Kent County Council is at a “tipping point” and unless the authority improves its financial position it will have “no other option but to publish a section 114 notice”, external auditors have warned.
A 2022/23 Audit Plan by auditor Grant Thornton for Kent County Council outlined that over the past couple of years its financial position has “deteriorated”, with the council failing to deliver savings and “take a grip” of unplanned budget growth.
The report also highlighted that the authority has recorded “significant deficits” on its budget in previous years and that its level of usable reserves has deteriorated at an “unsustainable” rate.
“The council is therefore at a ‘tipping point’ and unless the council recovers the financial situation, then your section 151 officer [Zena Cooke] will have no other option but to publish a section 114 notice.
“The council has a very short window to address the financial position – to stop unsustainable growth and deliver savings. Addressing the issue will require a coordinated and focused response from key executive officers, members and employees of the council,” the report said.
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Unsustainable use of reserves
Grant Thornton’s report outlined that in the last financial year Kent had a budget gap of £44.4m, with the deficit being funded from useable revenue reserves. This has caused the council’s reserves to fall from £469m at March 2022 to £416m at March 2023, leaving the authority’s level of reserves in the bottom quartile of all county councils.
The report added: “The deficit for 2022/23 is as a result of unsustainable growth in certain budget lines and non-delivery of savings. The council is unable to absorb further years like they had in 2022/23 because usable revenue reserves will run out.”
The audit report noted that the council has published a balanced budget for 2023/24, which requires it to achieve c£55m of savings. This represents 4% of the total budget.
“Whilst this is a challenging savings requirement, it is still achievable. Given that in recent years the council has not fully delivered savings plans, there is some risk around the delivery of the £55m,” the report explained.
This comes as Grant Thornton sparked concern over the council’s savings plan in its 2023/24 budget in July.
Grant Thornton’s report also outlined that Kent County Council has one of the largest Dedicated Schools Grant deficits in the country.
“The deficit has grown over the past number of years, primarily because of higher than funded costs within Special Education Needs and Disability services. The deficit as at March 2022 was £97.6m and is currently being held in an unusable reserve,” the report added.
In regard to Kent’s value for money arrangements, Grant Thornton identified seven risks of “significant weaknesses”, with five of these risks following on from key recommendations in Kent’s 21/22 auditors annual report.
The two new risks identified by Grant Thornton include the risk that behaviours and the culture within the council do not support effective governance and decision making, and the risk that the arrangements in place to provide statutory services for asylum seekers are not effective.
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