Kent County Council “burning” through reserves as government squeeze bites

KCC County Hall

By Local Democracy Reporter Simon Finlay

The authority in charge of looking after roads, schools, children and older people is “burning” through its reserves as the government continues to squeeze budgets, new papers have revealed.

Kent County Council’s financial position has “weakened significantly” because it has been forced to dip into its savings pots to balance the books.

KCC forecasts it will have spent just under one quarter of its usable reserves in the two years to April 2024, dropping from £408m to £316m.

This is making the council less resilient, said the papers.

KCC provides a range of vital statutory services such as adult social care, running schools and looking after vulnerable and asylum seeking children, as well as maintaining the county’s roads.

Cllr Harry Rayner, KCC’s deputy cabinet member for finance, said “discretionary” services, those provided outside the council’s legal obligations, will have to be targeted to make savings.

Cllr Rayner refused to name which might be culled to “to stop hares running” but said all areas are being considered. At any authority, discretionary services can range from tourism services to regeneration projects.

He added that having drawn down on reserves, the council will seek to replace them over five years.

Cllr Rayner said: “It will have to come as a reduction in discretionary services and a number of them are now under review.”

According to KCC auditors Grant Thornton, the council will need to find £86m in efficiencies next year because of a shortfall in government funding set against spiralling costs and soaring demand for services.

Papers to be considered by this week’s Growth, Economic Development and Communities Cabinet Committee on Thursday (November 9) state: “The levels of reserves now pose a more significant risk to the council’s financial resilience than levels of debt.

“Levels of reserves are now considered to be the second most significant financial risk after capacity to deal with in-year budget pressures.”

The council has already made moves to cash in on its property portfolio and has already put Sessions House, known as County Hall, on the market to raise funds.

The report, published by leader and deputy leader Cllr Roger Gough and Peter Oakford, says: “The financial standing of the council has weakened significantly as a result of the overspend in 2022-23 that was balanced by the drawdown of £47.1m from general and risk reserves (39% of general reserve and all of the risk reserve).

“Usable reserves were also reduced through the transfer of £17m from earmarked reserves to Dedicated Schools Grant (DSG) reserve as part of KCC’s contribution to the Safety Valve agreement with DfE in March 2023 (with further transfer of £14.4m planned for 2023-24).

“Overall, the council’s usable revenue reserves have reduced from £408.1m at 31/3/22 (40% of net revenue) to £355.1m at 31/3/23 (29.8% of net revenue) with further reduction to £316.3m (24% of net revenue) forecast for 31/3/24.”

The papers say that the “reserves will need to be replenished at the earliest opportunity and will need to be factored into future revenue budget plans”.

KCC’s £1.1bn borrowing requirement from historic and ongoing capital expenditure “is expected to remain broadly stable” and covered by existing external debt, which is forecast to decline.

Unlike other councils, such as Birmingham City Council, KCC has so far avoided having to issue a section 114 notice, which effectively is an admission an authority cannot afford to fulfil its statutory functions.

In the event of a section 114, the government appoints commissioners who take over the day-to-day running of the council.

One Tory backbencher said: “Some of us feel there is still an 80% chance we’ll end up having to issue a section 114 notice. We’re doing all we can to prevent it but you can’t keep burning through the reserves without putting the money back.

“At the end of the day, this is the government’s doing by not funding the council properly to meet the cost of services we have to provide by law. And it will be those who rely on discretionary spending who will end up paying the price.”

25 Comments

  1. The Tory KCC will collapse as a result of the Tory Goverment
    Lets have an East Kent Unitary Authority instead

    • Wasting them on tabloid grabbing headline barges, Rwanda schemes & buying all the booze for their conferences & parties.

    • They are spending our taxes on illegal immigration (this will only get worse when we have a Labour let them all in Government) the crippling Benefits system (again these costs will skyrocket under a Labour government), the seriously underperforming NHS, minority inclusivity projects, funding our armed forces, and billions are also spent on an extortionate foreign aid budget.

      • To be fair the whole point of Brexit was to not send refugees back to France for processing. Brexiteers wanted more immigrants and everyone complaining about it are just remoaners trying to subvert the will of the people. Also, the Tories promised to cut funding to armed forces, NHS. And they have also given people on benefits an inflation busting payrise but said workers don’t deserve it. After 13 years it’s clear that the Tories care more about immigrants and benefit scroungers. Keri Starmer is a Tory in a red tie so if Labour get into power and t’ll be more of the same.

  2. Easy answer-just have the KCC higher-ups take a pay cut. Maybe it shouldn’t have pumped & continue to pump so much money into the Turner Centre-510k per annum just for ‘core funding’ & Dreamland.

  3. KCC is a far too large an area and being broken up into smaller Unitary Authorities is the long term solution .
    The real problem is the government trying to micro manage local authorities whilst cutting their grants year on year. This started under the hapless Gordon Brown and was made far worse by Cameron’s Lib Dim / Tory coalition . Under May and the succeeding uber right wing monetarists the train is now running into the buffers.

  4. some great replies on here , i hope sir craig mckinlay reads them , he will be after our votes soon , then the promises will begin

  5. Money has been wasted on vanity projects and road building . Interest on them is costing taxpayers millions of pounds every year that should have been spent on people not edifices like thanet parkway station

    • Surly you should point out that the money has been wasted by both conservative and labour governments / councils.

      • Paul – Mr Lewis wears blinkers and only looks ahead always blaming Conservative governments/ Councils. Labour has had its.fair share of dodgy dealings eg Gordon Brown giving gold reserves away as an example. Still the old Labour money tree will flourish into life and run up more debt. Happy days.

  6. KCC are in this fix because of:
    Underfunding by central government.
    A long history of short term policy making to keep council tax down.
    Out sourcing mania which means services become more expensive each year because there is no in-house alternative.
    An addiction to vanity projects. And
    A general lack of competence, not helped by everyone working from home and not being on the spot when problems arise.
    They are not loved because they are a one party state let and tend to favour West Kent over other areas of the county.
    They are getting desperate and it may be that Max Caller will be ‘calling’ soon.

    • Nope.. Nothing to do with underfunding

      Try looking at investment funds.. Iceland and now some bogus company claiming they make solar panels.

      Also the investment over decades to Thurrock Council who got us all to wtite off debts because they too invested in solar panels.

      Go figure.. Truth bites.. Liars KCC TDC

    • The voice of Checksfield speaks.Pray tell us sage of Birchington what wise words are you going to utter today?
      I wait with bated breath for your erudite and learned expressions.The world is waiting on your every word, or perhaps not, you sad person.

  7. How strange! I would have thought that the way money has been spent on a ghost train station KCC money was flowing!!!

  8. Recently I was upturned on my mobility scooter, because the nearside rear wheel went into a sunken drain cover when I tried to slowly reverse due to an oncoming flat bed truck that was reversing and hadn’t seen me! The roads certainly in Ramsgate, are appalling, and the pavements even worse, so much so most 3rd World countries would be ashamed of them! So why are KCC not resurfacing them? It can’t ne lack of money, they just spent million on the Parkway train station no one uses!

      • Ray the bread – I have worked and lived in Communist South Russia in late 90’s, Africa, Iraq, Egypt and most recently Sudan. You have no idea until you experience these places . Some of the people frequenting this site do not know how lucky they are!!

        • I was stating people ,on this site going on about UK likened to a third world country,when it no where near it .And yes having served in the British Army , I have been to other countries,and seen them first hand

  9. You state that your using your reserves. Please take note this money belongs to the people of kent. Spend it wisely.

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