Kent County Council has set out a savings plan and reduced non-essential spending amid an almost £44m budget gap and depleting reserves.
A council report, which is to be presented to the authority’s cabinet tomorrow (17 August), has revealed that Kent is forecasting an overspend of its 2023/24 budget by £43.7m, with the majority coming from adult social care and children’s services. It detailed that Kent is currently anticipating an overspend in adult social care of £25.8m and in children’s services of £28.4m.
The report also set out measures to recover Kent’s immediate financial challenges and medium-term sustainability. It detailed that the council must make savings of £17m this year, £10m in adult social care and £7m in capital programme financing, to reduce the overall overspend to £26.7m.
“The forecast overspend represents over 3% of the revenue budget and presents a serious and significant risk to the council’s financial viability if it is not addressed as a matter of urgency,” the report said.
“Given the size of the forecast overspend and the budgets in question, it is important to focus on these budgets in adult social care and children’s services.
“Spending growth in these areas is unsustainable and needs to be brought back to a level that can be afforded within the overall resources available to the council from local taxation and central government grants.”
However, the report detailed that it is unlikely that all the money needed to bridge Kent’s budget gap will be found in these areas. “Therefore, non-essential spending in other areas of council activity will need to be curtailed to secure the council’s financial viability.”
The report outlined that the £43.7m overspend is a result of “significant deterioration” in Kent’s financial and operating landscape since it implemented its Framing Kent’s Future strategy in May 2022. This is due to an acceleration of demand pressures and the continued impact of a “challenging national and global economic environment”.
Depleting reserves
Kent County Council’s report also outlined that the council faced a similar budget gap for the previous financial year of £47.1m, which had to be plugged using the authority’s risk reserve of £25m, with the remaining £22.1m being drawn from its General Fund reserve.
“The overspend from 2022/23 has significantly impacted the council’s financial resilience with the General Fund reserve level now at £37.4m, well below the amount consistent with the agreed policy of 5% of net revenue budget (£65.8m),” the report explained.
It stated that the maximum amount available to be drawn down from reserves in 2023/24 is £12m, which has been set aside in the council’s risk reserve approved in the budget.
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The report added: “However, this £12m was planned as part of the budget setting before the need to draw down £22.1m from the general reserve to cover the balance of the 2022/23 overspend and it is therefore critical to minimise the need to utilise the £12m in the risk reserve.”
This comes as Kent County Council’s external auditor warned just last month that it faced a potential section 114 notice due to its “perilous financial position”.
Alongside Kent, in the last two months, Kirklees, Guildford, Hastings, Southampton and Bradford councils have warned that they face potential s114 notices in the future.
However, the report outlined that whilst other councils are forecasting overspends in 2023/24 in similar areas such as children’s and adults’ social care, these councils’ situation is of “lesser magnitude” than Kent’s as they have “more resilience through their historic level of reserves”.
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