Durham County Council is looking at a maximum council tax increase and ways to make savings as it tackles an “extremely challenging” financial outlook.
The authority’s cabinet was told in a meeting yesterday (13 September) that £12.1m in budget savings for 2024/25 were needed, even if council tax is increased.
A budget gap of £56m over the next four years is also being forecast.
A report by Paul Darby, corporate director of resources, and Richard Bell, portfolio holder for finance, noted that the council is “continuing to operate in a period of significant financial uncertainty and volatility”.
This uncertainty, the report authors said, is being driven by “continuing short term local government finance settlements; [Durham’s] inherent low tax raising capacity due to [its] low tax base alongside ongoing significant demand pressures; enduring demographic/cost pressures in children’s social care; and the ongoing inflationary impact of the expected pay award and service provision”.
Residents in County Durham are being invited to have their say on proposals to balance council budgets next year and beyond in a seven-week consultation which closes on 20 October.
But the council warned that putting council tax up by anything less than the maximum permitted “would result in in our budget deficit increasing and more reductions to services being required to balance the books”. Every 1% of council tax equates to around £2.675m in income, the authority said.
Bell commented: “Like all councils, we are facing unavoidable financial pressures driven by rising costs and increasing levels of demand, particularly for adults’ and children’s social care.
“To put it into perspective – we spend 47% of our budget on providing adults’ and children’s social care to 2.5% of the population.
“It is increasingly challenging to balance our budgets with the funding received from the government and the income we are allowed to raise locally, which is primarily through council tax.
“That makes this another year in which we have some incredibly difficult decisions to make and we have no certainty about local government funding beyond next year, which also makes it very difficult to plan ahead.
“We’re seeking people’s views on a set of proposals that would save us a further £3.7m next year, along with views on where we might look for the remaining £6.2m we’ll need to save to balance our budget.”
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Bell said savings in management and administration services to protect front line services had “already largely been made over the last 10 years”. Without extra funding, front line services “are inevitably going to be impacted going forward and more so if we do not increase the council tax in line with government expectations”.
The council has written to government and to the leadership of all the main political parties asking for a fundamental review of the system of financing councils.
“Making decisions between council tax increases and service reductions is never easy,” Bell said. “We very much understand the financial challenges many of our residents are facing, which is why we’re also proposing that we continue to protect the most vulnerable by extending our Local Council Tax Reduction Scheme in its existing form. The scheme offers a council tax discount to eligible residents on low incomes whether in work, unemployed or retired and is uncapped, which is unique across our region.”
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