and remain confident that we can identify and deliver these savings and ensure that KCC continues to be a sustainable local authority that delivers for Kent residents.
“Our finances are under enormous pressure, as we endeavour to keep critical frontline services running in the face of these sharply rising costs and increasing demand. We need to make urgent savings in the remainder of this financial year from spending reductions and increased income, in order to ensure that we balance the budget, without the reliance on reserves. The report published today represents the first stage of this process.
“However, our message to central government, and to our residents, is clear. Our funding is going up by less than inflation, ultimately making extremely tough savings decisions not only inevitable but urgent.”
Progress report
A progress report will be presented at a meeting of Cabinet on October 5, which will set out in more detail additional actions and decisions needed to bring the forecast overspend down to as close to a balanced budget as possible. Between now and October the Leader of KCC and his new Cabinet will be taking urgent decisions to address the budget overspend.
Cllr Gough added: “I am all too aware that a number of local authorities in the UK are in formal talks with the Department of Levelling Up, Housing and Communities (DLUHC) to start the process of issuing an S114 notice.
“KCC is not one of those local authorities that is having those conversations with central government, and we remain confident that we will not have to.”
‘Russian roulette’
County Councillor for Ramsgate, Karen Constantine, said: “I joined Kent County Council in 2017. Since then I have watched while the Tories have essentially played Russian roulette with people’s lives. The cuts to funding by Central Government been felt particularly hard in Thanet, especially in the poorer wards where many people have been struggling with the cost of living crisis for many years.
“The Institute for Government say, ‘The fall in spending power is largely because of reductions in central government grants. These grants were cut 40% in real terms between 2009/10 and 2019/20, from £46.5bn to £28.0bn (2023/24 prices).’
“The funding crisis is absolutely the responsibility and the intention of the Conservative party. They have stripped funding in the ideological driven belief that councils of all types and sizes can make money off residents to meet the gap in funding. Above and beyond the council tax they already collect.
“Labour councillors have repeatedly told them this formula does not work and that Central Government funding needs to be restored urgently. And that it should be restored in such a way that funding meets actual need. They continue to fail to do this and they should be held responsible for their failure to tackle the spiralling rise in poverty the rising tide of inequality.
“The upshot of this is that people suffer unnecessarily and we are seeing that with the elderly and children in particular; the so called safety net is full of holes. People are falling through.
“By failing to effectively challenge their own Government, KCC are playing fast and loose with people’s lives.”
