Leaders at the region’s largest council are due to be asked to agree final budget proposals for next year and the following three years ahead of them being considered by full council.
Durham County Council’s Cabinet will be asked today approve the council’s final budget proposals for 2025/26 and the following three years.
Cabinet will hear that the council continues to face significant financial challenges, with a budget gap of £45.5m over the next four years, despite assumed increases in government funding and expected council tax increases across the same period.
While the council expects to receive £48.8m in additional government funding and is able to raise a further £19.5m through council tax and local business rates, it is facing additional unavoidable cost and budget pressures of £89.5m, which significantly exceed this extra revenue funding.
The council still has a funding shortfall of £21.2m in 2025/26, which is based on a 4.99 per cent rise in council tax.
To respond to this shortfall, the council has identified £18m of further savings which would reduce the deficit for 2025/26 to £3m – necessitating a use of its reserves to balance the budget next year.
Included in the additional government grant is an increase in the Social Care Grant of
£12m next year, which is being provided to help meet the increased costs of children and adult social care.
However, cabinet will be told this will cover only 35 per cent of the £34.5m of unavoidable cost pressures the council faces for social care provision.
Cllr Richard Bell, Durham County Council’s deputy leader and cabinet member for finance, said: “We are committed to strong financial governance and getting value for money and ensuring that we set a sustainable balanced budget.
“While we welcome additional government grant funding, our financial position remains very challenging.
“We face significant cost pressures in terms of the rising costs and demand pressures associated with social care, waste management and home to school transport and were very disappointed that the funding we will receive next year to offset the impact of the increases in Employers’ National Insurance costs will cover only half of the increase in costs we will face as a result of these changes.
“To balance the budget, we have identified savings which will reduce the shortfall we predicted in December.
“The vast majority of these savings proposals will not impact on frontline services, and we continue to ensure we deliver vital services. However, the medium-term financial outlook remains very challenging, and we need to look at more transformative ways in which we deliver services.”
Included in the savings proposals presented to Cabinet is an increase in council tax of 4.99 per cent, which is made up of a 2.99 per cent council tax increase and a two per cent adult social care precept, in line with government expectations for local authorities to raise council tax to increase the funding available to meet rising cost pressures of delivering local services.
The council tax increase proposed next year is expected to generate an additional £14.4m in 2025/26, of which £5.8m relates to adult social care.
Cabinet will hear there remains a significant revenue budget gap across the four-year planning period, of £45.5m, which needs to be addressed, and planning of which has now started.
If approved by cabinet, the agreed budget and Medium Term Financial Plan will go to Full Council for approval on Wednesday, February 19.