Agenda item

1.    The item was introduced by Brian Collins, Deputy Leader, who thanked the relevant officers for their time and work in the production of the Draft Revenue Budget and Medium-Term Financial Plan (MTFP).

2.    Further to comments and questions from Members, discussion covered the following:

a)    Mr Collins assured the Committee that the MTFP demonstrated the savings/income necessary to balance the later years of the plan assuming no further council tax increases.

b)    Dave Shipton, Head of Finance, Policy, Planning and Strategy, clarified that the £250k saving listed for the library estate review formed part of the long- standing community assets programme, with any savings only arising from temporary closures pending a revised library strategy. A Member proposed the recommendation that the wording relating to the review of the library estate be amended to clarify its reference to temporary closures only. It was agreed that it would be considered outside of the Committee and brought back if necessary.

c)    Paul King, Cabinet Member for Environment, Coastal Regeneration and Special Projects, clarified that a proposed £130k saving from removing blue badge parking concessions at country parks had already been achieved without removing the concessions. Accessibility remained a priority, including through initiatives such as Changing Spaces.

d)    In response a query on the £333k change for the Crisis and Resilience Fund, Mr Shipton explained it was a technical adjustment to reflect the reduced spending capacity following the external funding allocation in the provisional settlement, with a full reconciliation to be provided outside of the meeting.

e)    A concern was raised about the flat cash settlement for the Homelessness, Rough Sleeping and Domestic Abuse Grant, with regards to it representing a real-terms reduction due to inflation. Mr Collins confirmed that this was a draft budget, and that the issue would be considered before the final proposal. Mr Shipton further added that the grant was subject to the multi- year government settlement with no uplift over the period.

f)     Mr Collins confirmed that following extensive debate and consultation, the administration had been able to reduce the planned Council tax increase by 20%, contrary to previous years’ practice. He also established that the main areas of financial risk continued to be Adult Social Care (ASC) and Children’s Services, although the recent Quarter 3 report indicated the position in ASC was gradually improving.

g)    In response to concerns about significant medium- term budget shortfalls and the achievability of several savings proposals, Mr Collins explained that the medium- term forecasts were subject to adjustment and that focus was on the upcoming financial year. Mr Shipton confirmed that the MTFP had not always been balanced and highlighted that previous plans had assumed the maximum Council tax increase. He further clarified that the Section 25 report would outline the most significant short and medium- term risks within the budget and MTFP, allowing for a transparent assessment of such risks to take place.

h)    Regarding questions on speculative savings proposals, Mr Collins emphasised the ambitious nature of the savings plans and that they were still in draft stage. Mr Shipton also explained that District Councils needed to submit their final tax base estimates, including assumed collection rates, by 31 January 2026, followed by statutory returns to Central Government once Council tax was set. A full breakdown of tax base assumptions would be available in March or April, with interim information provided earlier through statutory returns.

i)     Mr Collins confirmed that work to assess compound risks arising from multiple risks occurring simultaneously had been ongoing and would be addressed before the budget was presented at Full Council. He also assured the Committee that the fresh perspective of a new administration instilled confidence that the financial pressures in the ASC sector could be reduced.

j)     Regarding the Safety Valve Agreement, Mr Shipton explained that there was a statutory override preventing the accumulated High Needs Block deficit from affecting the Council’s General Fund that was in place until March 2028 but could be removed by Central Government at any time. He also acknowledged that its removal without any additional government support posed a significant medium- term risk to KCC’s future financial sustainability.

k)    In response to concerns about the risks of freezing residential and nursing care fee uplifts, Mr Collins acknowledged the risks during ongoing negotiations but stated that the approach formed part of the administration’s wider strategy to deliver efficiencies while maintaining ASC duties. Sarah Hammond, Interim Corporate Director of Adult Social Care and Health, explained that around one- third of the Kent care market was funded by KCC, with the remainder funded by the NHS or other authorities and that recent above- inflation increases had already been applied in previous years. She also highlighted that the joint brokerage team had transferred back to KCC on 1 December 2025, improving joint decision- making with the NHS and enabling better value placements, with further discussions with NHS colleagues ongoing.

l)     Mr Collins confirmed that the late Fair Funding Settlement had made financial forecasting more challenging and placed additional pressure on officers.

m)  Christine McInnes, Interim Corporate Director of Children, Young People and Education, confirmed that a small number of children with highly complex needs were in very high- cost external placements, and that new in- county provision was being developed to bring up to 4 children back in Kent by September 2026, which would reduce costs and improve oversight. She also explained that savings in Children’s Services would be achieved with joint work with Adult Services on health contributions and modernising manual processes, including automating parts of the SEND assessment processes and payments to early years providers.

n)    Mr Collins stated that projected savings across all Directorates would be closely monitored and highlighted a £670k annual net reduction in interest costs achieved through early debt repayment.

o)    Mr Shipton detailed that £16 million had been identified as no longer required following an annual review of reserves, with £7 million originally set aside for social care charging reforms that was no longer proceeding and £9 million for major projects which was now funded through the Strategic Reset Programme.

p)    Mr Collins stated that capital receipts were being used to support the current year’s overspend and that further use of capital receipts may be considered if prudent as the year progressed. Mr Shipton explained that £8 million of capital receipts were already assumed to be used in the 2025-26 budget and a further £7 million would be used to support the current year’s overspend, totalling £15 million. An additional £9 million was planned for use in 2026-27 and any further information on the available capital receipts in the pipeline would need to be provided by Infrastructure.

q)    Mr Shipton explained that the £5.8 million reduction in capital spending reflected the removal of the digital autopsy and public mortuary project, as the software required for the scheme had been found to be unsuitable and the project could not proceed. It was also indicated that the £500k reversal relating to temporary spending to mobilise new contracts for Household Waste Recycling Centres (HWRC), carried no identified risk or impact anticipated from removing the spend.

r)     Diane Morton, Cabinet Member for Adult Social Care and Public Health, outlined that mediation with the NHS regarding Section 117 aftercare funding had progressed with an in- principal agreement for a 50/50 funding split pending Integrated Care Board (ICB) confirmation.

s)    Mr Shipton advised that the £37.7 million figure in the report represented the total forecasted spend over a 10- year period required for the modernisation of assets under the Council’s policy of keeping buildings warm, safe and dry. Mr Shipton stressed to the Committee that due to funding limitations, some non- priority buildings that do not meet those standards may be subject to temporary closure.

t)     It was advised that Council taxbase data provided by District Councils would have figures confirmed in March. Mr Collins elaborated that KCC’s forecasts for these figures relied on well- established estimations by the Finance department. Further information could be provided outside of Committee. Mr Collins also explained that progress against the financial plans were monitored through the quarterly reports, which provided early indicators of whether the Council was on target.

u)    Mr Shipton highlighted that the 2026-29 plans had been prepared on the basis that the Council would continue in its current form, as no firm decisions on Local Government Reorganisation (LGR) had been made. Mr Shipton advised that no specific reserve had been set aside at this stage, as implementation costs would depend on the model that was chosen, each with different payback periods and therefore this would be established once a model was confirmed.  Any pre-implementation costs incurred by the Council would have to funded by borrowing from long-term reserves which would have to be paid back from LGR savings over the payback period. Mr Collins further confirmed that no allowances or reserves had been made in the 2025/26 budget for potential LGR implementation costs.

v)    In response to a query on the £8 million referenced in the budget regarding Oracle cost, Mr Shipton clarified it was only part of the total, funded through capital receipt flexibility in order to avoid drawing from the IT reserve for one year and creating a one- off saving. The overall annual cost of approximately £20-30 million had been largely already covered by the existing IT reserve.

w)   Regarding the use of capital receipts, Mr Collins assured the Committee that plans would be included in next year’s budget to replenish relevant reserves and that ongoing property disposals, undertaken in line with Section 123 duties, were continuing to generate capital receipts.

x)    Simon Jones, Corporate Director for Growth, Environment and Transport, advised that the winter maintenance budget would remain at the current level, with funding incorporated within the wider highways maintenance contract. Any inflationary impacts would be reflected through the updated contract rates already accounted for within the budget. Mr Jones confirmed that wider asset management approach, covering both revenue and capital, could be provided to Members outside of Committee. Mr Shipton added that the papers published showed the planned year-on-year changes in revenue spending, not the full-service budgets, which would be produced as part of the final draft budget.

y)    A Member referenced the multi- year settlement and asked what level of Government funding would have been required to enable a 0% Council tax increase, as well as breakdowns for the current year and next 2 years. Mr Collins stated the figures were not available but could be provided outside of the meeting.

z)    A Member raised concerns about the reliance on property disposals to balance the budget, the long?term impact on services, and the number of assets remaining for future sale. In response, Mr Collins reiterated that the Council had a statutory duty under Section?123 of the Local Government Act to dispose of any property no longer required for use, following an assessment by the relevant service and local members. Mr Collins also acknowledged Member’s concerns about underfunding in building maintenance leading to increased disposals and an overreliance on capital receipts and assured Members property and maintenance matters were kept under regular review with Infrastructure colleagues.

aa)  Miss Morton outlined how the Council maintained a strong relationship with healthcare service providers, meeting regularly with the Kent Integrated Care Alliance (KICA), and confirmed that the charging policy remained under consultation, with ongoing engagement and a further meeting scheduled shortly. It was posed that once these negotiations concluded that the results be brought back in time for the final budget or to the Adult Social Care & Public Health Cabinet Committee.

bb) Mr Shipton advised that demand and cost pressures had been rising faster than available funding since 2021/22, increasing financial risks. He stated that without sufficient funding to meet statutory duties, these pressures would grow and create increasing challenges.

3.    Ben Watts, Deputy Chief Executive, stressed the importance of Members fully understanding the budget- setting process and encouraged Councillors to attend available finance training sessions and make use of Member resources. Mr Watts explained that additional information would be published in the coming weeks and Members were also encouraged to seek support from Democratic Services or Finance where needed.

4.    The Chairman proposed the Scrutiny Committee note the administration’s draft capital and revenue budget proposals and outlined the Committee’s requests for further information on the following: risk and compound risk, the total number of properties available, budgeting for LGR, capital receipts in year, greater clarity on the Oracle programme, Highways Asset Winter Repair Maintenance as part of the entire Highways Asset Maintenance budget and what the Central Government grant would have needed to be to enable a 0% Council Tax increase. This was agreed by the Committee.

5.    RESOLVED that the Committee note the administration’s draft revenue budget proposals and request further information on the following: risk and compound risk, the total number of properties available, budgeting for LGR, capital receipts in year, greater clarity on the oracle programme, Highways Asset Winter Repair Maintenance as part of the entire Highways Asset Maintenance budget and what the Central Government grant would have needed to be to enable a 0% Council Tax increase.