County Durham council budget to be considered by Cabinet

Cabinet will consider our final draft budget proposals before making recommendations for consideration by full council at the end of February.

At next week's meeting, Cabinet will hear we are facing £51.8 million of unavoidable base budget pressures in 2024/25 due to the impact of inflation, increased costs relating to looked after children, adult social care, and home to school transport, as well as the impact of a loss of housing benefit subsidy linked to temporary accommodation and supported housing.

Proposed savings

Cabinet will be recommended to approve savings options totalling £8.083 million for 2024/25, and £16.360 million across the four-year Medium Term Financial Plan (MTFP) period. The majority of the proposed savings were presented to Cabinet in July and October 2023 and subject to public consultation.

To help meet the significant cost pressures in this budget, a 2.99 per cent increase in base council tax and 2 per cent increase in the adult social care precept, totalling 4.99 per cent, has been proposed to protect frontline services and help meet the unavoidable cost pressures facing the council. This will require the approval of full council on 28 February 2024. The Government's published Core Spending Power figures for all local authorities assumes that local authorities will increase council tax by this amount.

The overall increase in council tax, if approved, including resources generated from the adult social care precept, will generate an additional income of around £13.350 million next year, as compared to the £51.8 million of budget pressures faced. The proposed increase equates to an increase of £1.15 per week for the majority of council taxpayers in the county, who live in a Band A property, with a £1.76 per week increase for Band D properties.  

The most financially vulnerable would continue to be protected by the council's Local Council Tax Support Scheme, through which over 81 per cent of eligible households will continue to be awarded 100 per cent relief and pay no council tax, as well as the support available through the council's welfare assistance programme.

Support reserve

The report to Cabinet outlines that, although savings of £8.083 million are recommended for 2024/25 and a council tax increase is proposed, there will still be a need to use £3.798 million of the MTFP Support Reserve to balance the 2024/25 budget.

This would be a short-term solution to provide time to develop sustainable budget savings for 2025/26, where the council is forecasting a significant funding shortfall which will require the delivery of £16.789 million of additional savings to balance the budget.

Cllr Richard Bell, deputy leader and Cabinet member for finance, said: "Cabinet is committed to strong financial governance and getting value for public money whilst ensuring that the council sets a sustainable balanced budget with any council tax increases being justified and affordable.

"Through prudent financial management, the council is not in the position that many others across the sector find themselves in at this time, but we are not immune from the financial crisis that besets many other councils. Both the council and the County Councils Network have been lobbying Government for some time for extra funding, and it is pleasing to see that they have responded with the additional funding announced on 24 January of an estimated £5.88 million social care grant.

"However, whilst I welcome that funding, which comes on top of the additional funding previously announced, it is insufficient to keep up with demand and the unavoidable cost pressures we face in our statutory social care services. This means we still need to use £4 million of our depleted reserves to balance the budget, despite making savings of £8 million.

"Most of these proposed savings have limited or no impact upon frontline service provision. This is unlikely to be the case going forward as the scale of the challenge and the need to meet the escalating costs of statutory social care services will mean that there will be a need to reduce discretionary service provision to balance our books. Achieving a further £17 million of savings in 2025/26 will require some very difficult choices to be made."

Capital programme

We continue to prioritise investment in the county through our capital programme, including:

• An additional £10 million to the Greenfield School scheme bringing total investment to over £20 million.
• Investment of the £14.8 million Local Transport Plan (LTP) government grant in highways maintenance, supplemented with an additional £5 million from the council.
• A £5 million budget to repair bridges and structures across the county.
• An additional £2 million allocation for building investment to enable the council to meet its net zero targets.

However, Cabinet will be advised that maintaining capital expenditure at this level will not be possible in future budget rounds.

Cabinet will hear more details when it meets on Wednesday, 14 February at 9.30am.

Cabinet will then make recommendations to full council, which meets on Wednesday 28 February to set the budget and agree the Medium Term Financial Plan.