Further budget cuts at KCC will mean more inflation busting Council Tax increases

Like night follows day, like sunshine follows rain, the raising of Council Tax bills in Feb 2022 across all Kent district councils is inevitable due to KCC looking to plug a £40-60 million funding gap in 2022/23.

Council Tax currently funds almost half (46%) of Kent County Council total spending budget (excluding schools) so it is a significant funding source for the services they provide. In the financial year 2020/21  April 1 2020 – March 31 2021, KCC received £749, 443,400 from all twelve district councils.

KCC’s total income in 2020/21 was £2.8 billion as reflected in the Statement of Accounts at Note 11 page 50.

As such Council Tax contributes 26.62% of KCC Total income overall. 63.2% or almost £1.8 billion of KCC Income is from central government. This is made up from ‘specific’ grants (usually ring fenced), and a general grant (not ring fenced) for local authorities:

• Specific grants are provided by central government to pay directly for individual services, such as running schools and helping vulnerable people with their housing and accommodation needs. Local authorities and schools would normally only spend this allocated grant money on the specified purposes.

• A general grant is also paid by central government to local authorities. This is known as the Revenue Support Grant or Formula Grant. Formula Grant is largely funded by local business rates income (which is ultimately collected for central government). General grant and business rates are added together to make up the Formula Grant, which is then distributed to local authorities using a complex formula.

The other 10.18% of KCCs income comes from fees, charges and other service income (£256 million), interest and investment income (£13.5 million),  Income from business rates (£17.5 million)

Each year KCC inform their residents they’ll be a budget deficit in 2022/23. This year is no exception. KCC begun their Budget consultation on the 28 July. It closes on the 19 Sept. They anticipate the deficit at present may well be between £40m to £60m, so are asking you the residents how they might make savings.

Council Tax income for all Councils at district level has fallen due to the rise in unemployment during Covid. This has caused more households to claim Council Tax Reduction. This impacts on all Council’s budgets, including KCC’s which funds 46% of their current spending. With a lower Council Tax income this will impact on services and cutbacks to local services, including social care are definitely on the cards.

But KCC like all other district councils in Kent will raise council tax rates and by more than inflation — something they have been doing since 2016.

The onus on KCC and all other district councils in Kent will be to fund more of their services from council tax revenues as central government look to reduce still further the grants they give to KCC and all other Kent council. This  will exacerbate still further the continuous squeeze on local budgets, which has been happening since 2010; which has left councils shouldering a hefty chunk of the austerity that followed the financial crisis.

Council Tax is out of date, regressive and distortionary. Those who live in Band A to D pay a larger proportion of their income on Council Tax than those in higher bands.

John Major, replaced the poll tax with council tax, promising to revalue homes every decade. But no government has carried out a revaluation, as it would result in dramatic council tax rises, especially for those in Band D to H.

It is the mother of all political bombs and no political party has the balls to resolve this distortionary tax. Replacing it with a local income tax or other measure could prove even more unpopular. It would appear Council tax is the least worst option and here to stay for a while longer.

KCC though still needs to find savings of £40-60 million to already stretched budgets in order to plug funding gaps and meet their legal duty to set a balanced budget in 2022/23. This means residents will see their council forced to increase bills next year . . . but still have to make cutbacks to local services, including social care.

We can already see the cut backs. Just walk around your local area and see the amount of weeds growing, the state of the pavements and the all too often blocked drains which cause flooding and misery to many. Drivers all too often lament the state of the roads. Potholes have been found to be housing the homeless as they’ve grown that big And Folkestone & Hythe have built their controversial Princes Parade  leisure centre in one (pictured). But seriously, one no longer has to look hard to see the austerity which is now blighting the Garden of England. Further reduction of £40 – 60 million in KCCs budget for 2022/23, will only make things worse

The Shepway Vox Team

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