Agenda item

1.      The item was presented by Mr Paul Dossett from Grant Thornton.

2.      Mr Dossett highlighted to Members that the report was an interim Value for Money report produced annually and presented to full Council. It was clarified that the final version would be included alongside the final Statement of Accounts.

3.      It was explained that Auditors were required by the National Audit Office Code of Practice to consider three specific areas: arrangements for financial sustainability, governance arrangements and improvement of economic efficiency and effectiveness. Mr Dossett clarified that if these specific areas were run properly, this would lead into the Council into obtaining value for money

4.      The report contained some key recommendations and improvement recommendations and Members were encouraged to view the contents. Two areas of focus in connection with financial sustainability included adult social care spend and the challenge of getting that budget under control and the other being dedicated schools grant and the overspend on that.

5.      In terms of economy, efficiency and effectiveness, Mr Dossett commented that the Council was in good form; challenges in the past around procurement strategies were being addressed and no further significant areas had been identified. Mr Dossett acknowledged that the report was reasonably good, albeit the financial challenges remained immense.

6.      In answer to some Member questions and comments, the following was said:

          a)      Mr Betts explained that reference was made to the importance of resolution to the Dedicated Schools Grant deficit issue, but nothing had been built into the figures as it was not yet known what the resolution would be in respect of LGR (Local Government Reorganisation). MHCLG had indicated that they would make an announcement in December 2025 as part of the year’s provisional financial settlement.

          b)      It was confirmed that a large majority of local authorities had high need block deficits and that it was a systemic issue. Mr Betts confirmed that it was unusual for Central Government to introduce a statutory override which specified which debts could not be included in a balance sheet. It was confirmed that it was not an issue of scheduled repayment as the funds had already been spent. The Department of Education could either pay off the deficit in whole or in part; ultimately the Council required an adequately resourced national SEND system to prevent an overspend the following year.

          c)      Mr Betts confirmed that whilst the repayments to the DofE (Department of Education) were not on track, DofE were satisfied that KCC were doing everything in their scope to contain costs and keep them as low as possible. It was highlighted to Member that this was a systemic issue which underpinned the whole of local Government and not one isolated to Kent.

          d)      Mr Dossett confirmed from an external auditor’s perspective, the issue had been raised; two choices existed either the Government wrote off the debt and put new arrangements in place or Councils shouldered the debt, meaning that more local authorities would require debt financing from Government.

          e)      Mr Betts confirmed that the Council had borrowing on the balance sheet and not have uncosted debt.  The borrowing occurred to fund assets and was against the likely life of that asset.  Sufficient revenue needed to be set aside to repay both the interest accrued over a point time and the debt itself. Any debt or borrowing would not be written off, instead it would be apportioned to the successful authorities following LGR, who would then have to manage how to sustain and manage the debt going forwards.

          f)       Mr Dossett commented that debt left off the balance sheet needed to be resolved alongside LGR as it could not be left, however this depended on Government making a decision and providing clear guidance on what happened with the debt.

          g)      The Deputy Leader, Mr Collins, confirmed that whilst it was important that discussion took place with the public, there was no current timetable for LGR, other than the consultation response being submitted to Government by the end of November 2025. An answer/reply was scheduled for late spring, early summer, 2026.  Mr Collins confirmed that if LGR proceeded, it was the Authority’s intention to consult with the public.

          h)      Tribute was paid to Mr Tristan Godfrey and Ms Katy Reynolds for their consistent hard work across the organisation to facilitate and implement the changes in accordance with the external auditor’s recommendations.

          i)       Members unanimously agreed that a midterm review covering the effectiveness of the committee would be helpful.  Mr Watts confirmed that one would be added to the Governance Recommendations Improvement Plan (GRIP) and presented to the Committee in January 2026.

7.      RESOLVED that the Committee NOTED the External Auditor’s Annual Report on Kent County Council 2024/25 for assurance.