Derby City Council faces an “extremely challenging” financial situation according to its chief executive Paul Simpson, joining a “growing number of local authorities with a very similar story”.
He called for action across the sector to address the national situation in order for local authorities to “remain sustainable” and be able to “continue to provide good quality local services”.
An overspend of £6.091m at the authority has been forecasted in its 2023/24 Q1 financial monitoring report, authored by Toni Nash, head of finance. Using reserves to secure a balanced position would mean that Derby’s Budget Risk Reserve would drop to a nil balance at 31 March 2024, while the forecast General Fund Reserve balance would reduce to £5.583m on the same date.
This would represent around 1.97% of the current revenue budget and would take the General Fund Reserve below the current expected range of 3-5%.
The council has put a “continued focus” on spending panels, spending moratoriums and vacancy control for the rest of the year, the report noted, “which will help ensure the council delivers a balanced position to mitigate any potential use of reserves”.
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Derby City Council is currently forecast to achieve 96% of its £16.196m total saving target for 2023/24. However unachieved previous year council wide savings reduces the percentage to 91%.
The report was discussed at a cabinet meeting last week (2 August), in which Simpson described the situation as “extremely challenging”.
Putting these difficulties in the context of the national situation, he said: “This is now becoming a regular occurrence, of local authorities reaching the end of the road in terms of their financial position. That’s not to say that’s where we’re at, but the situation facing local government is an extremely challenging one.
“It is incumbent on all of us, both politicians and officers, to do whatever we can to support the need for additional funding for local government.
“From my perspective, Derby is top of the list but it’s bigger than that – this is about the sustainability of local government as a sector and the sustainability of local services for local people funded by local taxation.
“As difficult as our financial position is, we are one of a growing number of local authorities with a very similar story. What do we need to do as a sector to address that? There are a number of potential solutions, but the reality is something needs to happen for local authorities to remain sustainable so that we can continue to provide good quality local services that local people and businesses want and need.”
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