The region’s only scheme to provide a 100 per cent discount on council tax payments to vulnerable households could be extended for another year.
Members of Durham County Council’s Cabinet will be asked to approve plans to continue the Local Council Tax Reduction Scheme into 2021/22 when they discuss the authority’s Medium-Term Financial Plan (MTFP) next week.
The report, which sets out the council’s long-term funding outlook and cost pressures, reveals that significant on-going financial uncertainty is making it extremely difficult for the authority to plan ahead, even if council tax increases mirror the maximum allowed without a referendum.
The council estimates that it may need to make a further £43.7m in savings over the next four years.
Having come to power in May, the new joint administration running the council is currently assessing its priorities.
However, unavoidable budget pressures in areas such as social care and waste disposal, alongside general inflationary pressures and uncertainty over the outcome timing of the Comprehensive Spending Review and the Fair Funding Review mean that planning is currently proving difficult.
The authority is, therefore, working hard to ensure it is in the best possible position to deal with potential pressures and that its plans remain flexible. A further update report is scheduled for October’s Cabinet.
Cllr Amanda Hopgood, leader of Durham County Council, said: “Local government is operating in a period of significant financial uncertainty and this is making planning extremely difficult. We really need some certainty from Government over future funding allocations.
“As a new joint administration we are reviewing the priorities for the council over the next four years as we await the outcome of the spending review. The level of uncertainty we face is not conducive to effective long-term decision making.
“It is likely that difficult decisions will need to be made if the financial forecasts contained in our latest projections are correct.
“Savings plans in the future will become more complex, requiring significant planning and consultation, but we are determined to ensure we engage our communities, partners and wider stakeholders in whatever plans we bring forward.”
The MTFP includes a proposal to continue the council’s Local Council Tax Reduction Scheme, which for the past eight years has offered eligible residents a discount of up to 100 per cent on their council tax charge.
The council is the only authority in the north east, and one of just a handful nationally, to have maintained the scheme in line with the old council tax benefit system despite funding being reduced. More than 57,000 residents in the country currently benefit from this support, including 36,000 working age claimants and 21,000 pensioners.
Should Cabinet approve the recommendations set out in the report the proposals would need to be endorsed by Full Council later in the year, and the scheme would be reviewed in a year’s time in advance of the budget setting for 2023/24.
Cllr Hopgood added: “The current policy of providing discounts of up to 100 per cent on council tax payments has helped to ease the burden on vulnerable households at a time when welfare reform changes and the pandemic have had a significant adverse impact, but this does come at a cost.
“The current financial climate is putting pressure on many people. so it is important that we continue to do all we can to support people when they need help.
“In terms of budgets going forward, the new joint administration is determined to keep a strong grip on the council’s finances, deliver value for money investments and have meaningful engagement and consultation on our priorities and on any spending and savings plans we develop.”
Cllr Richard Bell, Deputy Leader of Durham County Council and Cabinet member for Finance, said: “I welcome the updated forecasts, which give us a platform on which to base our service and financial planning. The sooner we know the outcome of the Comprehensive Spending Review and Fair Funding review impacts on our council, the better, as that will provide us with the certainty we need.
“I do however recognise the potential scale of the task facing us in terms of balancing the books across the coming years if the forecasts officers have prepared come to fruition.
“Difficult choices will have to be made, but we will leave no stone unturned in seeking to get the best possible value for money and protecting the public purse.”