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K&C uncertain of ministry support as Grenfell drives £18m overspend

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Kensington & Chelsea RBC faces an £18m black hole this financial year, largely driven by costs associated with Grenfell, as uncertainty lingers over whether the government will continue to provide financial support.

Of the total overspend, £16m relates to Grenfell Tower. Kensington & Chelsea said last year the Ministry of Housing, Communities & Local Government covered many of the costs, which are out of the council’s direct control, but the borough is currently in the dark about whether it will receive this assistance again this year.

The main driver of the overspend is a contract worth about £1m a month for maintaining the site of the tower block, while a contract for the recovery and storage of personal effects is to be extended until December, resulting in a £3.6m overspend.

A further £1.8m overspend is projected across the council’s other services, but that budget pressure is largely driven by demand in children’s services.

Kim Taylor-Smith (Con), Kensington & Chelsea’s deputy leader and lead member for Grenfell, said: “The human cost and loss of life will always outweigh any financial costs. We must do all we can to support the families who suffered as a result of last year’s tragedy. It is therefore right that the council spends reserves on buying new homes and funds vital support for those in need – that has been my top priority and will always be my top priority.

“Most of the overspend outlined in our quarterly review comes from spending £1m per month on maintenance and management of the tower site – which is done through a completely independent site team. The council has now set aside £5m extra to try and cover future costs, but we will be seeking further financial support from central government.”

In a report which went before Kensington & Chelsea’s leadership team this week, acting director of financial management Taryn Eves said much of the £16m Grenfell overspend relates to “services that the council must provide but do not relate directly to individual groups or people, such as the site costs, corporate legal costs, insurance liabilities and the costs of the taskforce”.

Ms Eves added: “The council is not in direct control on many of the costs associated with the site, which in turn exposes considerable risk. In 2017-18, many of these costs were met by MCHLG but it remains unclear if there will be a similar arrangement for the current year.”

The service that provides direct support, including rehousing and rehabilitation, to the bereaved and survivors of the fire and the wider community is projecting a £32,000 underspend on a net budget of about £32.2m, after a £13.2m government grant has been taken into account. To date, the government has spent more than £46m on supporting the recovery following the Grenfell Tower fire. A further £34m has been committed for rehousing costs, new mental health services, investment in the Lancaster West Estate, and a new community space.

However, Ms Eves warned: “If no further additional funding is secured from government, these costs will need to be funded from the council’s remaining reserves.”

An MHCLG spokesperson said: “Last month, we announced we will take responsibility for the Grenfell Tower site, making operational decisions until its future has been determined by the community.

“We are in discussions with the Royal Borough of Kensington and Chelsea Council about plans for the funding of the site.”

A formal agreement on the responsibility for the Grenfell Tower site is due to be finalised this autumn.

In relation to a projected £1.8m overspend across Kensington & Chelsea’s other services, Ms Eves highlighed “pressures” around the special educational needs service “due to increasing complexity of needs which is both increasing demand, support costs and also tribunal costs”.

Further financial strain is also found in the council’s family services and in particular an “increased pressure from services for care leavers”.

Ms Eves said: “Regular meetings are taking place to review high cost care packages and a business case is being drafted to secure funding for a permanent bi-borough post, dedicated to reviewing the suitability of current care packages. Early indications from a review of a small number of cases has shown that significant savings could be generated.”

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