COUNTY Hall leaders are demanding urgent talks with the Home Office over a spiralling cash crisis caused by a £3.6million shortfall for asylum seekers.

Kent County Council says it is running out of ways to plug the shortfall and has warned any steps it now takes may well place young children at risk.

The situation is regarded as so serious that KCC has even floated the possibility of ignoring a legal ruling that has meant the costs of looking after child refugees has risen sharply.

One county councillor said that if the cash crisis could not be solved, KCC risked being officially rapped by its auditors.

A report presented by social services chiefs to a meeting of KCC’s Conservative cabinet on Friday has revealed that despite having to deal with more asylum seekers and unaccompanied minors, Kent is paid less to look after them than other local authorities in the South East.

KCC has discovered that the National Asylum Support Service (NASS) pays it about £141 a week for each single adult while Buckinghamshire gets £164, Hertfordshire £183 and Surrey £188.

Social services chiefs say that if KCC was paid similar amounts, it would not have to go cap in hand to ministers to ask for more cash to bail it out.

The £3.6million shortfall is also being blamed on a long-running wrangle with the Home Office about Kent’s claim for grant money to look after child asylum seekers.

KCC says it is still due money from the government which it was promised would be reimbursed but has still not been paid in full.

Of the disputed £14million that KCC is claiming, it has been paid around £10million.

KCC cabinet member for social care Cllr Peter Lake said: "It is an absolutely impossible situation but we have to try and find a way out.

"We are getting to a point where we will have to say we cannot carry on. The Government has to come clean and accept that the situation is one of their making, not ours."

County council leader Sir Sandy Bruce-Lockhart described the situation as untenable.

"If we are being paid lower levels of grant and promises we were given are not being honoured, there will be an increasing risk to asylum seekers," he said.

Social services chiefs admit that their options are limited. One proposal could be to disband a unit that works to place young children with relatives already in this country.

But KCC education chief Graham Badman warned that dismantling what is known as the Kinship Assessment Team could put vulnerable children at even greater risk.