KCC budget: Fit for tough times

At Kent County Council yesterday we passed the budget for 2025-26. 

The circumstances in which we have set the budget remain difficult. Over the last few years, pressures in adult social care, children’s services and Special Educational Needs (in particular, in relation to transport) have outpaced the growth in our resources.

While we have made a lot of progress in the first two areas in the last eighteen months (SEN transport is now coming in under budget in the later stages of 2024-25), savings in adult social care are proving harder to realise, and our expenditure outside adults’ and children’s services is still set to fall in 2025-26. This is in spite of an increase in council tax of just under 5% (the referendum limit, although unlike some other councils we did not attempt to go beyond that). 

In my remarks to the council I pointed out that, with public spending under pressure, the government leaning towards methods of distributing funding that do not work in Kent’s favour and many major areas of spending unlikely to be reformed in the near future, the situation will remain tough for the foreseeable future. “There is no cavalry coming over the hill. There is only the hill. So, we have to have a budget fit for that stretching environment, setting us up for a number of years, which is what this budget does.” We share these pressures with councils up and down the country.

The budget continues our savings and transformation programmes in core services, delivers the first part of a nearly £20 million savings package in discretionary expenditure and rebuilds our general reserves in recognition of that tough operating environment. Amendments put forward by opposition groups covered just 0.4% of the budget spend, and none were agreed by County Council.

You can find our media release here.

 

Government funding: welcome but not a game changer

It’s not often that we get some unexpectedly good news on funding, but that did come through in the middle of last week. After a strong campaign led by the County Councils Network, in which Kent County Council played its part and worked closely with our Members of Parliament, the government made an unusually late amendment to the Local Government Finance Settlement. This gave an additional £600 million to the sector, of which £500 million goes to councils (like KCC) with responsibility for children’s services and adult social care.

We do not yet know our precise allocation, but estimate it (on the basis of past methods of distributing the social care grant, which is the approach that will be used) to be somewhat over £10 million, probably between £11.5 and £12.8 million. 

This is, as I have said, welcome but not a game changer. It has to be seen in the context of our £1.3 billion budget and the £118 million savings gap with which we started our budget process. It does not address the underlying pressures that are driving up local authority spend, and the outlook for the next few years (whoever forms a government after the election) suggests that funding settlements or remain tight.The cavalry is not coming over the hill. 

Nonetheless, after a disappointing outcome to the Autumn Statement and the provisional Local Government Finance Settlement, it is a welcome recognition of at least some of the pressures local government is experiencing. And it all helps. 

You can find our statement here.

Budget consultation and Cabinet report: the pressure is on

There’s just over a week to go to take part in KCC’s budget consultation, which closes on 6 September. We are currently developing our budget plans for the next financial year (2024-25) and the consultation is central to that. 

At the same time, there are significant financial pressures in year (2023-24). A report to our Cabinet meeting on 17 August set out a projected overspend (before any corective management action) of £43.7m. The main pressures are to be seen in adult social care (including the effects of hospital discharge on demand for costly short term beds), SEND transport and the rising cost of placements in children’s services. Management action - notably in adult social care and financing costs - narrows the projected gap by £17m, but there is still a lot to be done.

By a further Cabinet meeting (5 October) further detailed measures to close the in year gap will be brought forward, along with a longer-term plan (Securing Kent’s Future) to address the underlying pressures. Many if not all of these pressures are to be found across much of local government, which is reflected in the increasing number of councils reporting severe financial distress. We are therefore both analysing which areas of pressure are distinct to Kent, and what actions we need to take; the pressure to act is the more intense because our historic levels of reserves are at the lower end of the range for County Councils.

The Cabinet report, which sets out in some detail the budget pressures and our response, can be found here .

KCC budget approved: high risks and a narrow path

At a day-long meeting yesterday, the County Council passed the administration's budget for 2023-24. It was the fourth budget since I became Leader, and the most difficult for many years.

I have addressed the reasons for this before, and they underlay the joint letter that the Leader of Hampshire and I wrote to ministers in the autumn. The financial year just concluding (2022-23) is almost certain to be the first in 22 years in which the budget has been overspent; the full year effects of that, and the pressures that have caused it, carry over into 2023-24, for which our budget projects a £217 million (18.2%) rise in the cost of services. This far outstrips the increase in our resources, even after a much better than expected settlement for local government in the Autumn Statement.

The main reasons for this, in addition to surging general inflation (our budget last year was set two weeks before the Russian invasion of Ukraine) were cost pressures in adult social care, reflecting the crisis in the sector and the ever more complex needs of those in need of our services; rising numbers and costs in school transport, especially for SEND students; and the increasing costs of fostering and specialist placements in Children's Social Services.

The result is that we have both to increase council tax by the full referendum limit level of 5% and deliver some £55 million in savings and increases in income. The savings include difficult decisions in areas such as non-statutory social care services, community wardens and the cost of the Kent Travel Saver. Other measures are currently out to consultation, including our proposals for community services.

The council debate was long, wide-ranging, occasionally contentious and often thoughtful. At its conclusion, the administration's budget passed without amendment. I concluded by setting out the longer-term measures - sustainable budgets, work with the health service, making the most of the national devolution agenda -needed to secure the long-term future of the council and the services we provide. "So, we have a narrow path to tread. There are some very tough choices this year and some very big challenges for the years ahead."

You can find the KCC media release here.

Building the budget: after the Autumn Statement

The joint letter from the Leaders of Kent and Hampshire came a few days before the Chancellor’s Autumn Statement (17 November).

The Statement was in many ways better than expected for local authorities, at least upper tier councils with social care responsibilities. There was £1bn extra for social care in 2022-23, rising to £1.7bn in 2023-24 (60% via the NHS, the remainder through the local government settlement); the social care charging reforms were delayed, but councils are able to keep the funding associated with them; and councils have the ambiguous opportunity to raise more council tax, with the referendum limit (for social care authorities) rising from 3% to 5%.

All this has made a big difference to KCC (and other authorities) in setting their budgets. But it does not stop the requirement to make very difficult and painful savings decisions - it simply reduces somewhat the mountain to be climbed. Nor does it resolve the longer-term issues central to the Kent/ Hampshire letter. As I wrote in an article for the New Statesman, “the wolf is still at the door, even if he is no longer in the kitchen”. I have written in similar terms in the Municipal Journal.

At tomorrow’s Cabinet meeting, we will consider the latest financial monitoring report, which shows a projected overspend of £60 million for this financial year. The process of building next year’s budget, now in its later stages, has been helped by the Autumn Statement but is still exceptionally challenging. 

The Kent-Hampshire letter: we cannot go on like this

Yesterday the Leader of Hampshire, Rob Humby and I published a joint letter which we had written to the Prime Minister, Chancellor and the Levelling Up Secretary. In this we set out our concern that both councils face unsustainable financial pressures. 

The reasons for this are quite clear. Councils across the country have had to deliver huge savings (over £800 million in the case of Kent County Council) over the last decade or so. The pressures of core services to vulnerable people, notably adult social care and children’s services have continued to grow ahead of the resources available to councils. This year’s surge in inflation has added to our costs (some £45 million in the case of KCC) without having a matching effect on revenues. 

As a result, KCC is currently (after the first six months of the financial year) projecting an overspend of £60 million in 2022-23, and over £100 million for 2023-24. Perhaps most seriously, there is no prospect of achieving a sustainable financial position, and even the severe cuts in services which we are now considering may well not be enough to avoid a financial crunch and, over time, the need to issue a Section 114 notice that freezes all non-essential council spending.

Hampshire and Kent are similarly large and historically strong county councils. We recognised that we face similar problems, as does much of the local government sector; our voices add to the strong case being made by organisations such as the County Councils Network and the Local Government Association. 

Coming ahead of the Chancellor’s statement on Thursday, the letter has generated a lot of media interest. Above all, we are arguing that, while any solution can embrace a combination of funding support (in particular, in relation to adult social care), decisions about council tax and changes to legislative requirements on councils, there is one option that we cannot pursue: that is to continue as we are.

KCC budget consultation until 5 September

A little over a week ago - so with apologies for the lateness in posting this - Kent County Council launched its budget consultation. You can find the media release about the consultation here.

As in previous years, the 2023-24 budget will be a story of hard choices. KCC has delivered over £800:million in savings (equivalent to two-thirds of our annual budget) over little more than a decade. The years to come will present continuing challenges, with needs in areas such as adult social care and children’s social services outstripping the growth in our resources (council tax and government grant). To this must be added the pressures of inflation, to which much of our expenditures are highly sensitive.

The consultation offers an opportunity to help shape KCC’s budget choices in these challenging circumstances. You can take part via this link, and the consultation runs until 5 September.

Council tax - Helping Hands for hard-pressed residents

KCC has today confirmed a programme of help for hard-pressed residents with their council tax set out in last week’s 2020-21 budget.

Under the scheme, funded by some £6 million of the support that KCC has received from the government’s Emergency Covid-19 Grant, all those already under the Council Tax Reduction Scheme (CTRS), which provides discounts to those on the lowest incomes, will receive a rebate of £50 on their council tax bills. This will also help those who join the Scheme during the financial year, perhaps because of a sudden change in their circumstances such as redundancy. 

In addition, KCC is providing supplementary funding to District and Borough Councils to extend their existing Council Tax Hardship Fund schemes. These schemes are intended to help those who are - or were prior to the pandemic - ‘just about managing’ but above the income levels that would make them eligible for the CTRS. In this case too, the policy aims to help those who have been affected by the pandemic and its economic consequences. 

This announcement follows last week’s launch of the £10 million Helping Hands scheme by the council, providing support to businesses, households in financial distress, the voluntary sector and those in need of help in securing access to the digital technology that we all increasingly rely on. This too is funded by the Covid Emergency Grant; in both cases this is one-off funding that we as a council have decided to use to support those most impacted by Covid and its economic and social consequences. 

Last week’s KCC budget was aimed at protecting our services - especially those, such as adults’ and children’s social services that are likely to see a sharp increase in need and in more complex cases as we come out of lockdown. It also aimed to secure the long-term financial stability of the council - a council that is strong enough to be able to help when it is needed. The consequence of that, though reluctantly on the part of the administration, was a 2% increase in general council tax levels and a 3% increase in the adult social care precept. We were determined to ensure that the most hard-pressed households were relieved of the pressures of a council tax increase, and that is what these measures aim to do.

Funding announcement - but uncertainty continues

On Thursday the Housing, Communities and Local Government Secretary, Robert Jenrick, announced a further support package to help councils respond to Covid-19.

Councils in England will receive a further £500 million to respond to spending pressures they are facing.  The government has recognised that councils are best placed to decide how to meet pressures in their local area, and therefore the funding has not been ringfenced. Individual allocations have yet to be confirmed, but a subsequent letter from the Minister of State, Simon Clarke, made clear that this would focus on spending needs alone, rather than income losses, as was the case in the last disbursement announced by government.

Income losses will be dealt with by a separate mechanism. Where losses are more than 5% of a council's planned income from sales,fees and charges (SFC), the government will cover them for 75p in every pound lost.

Thirdly, the government is also bringing in changes so that councils can spread their tax deficit over three years rather than the usual one year.

Any additional funding and measures to relieve immediate pressure are, of course, welcome. Nonetheless, the concern remains that this still leaves councils, including KCC exposed to significant financial risk.

In terms of support for the financial pressures faced by councils, the first two tranches of government funding totalled £3.2bn, compared with the current £500m tranche.  KCC's share of the first two tranches was £67m, compared with our forecast additional spending of £96.6m and loss of income of £21m for this financial year. On the basis of the allocation of the first two tranches, KCC might expect its share of the new allocation to be in the £8 -12m range, still leaving a big shortfall.

It is not yet clear how the compensation of 75p in the £ on losses of income on SFC above 5% of total planned income will operate. It does suggest that KCC would have to absorb this  before receiving any compensation for losses. This may not be as material for County Councils as it would be for Districts and Unitaries, however the amounts for KCC are significant – as a total as an indication, our total SFC in the 2018-19 outturn was £156.6 million. We will  need to look at the full year effect before being certain as to whether the 5% trigger will be reached.

At this stage there is no funding attached to the provision to deal with council tax and business rate collection losses over three years. In the short run, the pressure would be deferred, and a deficit recorded in the collection fund which could be carried over into years two and three. The announcement says that funding will be considered "in the next Spending Review."  The government appears to be deferring a decision on this and relying on a strong economic recovery which will see council tax receipts increasing. If losses from council tax and business rates are not cash backed, there could be a viability issue for councils with inadequate reserves to cover short term pressures.

While this does represent some additional support for the sector, it is highly doubtful whether this can meet the pressures incurred in year, and many key decisions are deferred until the spending round and greater clarity over the speed of economic recovery.  Local government still does not have certainty in relation to its financial position as we emerge from the immediate impact of Covid-19. The County Council will be considering a revised 2020-21 budget at our meeting on 10 September.

 Interest in this issue has remained strong, and you can find an article in the Huffington Post, which includes an interview that I gave, here.

KCC budget consultation

Kent County Council launched recently its annual budget consultation.

We are currently putting together our budget for 2019-20. The pressures on the council - seen in still more dramatic form at many other County Councils and other parts of local government - remain intense, as government grant reduces and demand for services remains strong.

The Council is consulting on a further 5% increase in council tax, made up of the 3% 'referendum cap' (the level of increase above which a referendum would have to be called) and 2% for a 'precept' for adult social care. This remains something that the Council is very reluctant to do, but has little room for manoeuvre (it is striking that, at national level, government projections that local government will have a 'flat cash' budgetary position over the period of the Comprehensive Spending Review is predicated on local government raising the maximum amounts of council tax that it can).

With growing pressures in areas such as social care, KCC has had to realise savings of some £640 million over the last eight years. For 2019-20, the Council needs to realise a further £57 million in savings (all this on a net budget projected to be £967 million). So far some £41 million has been confirmed, leaving a gap to be filled of £16 million. There are a number of major uncertainties still to be resolved, such as the full take from council tax, the treatment of business rates and various government grants. But if other things remain equal, the Council (and those of us who serve in the Cabinet) will face some very difficult decisions.

The consultation runs until 21 November and can be found here.

New budget plans and bus subsidies

KCC has set out its latest plans for the 2018-19 budget, reflecting some important developments in the Local Government Financial Settlement announced just before Christmas.

In many respects, the financial challenge facing the Council remains massive.  The budget gap that KCC has to plug is some £113m, reflecting a £45 million reduction in government grant, the impact of price increases and growing demand for services, especially in children's and adults social services. Much of this will be met by spending reductions driven by greater efficiency, effective commissioning and the like.

There was also one major disappointment in the pre-Christmas announcement, that an earlier government Transitional Grant, worth some £5.3 million to the Council, is not being continued.

However, the Local Govenrment Financial Settlement also included - more positively - the news that Kent, working with the County's 12 District Councils, Kent Fire and Rescue Authority and Medway Council, will be one of the national pilot areas for Business Rate Retention. This will bring in £5.6 million in the coming financial year.

Secondly, government has raised the 'referendum cap' - the amount by which Councils can raise Council Tax without having to call a local referendum - from 2% to 3%. This is in addition to the 2% precept that the Council is able to raise for social care. In line with most other County Councils, KCC will propose in its budget to increase the coming year's council tax by just under 5%. This will not be welcome to residents, but our pre-budget consultations have suggested a willingness to see some increase to protect services.

In its budget proposals, the County Council will no longer be proposing a £2.25 million reduction in subsidies for bus travel, but instead will propose a reduction of only £0.45 million. The Council nonetheless believes that there is a need to review existing bus subsidies and look for other and better ways to support transport for elderly and isolated residents, and will be investing £0.5 million in developing this approach. This will be carried out through a 'big conversation' with Parish Councils and local communities in the coming months.

Still time to respond to KCC budget consultation

With the Chancellor giving his Autumn statement next week, there is still time for residents to respond to Kent County Council's consultation on its budget for 2017-18. The consultation, launched five weeks ago, closes on 27 November.

Like many other councils, KCC has been under severe financial pressure for quite a number of years, chiefly because of sharp reductions in government grant at a time when areas such as social care for the elderly have increasing need. It is quite a thought that KCC has delivered savings of £514 million – more than half a billion pounds – since 2010.

For 2017-18, the Council faces a financial gap of £108 million. It is - reluctantly - proposing an increase in council tax of 3.99% (including a 2% ‘precept’ for social care), but even after this has to deliver savings of £80.4 million. Our consultation focuses on how to deliver this; so far around £75 million has been identified and proposed.

You can respond to the consultation here.

KCC publishes draft budget

The County Council has published its draft budget for 2016-17, to be put before County Councillors on 11 February.

As in previous years - but perhaps even more so - the key factors shaping the County Council's proposals have been increasing need for social care services, especially for the frail elderly, and reductions in government grant.

The Chancellor's Autumn Statement and Sprending Review in November set out the overall reduction in Revenue Support Grant (the main, non-ring fenced transfer from central to local government) but not how this would affect individual authorities. When these figures were released - as in previous years, just before Christmas - it became clear that shire authorities had suffered much more severe reductions than local government as a whole. For KCC, it was £46 million.

Pressures on adult social care for the coming year amount to £31 million (out of overall pressures of £80 million). As a result of this and the reductions in grant, KCC has had to find around £100 million in savings. It will also have to raise council tax by almost 4%, which raises £22m. In part, this will come from the 1.99% increase that the council is able to undertake without triggering a referendum, in addition, the government - recognising the pressures from demographic change and the National Living Wage on social care expenditure - is allowing councils with social care responsibilities, such as KCC, to levy a further 2% 'precept'.

Taken together, this will mean just over £40 extra on a Band C property, and of course more for higher banded properties. The Council is proposing this with considerable reluctance, but it is having to do so at a time when local government continues to deliver very large savings.

You can find out more about the council's proposals, including links to more detailed pages here.

Budget consultation: choices for tough tines

KCC has launched a six week consultation on its 2016-17 budget. The consultation will close on 24 November, one day before the government's Comprehensive Spending Review (CSR).

The County Council has delivered huge savings - £433 million over the last five years. However, further savings of some £80 million will be needed this year, and after delivering such large-scale economies in recent years, we now face difficult choices. The precise amount of savings needed cannot be determined in advance of the CSR and the subsequent local government financial settlement, but the general scale of the challenge facing us is clear. At the same time the County Council is proposing a moderate council tax increase of 1.99%.

Rising pressures on the budget, such as the need for social care services driven by demographic change, are the biggest factor driving the need for savings. This effect is exacerbated by anticipated further reductions in government grant.

You can find the consultation, which covers the proposed council tax increase and the value that residents put on different services, here.

KCC will publish its post-consultation budget proposals on 11 January and the budget will be out to County Council on 11 February.

KCC Budget Consultation until 28 November

KCC is consulting on its annual budget. As was the case last year, the key feature is the need to find savings as a result of declining goverment grants and increasing demand for some of our services.

Over the last three years, Kent County Council has achieved £269m in savings (this compares with a net budget of a little under £1bn). It will need to achieve a similar annual rate - some £81m - in the next financial year (2014-15). Proposals have been set out that bridge most, though not quite all, of this gap. It is clear that, with the public sector remaining under the austerity cosh for years to come as central government seeks to eliminate the budget deficit, and with local government taking its fair share and quite a lot more of the savings pain, more will need to be found (some £209m over the next three years).

The County Council aims to meet its financial pressures partly through the Facing the Challenge programme, which sees the authority as above all a commissioner of services, looking for the most efficient way for those services to be provided (whether by the council itself, by the private sector, the voluntary sector or others). In addition, it is carrying through major programmes of change ('transformation') in social services, both for adults and (more recently) children; this also links to our increasingly close relationship with the health service, in which I am deeply involved. We are proposing a small council tax increase of 1.99%. Finally, while we have successfully minimised the impact of the savings programmes on front line services, some difficult changes are being proposed, as with the consultation on community wardens.

You can find the budget consultation here; it is open until 28 November. You can answer three short questions on how you would like KCC to meet the budget challenge, or can go into more detail in setting priorities though an online budget tool. You can also find a short summary of the budget situation by KCC Leader Paul Carter and a webchat with Cabinet Member for Finance John Simmonds, which took place last Friday. Last year saw a big increase in public response to our budget consultation, and I hope that many Darent Valley residents will take part this year.  

Budget 2014-15 goes to Cabinet

KCC's Cabinet, of which I am a member, will tomorrow consider the budget proposals for 2014-15. If approved, these proposals will then go to the meeting of the full County Council on 13 February.

The budget will be set under conditions of continuing austerity, which are unlikely to lift for some years. KCC has had to deliver savings of £269 million over the last three years, i.e. around £90 million per year on an annual net budget of a little over £900 million. We will need to make savings on a similar scale over the next three years, and grants from central government are likely to go on reducing until the end of the decade.

The bulk of this will be met through reductions in expenditures; back in the autumn, KCC set out in the autumn its plans for transformation of the authority's activities, through a focus on prevention rather than services that simply react to problems, enhanced productivity and the very best practice for procuring services.

However, after three years of council tax freezes, we are also proposing a modest increase (1.99%) in council tax. This is not something that we undertake lightly; however, a tax increase on this scale yields £10 million in extra revenue and so makes a useful contribution to closing the budget gap while protecting services to the greatest possible extent. From the autumn we undertook a public consultation that generated much higher response rates than in the past, and while a significant portion of opinion (around a quarter of respondents) was opposed to any increase, some 71% supported some level of tax increase to protect front line services.

You can find the Cabinet papers, including the Budget Book and medium Term Financial plan, here.

Have your say: KCC budget consultation

Kent County Council launched its consultation on the 2014-15 budget, and our plans for the coming years, at the end of last week.

The County Council has already delivered significant savings (£269m over the last three years). Over the next three years, further savings of £273m (out of an annual spend of £1.43bn) will be needed, reflecting further sharp reductions in government grant and growing pressures in areas such as social care.

The budget consultation page on the KCC website sets out more detail on the financial challenge and our proposals for tackling it. We are currently proposing a 1.99% increase in council tax (having frozen the council tax for three years), along with wide-ranging plans to transform the operation of the council.

The budget consultation page also has a two-question survey and a more detailed online tool that helps you choose how best to balance the KCC budget. I hope that as many Darent Valley residents as possible take part.