Minutes:
Dave Shipton, Head of Finance Policy, Planning and Strategy was in attendance for this item.
1) Mr Shipton said that the government had announced the settlement for local government within the Department for Levelling Up, Housing and Communities. KCC was to receive an additional un-ringfenced grant that could be used towards general budget spending pressures. The grant was to amount to £1.6 billion nationally in each of the next 3 years, £4.8 billion in total over the period. It was estimated that KCC’s share of the grant would be £20-30 million per year but it had not yet been announced how the grant would be allocated. The grant could be built into the general budget and could be used towards closing the budget gap. It was noted that it would be the same amount in each of the 3 years and would not be increased to take account of further spending growth in 2023-24 and 2024-25.
Information was not yet available to clarify whether the grant would have to be used to fund spending increases or income losses imposed by other measures from within the Spending Review. For example, the measures included freezing the inflationary uplift on business rates for all businesses. Normally, local authorities retained 50% of the increase in business rates coming through the uplift and this went towards funding KCC’s and Kent’s district budgets. In usual circumstances, KCC would be compensated and it had been announced that authorities would be compensated but it was not clear if it was within the grant or on top of it.
It was anticipated that there would be a further announcement in the next few weeks about the grant allocation and what would need to funded from the grant.
2) Mr Shipton said that the second announcement from the government was about additional funding for social care reforms. KCC was to receive a separate allocation from the Department for Levelling Up, Housing and Communities towards social care reforms. In total, this was to amount to £3.6 billion over 3 years, nationally. Unlike the un-ringfenced grant, this would be increased in incremental amounts: £0.2 billon in 2022-23, a further £1.2 billion in 2023-24 (taking the total to £1.4 billion) and a further £0.6 billion in 2024-25 (taking the total to £2.0 billion) and this was principally to do with the timings of the cap on the care costs for individuals due to come into force in October 2023, part-way through the 2023-24 financial year.
It had been estimated that KCC’s share of the social care reform grant in the first year of allocation would be £4-5 million, reflecting that most of the costs in the first year would be preparation costs. It was estimated that this would then rise to £30-33 million in 2023-24 and then £42-47 million in 2024-25. These were estimated numbers as it had not been announced how grants would be distributed but the grant would need to fund the cost of the reforms, including the cost of limiting individual client contributions and the additional workplace pressures needed to implement the reforms. KCC was not able to forecast the full cost of reforms as more information was needed. Further government consultation was expected on the reforms in the coming months.
3) As part of the Department of Health and Social Care departmental funding settlement, a ringfenced grant was anticipated. A further £1.7 billion was to be made available to improve the wider social care system including the quality and integration of care. When the Social Care reforms had been announced, it had been indicated that £5.4 billion was to be made available to fund the reforms out of the National Insurance increase. The vast majority of the remainder of the National Insurance increase was to fund the backlogs in health services. £3.6 billion of the total £5.4 billion was to go into ‘Levelling Up’ and the remainder was to be a ringfenced grant for social care.
It had been outlined that at least £500 million of the grant would be used to improve qualifications, skills and wellbeing across the adult social care workforce.
It had been indicated that the general referendum threshold for Council Tax looked to be 2%. The adult social care precept was to allow a further 1% meaning a 3% increase in total. Confirmation of details would be in the provisional local government finance settlement.
The local government spending power document produced by central government indicated what would be in KCC’s net budget and for local government as a whole, there would be annual increases in spending power. The local government spending power nationally in 2019-20 was £46.2 billion, which was raised to £49.1 billion in 2020-21 and £50.4 billion in 2021-22. In 2022-23, it was expected to increase to £53.7 billion.
The focus of the update was the core settlement but the department announcements were yet to be made and would give detail of any additional grants. It was unclear if spending demands would be met even though the settlement from government was better than expected. However, KCC’s ability to raise funds through council tax was less than had been assumed. The challenge for 2022-23 would be to find savings or find ways to reduce spending pressures to close the budget gap.
Further to questions and comments, it was noted:
· The underlying settlement was similar to previous years but with more coming from grants and less from council tax. There were additional costs and pressures associated with the adult social care reforms. It was felt that the government had recognised that there were spending pressures for local authorities that were outside of their control.
· Concerns were raised that other areas in Kent would have benefited from funding in addition to the areas that had engaged in the competitive process and were awarded ‘Levelling Up’ funding.
4) Mr Oakford said that the headline news was good and the additional money through grants was welcomed but the 1% lower than anticipated from the social care precept would have to be covered from the grant as would the NI increase. There would be spending pressures within the directorates and these would need to be looked at very closely.
5) The update was noted.