Consultation on updated proposals to balance the Council budget

These further savings are in addition to the savings set out in the consultation on our budget proposals which took place between 20 September and 1 November 2024. 

Update on current picture

The total savings needed at this stage for 2025/26 to balance our budget is now estimated to be £25.6 million - around £3.8 million more than was previously forecast. Across the next four years, the total savings required are estimated to be £69.7 million - around £5.7 million more than was previously forecast.

The worsening financial position is despite the additional funding committed by the Government as part of its Autumn Budget Statement, where we are expecting to receive extra money for social care, the collection of rubbish, and support for homelessness. The extra funding for social care will only cover 25% of the additional costs we will have to find next year to meet demand and the forecasted increases in the cost of provision.

The Government also announced that next year's National Living Wage will rise by 6.7%, and substantial increases in the rates of Employer National Insurance from April 2025. This will have a significant effect on our payroll costs, social care costs and other supplier costs (which will rise as a result of these changes).

We have also had to increase our costs for borrowing to fund our Capital Programme (our investment programme for things like buildings, roads, and bridges), and the costs of providing home to school transport for children.

A total of £7.327 million of savings have already been approved, of which £3.389 million can be delivered in 2025/26. Our Cabinet have now approved additional savings proposals of £14.7 million in 2025/26 and £15.8 million across the four year period for consultation. Making these savings would still leave a £10.9 million shortfall in 2025/26 with a £53.9 million total shortfall for 2025/26 to 2028/29.

Some of these further savings are a continuation or enhancement of ongoing savings related to back office services, or reflect the levels of income generated from existing income arrangements.  However, there are also a number of new savings proposals which change the way in which we deliver services. It is therefore important that Full Council review and discuss the 2025/26 budget savings and provide their continued approval when they meet on 19 February 2025.

The budget forecasts continue to assume that we will apply a 2.99% increase in Council Tax across each of the next four years. However, the Government have now indicated that we will be able to raise Council Tax by 5%, and expect us to, to help meet the costs of social care services. A rise of 5% could help to protect services and reduce our deficit for 2025/26 by around £6 million. The majority of responses we received during the first consultation phase during September and November 2024 were favourable towards a rise in council tax at either 2.99% or a higher amount if permitted, to protect services. If our capacity to rise Council Tax is confirmed in December, we intend to ask Full Council to consider this when they meet in February 2025.

More details of how much funding we will receive will be announced by 20 December 2024 as part of the Local Government Finance Settlement (the amount of funding we are given by Government on a yearly basis to help us deliver services).

You can read the full report in the Cabinet agenda and minutes - 4 December 2024.

Updated savings proposals - December 2024 savings plan

Wherever possible the focus on developing savings options for 2025/26 and the following three years, continues to look for efficiencies, raise additional income and protect front line services. However, some changes to how we will deliver frontline services from April 2025 will need to be considered. 

Feedback from the previous rounds of consultation, including consultation which took place between September and November 2024, showed support for our continued approach to savings based on both feedback from our survey, comments received at Area Action Partnership meetings and views shared directly from a range partners.

Savings from back office and making efficiencies

Savings for 2025/26 = £10.898 million, savings for the four year period = £10.426 million.

We propose to make continued efficiencies and make additional savings from back office areas, including Finance, Legal and Democratic Services, Digital Services, Human Resources and Employee Services, Transactional and Customer Services, and the Environment and Design Team. These savings do not aim to directly impact the way we deliver its front line services but will result in a reduction in the overall size of the back office.

We have also reviewed the way we set aside money to repay borrowing, which is known as our Capital Financing Costs and we have identified savings which can be made from our central budgets for non-front line service provision. 

Raising additional income and reducing our third party contributions

Savings for 2025/26 = £1.408 million, savings for the four year period = £2.006 million.

Proposals to raise additional income and reduce our third party contributions include:

• introducing charges for Learning Disability Transport for some users of this service who do not currently pay a charge
• raising additional income through the Registrars service from the opening of The Story, and from fees and charges
• raising additional income through our road permit scheme
• increasing value for money from procurement using joint procurement arrangements with other local councils through our membership of the North East Procurement Organisation (NEPO)
• raising additional income from court summon fees for non-payment of local Council Tax debts when residents fail to pay their council tax debt
• identifying opportunities to recharge staff costs to projects which are funded by one-off funding 
• reviewing the existing policy on Council Tax relief for empty homes by moving to a time limited scheme based on Government guidance
• drawing down increased dividends from our companies, such as Chapter Homes, who make annual profits from their activities

Savings from changes in the way we deliver front line services

Savings for 2025/26 = £2.348 million, savings for the four year period = £3.403 million.

Proposals to save money by changing the way we deliver front line services in areas such as reviewing:

• if substance misuse support can be absorbed into other adult social care teams
• if some learning disabilities and mental health support can be absorbed into wider adult social care services
• the way vulnerable adults access the adult social care pathways service for learning disabilities
• the way we deliver Durham County News
• the early help service which supports young children and families before issues start to emerge
• the find and fix (improving our community environment) service
• the frequency and chemicals used in our weed spraying operations
• staffing in our pest control, civic pride (improving our community environment), allotment and community protection services
• staffing and opening hours of our theatres on quieter days of the week
• staffing budgets in Area Action Partnerships
• staffing in our Care Connect (community alarm) service
• budgets for temporary housing and homelessness

Have your say

What happens next

Your feedback will help us shape and finalise our budget proposals for 2025/26, as well as help us look ahead longer term to make future savings. This will be reported to our Cabinet and Full Council in February 2025.