Kent County Council must save £86m in the current financial year otherwise it faces a “perilous financial position” and a potential section 114 notice, the authority’s external auditor has warned.
A report by Grant Thornton, which was presented to the council’s cabinet on 13 July, outlined that Kent faces a savings requirement of £86m in 2023/24 due to inflation and the growing demand for its services.
It recommended that Kent County Council take steps to control its expenditure and “be realistic” about the capacity available to support the delivery of savings. The report also stated that the authority will need to make “some very difficult decisions” to reduce its expenditure and in some cases “withdraw or pare back existing services”.
At the council meeting, Paul Dossett, partner and head of local government at Grant Thornton, said: “The council needs to take these decisions because if you don’t deliver the savings and you don’t make the difficult decisions for the 2024/25 budget, the council will be moved towards a perilous financial position.
“And it may move towards the section 151 officer [Zena Cooke] considering whether or not she needs to issue a section 114 report, which is quite a nuclear option in terms of that impact on spending and other decision making.
“The council is not there yet, but our assessment is that 2023/24 is a key year for you, in which you need to deliver those savings and set yourself up for the future.”
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‘Risk’ to reserves
The report identified that the council’s “financial challenges” have increased since 2021/22, with the council needing to make savings and find additional income of £38m to balance its budget in 2022/23.
It stated that Kent’s overspend of its 2022/23 budget presents a “significant risk” to the authority’s reserves as the latest forecasts estimate that they “will be some £99m lower than they were in March 2022”.
The report added that according to reserves data for 24 county councils, Kent’s reserves were lower than average at the end of March 2022.
It may move towards the section 151 officer [Zena Cooke] considering whether or not she needs to issue a section 114 report, which is quite a nuclear option in terms of that impact on spending and other decision making.
SEND overspend
Another area highlighted as a concern in Grant Thornton’s report was the financial sustainability of Kent County Council’s Special Educational Needs and Disabilities (SEND) budget.
The report outlined that the council’s high needs deficit increased from £51m at the start of 2021/22 to £97m by the end of 2021/22. The authority spends around £50m per year on transporting children – including those with SEND – to school, the report showed.
In November 2022, Kent, alongside Hampshire County Council, wrote to prime minister Rishi Sunak warning that without immediate government funding, both authorities face “sleepwalking into financial disaster” and section 114 notices.
The joint letter stated: “Without some immediate help and a clear plan for long-term financial sustainability we are likely to be considering section 114 notices within the next year or so.”
This also comes as Guildford, Southampton, Bradford and Hastings councils separately warned that they could be facing section 114 notices in the future due to factors such as spiralling costs of services and debt.
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