Agenda item

John Betts (Interim Corporate Director Finance) and Dave Shipton (Head of Finance (Policy, Planning & Strategy) were in attendance for this item

1. Mr Shipton introduced the report that set out the detail in the Provisional Local Government Finance Settlement (PLGFS) 2025-26 which was published on 18th December 2024. As in recent years the settlement was presented as core spending power (CSP) taking into account assumed council tax proceeds (assumed taxbase growth and council tax increases up to referendum limits) and the main grants for local government from the Ministry of Housing, Communities and Local Government (MHCLG). The provisional settlement was open for consultation until 15th January. The consultation sought views on the distribution and consolidation of grants, council tax referendum principles and ceasing the override on IFRS9, to which the Council would be responding. There was a further consultation which was due to close on 12^th February which focussed on the principles and objectives of local authority funding reforms for 2026-2027, to which the Council would be responding.

2. Further to comments and questions from Members it was noted:

·         That whilst the allocation of the Recovery Grant seemed to heavily favour those councils that were under intense short-term financial pressures, offering a short-term pragmatic solution, the long-term methodology which was to be applied in the distribution of funding was due further review.

·         The assessed needs for Recovery Grant were based on population weighted by the average index of multiple deprivation (IMD) for the local authority area. Therefore, whilst the IMD was designed to calculate whether one area was more deprived than another, it did not calculate whether that level of deprivation was a minor or significant difference. It was therefore hoped that the wider funding review would help to establish a more robust method of measuring the levels of deprivation that could be applied to the government’s final settlement.

·         Furthermore, government had also indicated that the children's formula that has been used for the Children's Social Care Prevention Grant was not the full formula that would be applied going forward. The formula for the Adult Social Care grant also required review as it had not been updated since 2013-2014. However, an encouraging aspect of the Children's Social Care Prevention Grant was that for the very first time, the area cost adjustment included within it an assessment of those areas where there was a remoteness issue.  This  recognised that there were not only additional costs in areas of very dense population, but there were additional costs in providing services in areas with sparse population.

·         Members commented on the reduced level of funding to be received by KCC as a result of the assessed needs methodology. It was therefore paramount to ensure that KCC’s response to the consultation strongly articulated the detrimental impact that the reduced funding would have on services as a consequence.

·         The risk of not moving towards the devolution agenda would see Kent and Medway further disadvantaged through reduced powers and funding, as had already been evidenced through Kent’s significantly reduced Core Spending Power in comparison to other Councils. It was this Council’s duty to do all it could for the people of Kent.

3. RESOLVED that Cabinet note the provisional settlement including the additional grants and grant reductions compared to assumptions in the draft budget published in October before the Autumn Budget statement; and agree to delegate finalising any response to the settlement to the Corporate Director for Finance, in consultation with the Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services.