Exclusive: Kent and Medway Councils Agreed £11.9m LGR Fund Before Government Chose Option 4B

On 16 July 2026, ministers finally settled the future shape of local government in Kent and Medway. Option 4B had won. Four new unitary councils would replace the existing system: North Kent, West Kent, Mid Kent and East Kent. Folkestone & Hythe would disappear into a new Mid Kent authority alongside Ashford and Swale.

But by then, something rather important had already happened.

Months before Government chose which councils would survive, Kent and Medway’s existing authorities had agreed how millions of pounds would be raised to help create their replacements, where the shared cash would be held and what would happen if the first pot wasn’t enough.

Documents seen by The Shepway Vox Team for the first time — including the Kent LGR Implementation Reserve Memorandum of Understanding, all 13 councils’ letters of comfort and a 1 May letter from KCC Chief Executive Amanda Beer — reveal an indicative £11,923,819 implementation budget sitting beneath the reorganisation. The papers assumed £4.4m would come from Government, leaving £7,523,819 to be met through the Kent and Medway arrangement. And that £7.52m wasn’t necessarily the end of it.

The boundaries came later.

The financial machinery was already being assembled.

The deal begins on 6 March

The copy of the MoU seen by Shepway Vox is marked “Draft”. That shouldn’t be brushed aside. But what happened afterwards is clear: letters sent by councils across Kent say the document had been prepared by Kent Finance Officers and agreed by Local Authority Chief Executives on 6 March 2026. KCC’s later procurement report says an MoU and letters of comfort had been signed by all councils so pre-implementation costs could be managed consistently across all 14 authorities.

The formula was already there.

Medway and the two-tier Kent area would first be divided using an average of population and the 2024/25 council tax base. Within two-tier Kent, KCC would shoulder 80% and the 12 districts and boroughs 20%. The district share would then be carved up again using population and council tax base.

On the figures in the MoU, KCC’s contribution comes to roughly £5.17m. Medway’s is around £1.06m. The 12 districts and boroughs collectively account for about £1.29m. Folkestone & Hythe’s two calculations — £90,643 by tax base and £91,665 by population — average out at roughly £91,154.

Then the signatures started arriving.

Thanet wrote on 14 April. Dartford and Sevenoaks on the 15th. Tunbridge Wells on the 16th. Tonbridge & Malling on the 17th. Canterbury followed on the 21st, Ashford on the 22nd and Folkestone & Hythe on 23 April. Dover, Maidstone, Swale, Medway and Gravesham followed before the month was out. Different letterheads, different signatures — but substantially the same commitment.

Folkestone & Hythe Chief Executive Dr Susan Priest’s Letter says the council was committed to jointly forming the implementation reserve to meet reorganisation costs up to vesting day – 1 April 2028. That included the Programme Director, Programme Management Office and Strategic Business Partner, with KCC requested to act as lead procurement organisation on behalf of the councils.

But the letters went much further than agreeing to hire some consultants.

They said Kent and Medway’s share of the Government’s £63m national LGR capacity funding — then estimated at about £900,000 per new unitary — should be held in a single central partnership pot at KCC. If MHCLG paid the money directly to an individual council, that council agreed to transfer it to KCC.

And then came the bit with teeth.

Each council committed itself to its share of residual procurement and associated costs after Government funding had been exhausted. The letters also accept an apportioned share of sunk costs if the LGR process was paused or cancelled.

In other words, pulling the plug wouldn’t necessarily stop the meter.

On 1 May, Amanda Beer (pictured) wrote back to the chief executives. Her letter says it had been determined that it was preferable to keep both the Government funding and the wider implementation reserve “in one place”. Chief executives had proposed KCC. Beer confirmed KCC was content to hold the money in a dedicated budget for collective LGR and devolution work.

The shared purse now had a home.

KCC’s own procurement process followed. Decision 26/00028 proposed KCC as lead commissioning authority for the Strategic Partner and said the county council would hold MHCLG LGR funding on behalf of Kent councils. The programme was already looking beyond the ministerial decision towards the period from July 2026 to shadow elections in May 2027, and then onwards to vesting day in April 2028.

What the £11.9m is really buying

The MoU’s budget offers a glimpse of the scale of the job.

The Strategic Partner gets an indicative £1.8m. Systems consolidation gets £1.2m. Culture and communications gets £800,000, workforce development £500,000 and transition processes £500,000. Then there’s a £2,751,651 contingency, alongside money for strategic, finance, HR, IT, policy and service teams. KCC’s procurement report said the final Strategic Partner contract value wasn’t yet known, although it was expected to exceed £1m.

Those are the tidy budget headings. The more revealing language sits elsewhere in the MoU.

The reserve can fund work on the aggregation and disaggregation of services, assets, liabilities and funding. In plain English, officers have to work out how the existing councils, their money, property, contracts, staff responsibilities and services can be pulled apart and rebuilt inside four completely new organisations without public services going sideways in the process.

It can also pay for extra staff capacity, legal and procurement specialists, programme management, consultation, communications, IT, shadow-authority running costs, rebranding and the machinery required to establish the new councils.

Yet £11.923m still isn’t the cost of Kent’s reorganisation.

Redundancies sit outside the reserve and remain with the council making them. So do the ordinary costs of keeping existing authorities running until vesting day. Transformation projects designed to produce savings aren’t included, nor are costs beyond April 2028. Elections for the new unitary councils are excluded too; the MoU says another cost-sharing mechanism will be needed for those once the warding arrangements are known.

And if the £11.923m reserve proves too small, there’s a mechanism for going back for more.

The MoU allows supplemental contributions where agreed spending exceeds the reserve. A revised budget would pass through programme governance, after which top-up rates would be calculated using the same apportionment formula. Individual councils would then have to use their own governance processes to approve the extra cash.

There’s no clean escape hatch if Government stops the process either. The MoU says expenditure incurred before termination, together with the cost of winding down LGR workstreams, would be shared between the authorities under the same formula. Any uncommitted balance remaining at 31 March 2028 would, conversely, be returned to contributors for transfer into their successor councils, or paid directly to those successors depending on timing.

Then Government chose 4B

By the time ministers finally announced their decision on 16 July, the councils had been working for months. Chief executives were meeting weekly, 11 priority activity groups had been running preparatory work and plans were being developed for a central Programme Management Office and Strategic Partner. The emerging post-decision structure now has one programme, four Unitary Delivery Groups and workstreams beneath them.

Government’s choice of 4B now leaves one particularly interesting number hanging over the paperwork.

The MoU assumed £4.4m would arrive from Government. The comfort letters referred to funding of approximately £900,000 per new unitary. Four new unitaries at £900,000 each comes to £3.6m — £800,000 less than the assumption underpinning the MoU.

That doesn’t prove Kent has an £800,000 hole. The Secretary of State’s 16 July letter also announced up to £150,000 per new unitary for leadership capacity and continuity in children’s services, adult social care and public health, together with other targeted support. What the documents seen by Shepway Vox don’t establish is whether those particular sums can simply be counted towards the MoU’s general £4.4m assumption. The figure therefore needs reconciling against the Government money actually awarded to Kent and the conditions attached to it.

The four new councils aren’t due to open their doors until April 2028. Before then come the Structural Changes Order, elections, shadow authorities, decisions about services, staff, property, contracts and budgets — and the not inconsiderable business of keeping today’s councils running while tomorrow’s are being built.

They don’t exist yet.

But months before Government chose 4B, Kent’s old councils had already agreed how the first £11.9m of that transition would be funded, where the shared money would sit — and how another call for cash could follow if it wasn’t enough.

The boundaries came later.

The bill had already started.

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