Kensington and Chelsea Council borrows money for Grenfell programmes
An extra £67m was borrowed last financial year
A West London council borrowed an extra £67m last financial year to pay Grenfell Tower survivors and victims, data shows.
Kensington and Chelsea Council used the cash – which is 41 per cent of the total money it borrowed over the 12 months – towards resolving claims lodged since the Grenfell Tower tragedy and to contribute towards the Restorative Justice support programme, according to the council.
The interest on this debt is being paid using reserves specifically set aside for this purpose and has no impact on council taxpayers, the Local Democracy Reporting Service (LDRS) understands.
The council is also borrowing this sum for relatively shorter periods and plans to repay these loans when it receives reimbursements from other companies responsible for the fire.
Last month, it was revealed the government had not paid its share of the Global Settlement Agreement (GSA) or said when it will. The GSA provides millions of pounds of support for bereaved family members and survivors regardless of where they live.
It comes as analysis by the BBC’s Shared Data Unit of government data found Kensington and Chelsea Council’s total debt at the end of the last financial year jumped by £161.5m to £503.5m.
Some £67m went towards funding Grenfell Tower programmes while £20m was used as cash flow for the end of the financial year. It was repaid in April 2025.
The remainder was used to support capital expenditure – money used to buy and maintain assets – in the General Fund and Housing Revenue Account.
A General Fund is the council’s main operational account and is used to manage day-to-day income and expenses. The Housing Revenue Account is legally ring-fenced for housing.
According to the council, this went towards school upgrades, highway improvements, buying waste and cleansing vehicles, net carbon zero initiatives, purchasing of temporary accommodation, housing stock improvements and the ongoing development of a new homes programme.
The council’s borrowing jumped by 47pc compared with 2023/24 – the third highest increase in London, behind Greenwich (57pc) and Hackney (153pc). It also experienced the steepest rise in debt per-person of £1,095, bringing total debt per person at the end of 2024/25 to £3,414.
Greenwich came second with a £912 increase, followed by Barking and Dagenham at £909. This is calculated by dividing the total debt the council owes by the number of residents living in the borough.
Kensington and Chelsea Council is the 17th most indebted local authority in the capital, according to BBC analysis of data released by the Ministry of Housing, Communities and Local Government.
According to the council, the current level of debt is affordable. A bankruptcy notice – known as a Section 114 – has not been issued, nor has a warning been given on issuing one. The council also balanced the budget last year despite the debt.
The overwhelming majority of borrowing has come from the government through its PWLB (Public Works Loan Board) lending facility. According to the council, this borrowing is less complex and is generally cheaper.
Cllr Cem Kemahli, Lead Member for Finance, Digital and Efficiency, said: “This council has consistently balanced the books and it is normal for councils to borrow as part of a responsible approach to financial management. It helps us to invest in our borough with projects such as buying new waste collection vehicles, highways upgrades and investing in temporary accommodation and our new homes programme.
“It is not borrowing that puts council services at risk, but the new fair funding formula from Government, which could see this council alone losing £80 million from our budget over the next three years, so we are urging Government to rethink the formula and extend the timeline for councils to adapt to the changes.”