Kensington and Chelsea Council is facing a significant financial challenge as changes to local government funding are set to reduce its budget by £82.7 million (40%) between 2026/27 and 2028/29.
The cuts are a result of government funding reforms, specifically in response to the government's consultation on 'Fair Funding 2.0'. The council is now working to develop savings options to address the projected budget gap as part of the Council's Transformation and Savings Programme.
The news came during a Leadership Team meeting on Wednesday, 15 October 2025, where members discussed an update to the 2026/27 Budget Setting and Medium-Term Financial Plan. Cllr Cem Kemahli, Lead Member for Finance, Digital, and Efficiency, presented the report, outlining the Council's response to the government's consultation on 'Fair Funding 2.0'.
The Leadership Team noted the estimated impact of the Government's proposed changes and the significant consequences for the Council's budget setting and financial planning. As part of the meeting, the Leadership Team considered options for the Council Tax Reduction Scheme, including:
- No change (retain current 100% support)
- Reduce overall scheme cost by 10%
- Reduce overall scheme cost by 20%
To implement potential changes to the scheme from April 2026, public consultation must begin by early November 2025, with the final recommendation going to Full Council on 25 February 2026.