A West London council has warned of almost £19 million blackhole in its budget next year if the government freezes funding and axes an adult social care topper, a council report has revealed. Kensington and Chelsea Council said the budget deficit could grow to £32 million by 2027/28 if the Treasury does not align council funding with the forecast rate of inflation or continue provide additional adult social care grants.
If both measures are met then the deficit is expected to hit £9.4 million in 2025/26 and £21.2 million by 2028. It comes as an updated budget report shows the council broke even in the latest financial year. It predicts the council's finances would be “adversely impact[ed]” if cost pressures associated with housing people in temporary accommodation and other services continue to rise and if inflation and interest rates fall slower than expected, and if savings targets aren’t met, the report revealed.
The document read: “Whilst the additional funding announced in the provisional settlement for 2024/25 was welcome, the outlook from 2025/26 onwards is even more challenging with the Council’s planning assumption resulting in a budget gap of around £19 million in 2025/26 and then between £6 million and £7 million in each of the subsequent two years. This therefore will result in a cumulative gap of £32 million by 2027/28.
“The reason for the large movement in the budget position for 2025/26 is partly driven by the additional social care grants confirmed for 2023/24 and 2024/25 expected to drop out from 2025/26 as well as the Council’s Settlement Funding Assessment (SFA) expected to be frozen in cash terms following the OBR’s (Office for Budget Responsibility) analysis of the Chancellor’s Autumn Statement.” The council has announced a raft of savings measures which could add £12.6 million to its bottom line.
It also announced a 4.99 per cent increase in council tax, which will see Band D households hit in the pocket with an extra £49.32 a year bringing their total to £1,037.58. It is expected to rise further when City Hall finalises its precept, which is currently tipped to rise by 8.6 per cent - or £37.26 for Band D homes.
The council will also start charging a premium on homes that have been empty for more than one year. It said it is working on ways to lower future deficits. Councillor Johnny Thalassites, who oversees the budget, told colleagues during a meeting on Wednesday (Friday 7) that uncertainty around government grants made it difficult for long-term planning.
He said: “How society treats its most vulnerable is always the mark of its humanity. This is a competent and a caring council, and so not only am I proud to be pressing ahead with plans to deliver older care housing at Lots Road…[but] we have put £10m in funding in the capital pipeline despite all of the pressures.”
He also announced a £100 one-off cost-of-living payment for residents across the borough. The single instalment is due in May and is expected to reach 16,500 households.
Meanwhile, the council also announced plans to increase social rents by 7.7 per cent - or an extra £43.12 per month - from April. Announcing the increase to colleagues on Wednesday, housing lead Sof McVeigh said: “This has been a very difficult decision to make, and not one we make lightly.
"We understand all the cost pressures everyone is under… and so we’ve thought long and hard about all the options for this”. She paired the announcement with a £200k increase in support funding for tenants and added the number of people seeking temporary accommodation has also increased slightly because of people leaving the private rental sector and being put into hotels.
She said: “We’re making sure we’ve got eyes wide open about this.” The budget will head to a session of Full Council for approval.
Want more from MyLondon? Sign up to our daily newsletters for all the latest and greatest from across London here.
(Feed generated with FetchRSS)
