Kensington and Chelsea Council Faces £120m Funding Gap, Cites 'Unfair' Government Formula

Kensington and Chelsea Council is confronting a significant financial challenge, with a projected funding gap of over £120 million anticipated over the next four years. This shortfall, described as unfair and unreasonable by the Leader of the Council, Councillor Elizabeth Campbell, stems largely from the Government's Fairer Funding formula.

The stark financial reality was detailed at a Leadership Team meeting on Tuesday, 13 October 2026. The council's resources are projected to be reduced by £108 million over four years due to the Fairer Funding formula, a figure that represents well over 40% of our controllable budget and is deemed quite unprecedented. While the specific mechanisms within the formula causing this reduction are not detailed, the council is actively pursuing alternative funding solutions.

A bar chart illustrating resident priorities for council funding, with the highest preference for allowing the council to keep a greater share of locally generated income.
Resident priorities for council fundingSource: Leadership Team papers, 13 October 2026

In response to this financial pressure, the council is utilising the Sustainable Communities Act 2007 to formally request alternative funding solutions from the Government. This action is backed by a public consultation where an overwhelming 93% of nearly 1,500 respondents supported challenging the current funding arrangements. Residents expressed a strong preference for retaining a greater share of locally generated income, such as business rates, and for more time to adapt to funding changes.

The potential consequences of failing to address the £120 million funding gap are serious. The council anticipates having over £120 million less than it needs to deliver current services over the four years. This will necessitate a more focused and disciplined approach to resource allocation, clearer prioritisation of services, and greater transparency with residents about what they can expect. Councillor Campbell warned that the funding settlement is going to have harsh consequences and stark consequences for the residents that we represent.

A bar chart and a choropleth map illustrating resident priorities and ward-specific common answers regarding council support.
Resident priorities for council servicesSource: Leadership Team papers, 13 October 2026

To mitigate the financial impact, the council is actively exploring additional revenue streams, including the possibility of introducing a tourist tax. The meeting's agenda and public reports pack, available at Agenda frontsheet 13th-Oct-2026 18.30 Leadership Team and Public reports pack 13th-Oct-2026 18.30 Leadership Team, provide further details on the council's financial situation and proposed strategies.

Illustration depicting a caregiver assisting an elderly person, symbolizing support and care services.
Care and support servicesSource: Leadership Team papers, 13 October 2026

Further details on resident priorities for council services can be found in related charts, including one illustrating preferences for council support and another detailing resident priorities for council services by ward. See Figure 2 and See Figure 2.

Residents also indicated their priorities regarding council support, with options such as Running local events and bringing people together and Looking after shared spaces like gardens, estates, streets being highly selected. See Figure 2.

Additionally, a chart outlines resident preferences for how they wish to engage with the council, with To tell us when something's wrong - and when something's working being the most selected option. See Figure 5.