Hampshire and Kent County Councils warn they could go bankrupt in less than a year

The leaders of Hampshire County Council and Kent County Council are calling on the Prime Minister and Government to take urgent action to address the looming financial crisis facing upper tier local government over the next few years. 

In a letter sent to the Prime Minister, Chancellor and Secretary of State, Councillor Rob Humby, and Councillor Roger Gough outline the drastic budget implications facing the two authorities.

They also express the need for Government’s immediate help and a clear plan for long-term financial sustainability, if the two County Councils are to avoid filing bankruptcy notices within the next year or so.

Councillor Humby explained: “Both Hampshire and Kent are high-performing, financially well-run and long respected County Councils. However, we face budget deficits over the next few years of a scale that has never been seen before – but not of our own doing. 

• Cllr Rob Humby fears the two counties are sleep-walking into a financial disaster

“We have experienced more than 12 years of national austerity and cuts to our core budgets.

"Inflation continues to grow, along with demand for services such as social care for vulnerable adults and children.

"We are also constrained by outdated laws created in the 1940s and 1960s and have no autonomy to be able to introduce initiatives for some local services to help generate our own revenue.

"As a result, our budgets are now at breaking point. We have gone as far as we can to close the budget gaps we have faced to date, and there is nowhere left to go in future without severely impacting some of the most vulnerable people in our society. 

“County Councils carry out many important functions on behalf of Government, which both Covid and the Ukraine crisis have clearly demonstrated and are also well placed to help stimulate and grow the economy, particularly in the South-East, where we already contribute significantly to the exchequer.

"We won’t be able to keep doing all of this if we are forced to scale back our vital services to the bare minimum.

“We cannot sit by and let two great counties sleep-walk into a financial disaster.

Even with drastic cuts to services, we won’t be able to close our future budget gaps and based on current forecasts, our Authorities would have no option but to consider formal talks with our auditors, DLUHC and Treasury over the coming months.” 

Kent County Council Leader, Councillor Roger Gough continued: “The problem is simple, the extra money we can raise from council tax and business rates barely covers our normal costs of inflation each year.

"This leaves major growth, particularly in adults’ and children’s social care, totally un-funded.

"This is not a medium-term problem that can be fixed with more one-off handouts to keep the sector limping along, it needs fundamental changes to the whole system of local government funding.

"Without a major change either in the way these two services are funded, or in our legal obligations, I suspect that large parts of upper tier local government will face collapse.  

“Our two Authorities have consistently asked for the same things from Government over many years, to put us on a long-term sustainable financial footing.

"This includes more annual funding to keep up with growing demand for adults and children’s social care services or legislative changes to reduce the demands on these services; fully funding the social care funding reforms and more money for growth in special educational needs; as well as greater freedom and flexibility around setting our council tax and charging for services, alongside legislative changes to help local government help itself. 

“We fully recognise the difficult national economic environment, but the time has come for urgent, meaningful dialogue with Ministers, our MPs and Government officials before the end of this year. We have a responsibility to the residents of Kent and Hampshire to do everything possible to protect the future of their important local services."

To read the letter in full, click here.