Council to consider further savings proposals to balance its budget

Our Cabinet will hear that we continue to operate in a period of significant financial uncertainly due to the impact of high levels of inflation and service demand, with an estimated £67.602 million in savings needed over the next four years - around £11 million more than was previously forecast.

Inflationary demand

These concerns continue to impact significantly on financial planning, with increases in bank base rates and the impact of future National Living Wage increases forecast to put further pressure on our budgets.

On Wednesday, 11 October, Cabinet will hear that these challenges are primarily due to continuing inflationary and demand pressures, and significant uncertainty in terms of how available funding will be shared between councils beyond next year.

Councillors will also be told that, at this stage, we are not in danger of considering a Section 114 notice due to our current financial resilience, strong track record of prudent financial management, and sufficiently robust budget and Medium Term Financial Plan (MTFP) planning processes. However, if the current challenges are not addressed in a planned way, the position could change rapidly.

Challenging financial planning

Cllr Richard Bell, deputy leader and Cabinet member for finance, said: "The ongoing inflationary situation is continuing to make financial planning extremely challenging, with one percent on the pay bill about the same as a one per cent increase in council tax, and significant extra demands particularly in children's social care. Even if we increase the council tax by the maximum permissible without a referendum, we still face a budget deficit of £16.3 million next year and £67.6 million over the next four years. 

"We continue to closely monitor and manage our budgets to identify additional savings options to help us balance next year's and future years' budgets. While we strive to be flexible and adaptable as a council, and increase our efficiency, it is unavoidable that these savings will be noticed by the public, as we will be required to make very difficult decisions to address these pressures.

"We have called on the government to provide more much-needed financial support to our council and to the wider sector to help with these demands. We've also called for a fundamental review of the way councils are funded going forward, as the current system is just not sustainable. We also need longer term settlements from government as the current pattern of annual announcements makes forward planning even more difficult.

"Our relatively strong financial position means we are not considering a Section 114 Notice, and we remain committed to strong financial governance and getting value for public money, while ensuring we have a sustainable balanced budget to support our services to residents."

Savings proposals

Wednesday's report includes details of further savings proposals that could be implemented to help balance the budget. These would be subject to consultation over the coming two months, building on the consultation which is currently underway on the proposals reported to Cabinet in July.

The total savings required at this stage for 2024/25 to balance the budget is estimated to be £16.308 million.

A total of £2.332 million of savings have already been approved which can be delivered in 2024/25. Cabinet agreed additional savings proposals of £3.7 million for 2024/25 and £6.617 million in total across the MTFP planning period, which are currently subject to public consultation.

Cabinet will hear proposals for further savings of £1.943 million in 2024/25 and £2.909 million across the four-year period, and that these go out to further public consultation.

Budget pressures

Savings are forecast to be required in all years of the MTFP as unavoidable budget pressures outstrip the funding we will receive from government and our ability to generate additional income from business rates and council tax. The forecasts assume that we will apply the maximum increases in our council tax across each of the next four years, in line with government guidance and expectations.

If ultimately agreed, the total savings would be £8 million in 2024/25 and £15.330 million across the MTFP planning period. This would reduce the forecast budget deficit to £8.308 million in 2024/25 and £52.272 million across the next four years. However, the current situation means there will be more significant challenges to come in balancing budgets beyond next year.