By Local Democracy Reporter Simon Finlay
Leaders at cash-strapped Kent County Council have disputed claims the authority is teetering on the brink of bankruptcy.
It was named as one of six councils facing going bust after the recent collapse of Birmingham City Council (BCC) with debts of £750m.
According to the i news website KCC, which must find savings of £86m next year, is vulnerable.
The i named Kent, Devon, Bradford, Guildford, Hastings and Southampton as all “fighting bankruptcy”.
But KCC sent out a robust defence of its position saying it is not about to issue a Section 114 notice, which effectively means it cannot meet its financial obligations.
It said that there are a number of councils in formal talks with the government about issuing section 114 notices, but KCC is not among them.
The authority’s leader Roger Gough will be setting out plans next month for making efficiencies without dipping into reserves, a move regarded as the last resort.
‘Finances under enormous pressure’
But KCC stated: “We are 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.
“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.
“Our finances are under enormous pressure, as we endeavour to keep critical frontline services running in the face of sharply rising costs and increasing demand, particularly in social care.
“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 leader, his cabinet and senior officers at KCC are discussing urgent actions to address the budget overspend. 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 position as possible.”
Potential 114 notice
The i quoted from KCC auditors Grant Thornton’s report which said the authority must find £86m in savings.
Written by David Parsley, the report was published on the i website on September 10 under the headline “Six more councils fighting bankruptcy, including Bradford, Kent and Devon…”
It read: “In Kent, where 61 of the 81 county councillors are Conservatives, the authority’s external auditor has warned that it faces a potential 114 notice unless it makes savings of £86m by the end of its current financial year next March.
“The report from Grant Thornton said Kent County Council was in a ‘perilous financial position’ due to inflation and a growing demand for its services. Kent council did not respond to i’s request for comment.”
Cllr David Brazier told today’s (Sept 13) scrutiny committee that if a Section 114 notice was to be issued, Government commissioners would have to step in and it would mean the end of discretionary spending.
He said: “It’s not a passport to the naughty step…There is a need for reality here and we need to control discretionary spending with a firm hand.”
‘Reserves are finite’
A well-placed KCC source told LDRS: “A section 114 is unlikely at the minute. Times are very hard at the moment and it is going to be tight – everyone knows that.”
But a senior backbencher said he believed the true situation is “far worse” than imagined and warned the council’s reserves are finite.
The member stated: “Once you start dipping into reserves, you have to have a plan to top them back up.
“There are reserves plonked all over the place and not all of them are readily to hand. If you carry on dipping into reserves, they won’t last long. There has to be a plan. Even so, I feel that a section 114 is an inevitability, not a possibility.”
