Report paints troubling picture of town hall finances

Kensington and Chelsea council has warned of an almost £19million black hole in its budget next year if the Government freezes funding.

It said the budget deficit could grow as big as £32million by 2027/28 if the Treasury does not align council funding with the forecast rate of inflation or continue to provide additional adult social care grants, a council report shows.

If both measures are met, then the deficit is expected to reach £9.4million in 2025/26 and £21.2million by 2028. The report comes as an updated budget report shows the council broke even this year.

It predicts the council’s finances would be “adversely impacted” 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 – as well as savings targets not being met.

The council has produced a raft of savings measures which could add £12.6million 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 by 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.

Councillor Johnny Thalassites, who oversees the budget, told colleagues during a meeting last week 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 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 £10million in funding in the capital pipeline despite all of the pressures.”

Meanwhile, the council has announced plans to increase social rents by 7.7 per cent – or an extra £43.12 per month – from April.

Housing lead Sof McVeigh said: “This has been a very difficult decision to make. We understand all the cost pressures everyone is under and so we’ve thought long and hard about all the options for this”.

Pictured top: Kensington town hall (Picture: Hannah Neary)