The impact of rising inflation and increases in energy and fuel costs alongside continued budget pressures are set to be discussed by councillors next week.
Members of Durham County Council’s Cabinet will be updated on the authority’s progress in making savings in its Medium-Term Financial Plan (MTFP) and asked to approve a revised capital programme and a range of budget adjustments.
The council has faced unprecedented budget pressures over the last two years as a result of the coronavirus pandemic and continues to face lower levels of income in its leisure centres.
This year, it is facing a new financial challenge resulting from the impact of the conflict in Ukraine, particularly around energy and fuel costs, alongside pay and price inflationary impacts on external contracts such as waste disposal and in home to school transport.
These factors are leading to a forecast overspending position of around £15 million this year.
Cllr Richard Bell, Deputy Leader and Cabinet member for finance, said: “We face significant challenges in our budget because of rising inflation. We are not expecting to receive any additional financial support from government this financial year which means we will need to rely upon our reserves to finance any overspend in the year. This is not a sustainable long-term position.
“There is uncertainty over our financial settlement from government for this and future years, with the expected consultation on a two-year settlement having been further delayed through the Prime Minister’s resignation and subsequent leadership contest. The budget pressures we are facing are beyond our control. It is important that government recognises this and provides us with the resources necessary so we are able to plan effectively.
“We are, therefore, calling on the government to increase local government funding next year in recognition of the unprecedented and unavoidable pressures we are facing. We will also be highlighting the significant financial strain on the council and the wider sector to the new Prime Minister.”
The impact of inflation is resulting in significant overspends this financial year, with Cabinet set to receive a further report next month on how this will affect its budget planning for 2023/24 and its MTFP for the next four years.
At a meeting in July, ongoing budget concerns were highlighted to Cabinet, in a report which forecast that these pressures were contributing to a need to make £55 million savings over the next four years, with around £22 million of that forecast to fall into 2023/24.
However, the scale of the challenge has further increased since then and it is likely that this sum will be higher than the latest reported forecast.
As a result of the pressures anticipated, Cabinet has already agreed to the creation of a Budget Support Reserve of £10 million, which has helped offset the forecast overspend in year.
Despite the pressures created by these unavoidable factors, the council continues to offer a range of support to residents and businesses, recognising the significant impact the cost-of-living crisis is having right across the county.
It has extended its Local Council Tax Reduction Scheme for another year, offering eligible residents a discount of up to 100 per cent on their council tax charge; providing top-ups to the reductions applied of up to £75 where partial Council Tax Reduction support is available; and, it has invested additional sums in its Welfare Assistance Scheme.
Cllr Bell added: “We fully appreciate that residents and businesses are under financial pressure at the minute because of the cost-of-living crisis. We remain committed to doing what we can to support everyone and would urge anyone who is facing difficulties to seek help as soon as possible.”
Cabinet will meet at 9.30am on Wednesday 14 September. The meeting can be watched on the council’s YouTube channel at www.youtube.com/user/DurhamCouncil
