The impact of COVID-19 has led to enormous uncertainty and an unprecedented challenge for Kent County Council as it prepares its budget for the next financial year.
Responding to the pandemic has required a huge increase in spending and has come at the same time as reductions in income from council tax, business rates and funding generated by the authority’s own services, all of which have been affected by the pandemic.
KCC has had to take this uncertainty into account as it prepares its draft budget for 2021-22, which is published today. This follows a public consultation in the autumn which produced the highest response rate to any similar consultation.
The budget proposals will be voted on at the full County Council meeting in February.
The council needs to spend around £1.128bn on day-to-day services, which equates to about £720 for every person living in the county. This is an increase of £64.7m (6.1%) on the approved budget for 2020-21.
To meet these costs and in line with the government’s expectation, it is proposed that council tax is increased by 1.99% plus 3% which is ring-fenced for adult social care services. These increases will protect frontline services, particularly for social care, which continue to be prioritised by residents in their responses to the council’s budget consultations.
The increase equates to £67.50 a year for band D households, equivalent to £1.30 a week, and low-income households can still claim discounts on their council tax bills under schemes operated by each district.
In order to balance the budget, the council has also had to find savings and make some difficult choices. This was the main focus of its budget consultation in which residents were asked which services were a priority and where they were prepared to see funding reduced. Taking resident feedback into account, the council has identified a number of savings that will close the budget gap while protecting, as far as possible, essential services.
KCC Leader Roger Gough said: “The government’s financial settlement in December was very welcome indeed, but much of that is one-off funding for COVID-19, and it is very clear from our budget forecasting that it is not enough to meet the projected shortfall for next year.
“The continued financial pressure in delivering social care, coupled with the massive financial challenges of responding to COVID-19, has brought about a situation of unprecedented risk and uncertainty.
“COVID-19 has exacerbated what was already a very challenging financial future for local authorities. I am immensely proud that, throughout the pandemic, we have continued to provide essential services and ensured that all those who have needed extra support have received it.”
KCC Deputy Leader and Cabinet Member for Finance Peter Oakford said: “The impact of COVID-19 means the current financial picture is enormously complicated, and in balancing this budget we need to take into account not just the short but long-term impact of the pandemic, in addition to the financial pressures we were already facing.
“Thanks to the financial settlement from the government and in particular the £50.2m one-off COVID grants, we are able to propose a budget for next year that maintains all the essential services that our residents told us matter to them most in our recent budget consultation and strengthen our financial resilience for the future.
“However, we predict that the outlook will significantly deteriorate in the future. Year on year, the pressures on social care budgets, the growing number of older and vulnerable people, coupled with the sudden, huge costs and consequences of the virus, will undoubtedly be a massive financial challenge for Kent County Council.”
Roger Gough added: “Some may ask why we have, in these difficult times, increased our reserves. The fact is that the demands on our budget and the financial impact of COVID-19 next year and in the future, is even more uncertain. We are not only required to balance our budget for next year, we also have to ensure that we are financially resilient in the medium term and can respond to increased risks.
“We have worked hard to produce a budget that protects the services that are most important to our residents, as well as taking a financially responsible approach.”
Other key points from the draft budget:
- The council proposes a £96.7m increase in spending on council services, including £5.5m for adult social care packages, £2.8m for home-to-school transport for SEN pupils, £3.2m to cover increased demand for children’s social work and disabled children’s services and a net increase in council reserves.
- This increase in spending is offset by £64.7m which includes savings from efficiencies, transformation and policy choices, additional income; as well as £22m from reserves.
- The council will increase its reserves by a net figure of £9.2m to reflect increased risks and uncertainties.
- There is proposed capital investment of £1.056bn on infrastructure over the next 3 years 2021-22 to 2023-24, mainly on roads and schools. This includes £19m of new schemes, £54m of schemes that have been removed, and £168m of spending that has been rephased within the three-year period.
- The budget has been prepared against the backdrop of an unprecedented level of uncertainty and risk. This stems from a one-year settlement from government for 2020-21 followed by the impact of the Covid-19 pandemic which hit soon after the 2020-21 budget was agreed last February.
- The pandemic has had a profound impact on the council’s budget and its ability to deliver services and, as a consequence, on its financial planning assumptions.
- KCC has received a total of £131m in one-off grants which should be enough to meet the costs of dealing with the COVID pandemic in the current financial year.
- However, these costs do not include the impact of the latest national lockdown and the latest wave of infections we are now experiencing. We have therefore included in the budget for 2021-22 a £32.9m un-ringfenced emergency grant and a COVID-19 Local Council Tax Support grant of £14.3m.
- The council is experiencing a rise in demand and extreme pressure on services as well as seeing increased levels of financial hardship for residents and businesses.
- The Chancellor of the Exchequer has already stated that, once the pandemic has subsided and economic recovery is secured, the government is committed to ensuring that borrowing and debt are on a sustainable path, which is likely to impact future funding levels for local councils.
- Consequently, the draft budget proposals focus on the council’s plans for the forthcoming year, with the potential for significant budget adjustments in future years.
- The council is under a legal duty to set a balanced and sustainable budget and maintain adequate reserves such that it can deliver its statutory responsibilities and priorities and be considered financially resilient.