Issue - meetings

Dave Shipton (Head of Finance Policy, Planning and Strategy) and Brendan Arnold (Corporate Director of Finance and S151 Officer) were in attendance for this item.

1.    The Deputy Leader, Mr Collins, reported that the final Local Government Finance Settlement was published on 9 February and was therefore not included in the budget approved by County Council on 12 February. Final business rates estimates were also unavailable at that time. Council had agreed that the resulting changes should be reported to and approved by Cabinet.

He advised that the final settlement increased the net revenue budget by £6.7m (0.4%), with a further £0.3m reduction arising from final business rates. This resulted in a revised net revenue budget for 2026–27 of £1,654.5m, compared to £1,648.1m previously approved.

Mr Collins explained that corrections to business rates pooling arrangements had increased KCC’s Revenue Support Grant by £6.57m in 2026–27 and £3.32m in 2027–28. As this funding was transitional, it was proposed that the additional sums be transferred to reserves.

He further reported the introduction of a new High Needs Stability Grant, covering 90% of accumulated Special Educational Needs deficits up to March 2026, with KCC’s allocation expected in the autumn. He commented that those authorities like Kent, that were previously part of the DfE Safety Valve Programme would not be penalised through the new grant and that the residual balances from the KCC contributions were proposed to be held in an earmarked Special Educational Needs reserve pending further clarification from Government on how deficits accrued after March 2026 would be managed when the current statutory override expired. Despite this mitigation, Mr Collins cautioned that forecast high needs deficits beyond 2026–27 could still expose the Council to financial risk in excess of £180m, posing a significant ongoing risk to financial sustainability.

Mr Collins advised that a one-off £1,000 increase in the amount for individual Member grants was possible within 2026-27 budget following the Council decision on increase in Member allowances.

2.    Mr Shipton reminded Cabinet of the business rates retention system, noting that it was often overlooked. He explained that fifty percent of locally raised business rates were retained by local government, with the remaining fifty percent returned to central government to fund grants.

He clarified that authorities only retained a share of any local growth in the business rate taxbase above an agreed baseline. This growth was generated through new businesses or changes of use, and this excluded inflationary increases and business rate revaluations.

Mr Shipton advised that a levy continued to apply to business rate growth following the Fair Funding reset, although this was now managed through tiered arrangements. He confirmed that there was no requirement to enter a business rates pool for the 2026–27 financial year, but noted that pooling could be reconsidered in future if parts of the county experienced high growth as a pool would enable a greater proportion of business rate income to be retained locally.

3.    It was RESOLVED that Cabinet agree to:

a)      APPROVE the revised net  ...  view the full minutes text for item 136