Kingston council has voted to tighten its purse until the end of the financial year, after it was revealed that the council predicts an overspend £1.9m. 

Portfolio Holder for Finance, Councillor Alison Holt, said: “This is putting us in a financially challenging position and is not ideal.”

She asked members to vote for a period of “expenditure restraint for the remainder of the 2019/2020 financial year.”

She said she was “hopeful” the council would get some money back from business rates: “The previous year we had received an additional £1.2m and we’re hopeful that would come forward by the end of the year, bringing us a little bit nearer to being in budget.”

Last year Council Leader Liz Green warned the council could face “effective bankruptcy by 2021,” but these claims were rubbished by Opposition Leader Kevin Davis who said such overspends were common mid-way through the year, which are usually sorted by March.

When councils do not have the money to meet their current expenditure they are forced to issue a Section 114 notice, as Northamptonshire County Council did in 2018.

It can involve the government stepping in and taking control of the council, or forcing huge cuts to non-essential services.

In October last year, the council was predicting a £3.9m overspend for the financial year.

While the current overall estimate is much lower, councillors are still concerned about the £6.74 overspend in the School’s Budget.

If this does not change by the end of the financial year, the accumulated deficit on the unallocated Dedicated Schools Grant reserve would reach £20.814m.

Cllr Holt said: “It is a very serious situation and it is very serious for this council. 

“There has been a lot of work done to look at this overspend, looking at ways to try and mitigate it, there’s recovery plans being put in place, we have had an education committee report, we have been lobbying government and speaking with schools through the school’s forum, speaking to head teachers. There are a lot of people that we have been speaking to and trying to let them know of the challenge we do have, but that doesn’t take away from the fact that that is our challenge.”

She added: “The pressure on our reserves is significant. Although the budget did include a £3.5m transfer, it is still not enough to cover the £20m cumulative deficit that we have.”

However Cllr Holt emphasised Kingston council is not alone in its overspend on the School’s Budget: 

“There are lots of councils up and down the country that are struggling with their high needs block and spending. If it wasn’t for that, looking at the revenue statement, we would be in a much more secure financial position,” she said. 

Conservative Cllr Rowena Bass wanted some more clarification on the overspend for the Children’s Services Contract, and was told spending pressures continue to be for those leaving care and unaccompanied asylum seeking children.

Cllr Liz Green said: “A lot of unaccompanied asylum-seeking children are coming in around 17. We have a responsibility to them until they are 25 but funding reduces aged 18 to the level it doesn’t even pay for the accommodation to put them in let alone the pay around that.”

She added: “All of us are lobbying collectively through the LGA to say government is not paying us at the rate it costs to look after these people even though they promised they would.”

Cllr Christine Stuart expressed her concern there seemed to be an overspend in contract management and “external consultants on transformational work,” but an underspend on support for vulnerable people. 

Officers said the situation was “rather more complex than that” and that underspend on vulnerable people “could be that demand was over-anticipated in the budget setting or there could be other reasons.”

Cllr Green emphasised the necessity of purchasing under contract rather than spot placements, as a way of getting “a better deal” for those in need. 

However she added “this is one of the things we really need to get on top of.”