A council may have to make £55m savings in the next few years to fill a widening hole in its budget.

Estimates of a future gap in Durham County Council's finances have soared, almost doubling from just under £30m to £55m.

The multi-million saving is needed in the next four financial years even if council tax is raised by the maximum of 2.99 percent, a cabinet meeting heard.

However, council leaders have warned of "difficult decisions" ahead and the need for more government money.

They put the "huge challenge" down to "unavoidable cost pressures" like rising inflation, energy, waste and transport costs, national living wage and social care.

Read more: Fear of 'passing the buck' over £30m Durham Council savings

Councillor Richard Bell, deputy council leader and cabinet member for finance, called for "clarity, stability and additional financial support" from the government.

He said: "The council is facing a forecast deficit of nearly £22m next year, 2023-24, and a funding deficit of around £55m over the next four years.

"There is significant financial uncertainty beyond this financial year, particularly in relation to the inflationary and demographic pressures we face and the amount of funding that will be made available.

"Put simply, the council and wider sector need more government grant support.

"The concern we have is that we are ultimately given additional council tax-raising powers to help address these pressures, which will place us in a very difficult position when we come to set the budget next February.

"We cannot keep up with rising costs by increasing council tax alone.

The Northern Echo: Cllr Richard Bell. Picture: Sarah Caldecott.Cllr Richard Bell. Picture: Sarah Caldecott.

"Balancing the budget next year and across the next four years will be a huge challenge based on these forecasts. It's vital, however, that we plan for the medium term.

"Many authorities have fallen foul of not planning sufficiently well ahead, not taking tough decisions early enough, taking too high commercial risks and using reserves to unsustainable levels. We will not countenance such an approach here in Durham."

There is still uncertainty over local government funding. A government "fair funding review" may be delayed until at least 2024 to 2025.

Read more: Plans to build solar farm in Murton in County Durham have been refused

Cllr Bell said proposals for a two-year settlement for government money may be published soon for consultation.

He added: "We are seeking from government clarity, stability and additional financial support.

"None of those seems likely in the short term. We are therefore obliged to plan for the worst and hope that by year end things will improve."

He stressed they were not setting the budget yet, and an updated report would come to cabinet later this year.

Read more: Durham County Council budget hailed by leaders as 'the envy of councils'

Council leader Cllr Amanda Hopgood said: "This position is unprecedented and exacerbated by significant unavoidable cost pressures we're experiencing.

"If there is no further funding made available and these forecasts come to light, then we will surely need to make some very difficult decisions and rely on our reserves.

"Officers and cabinet members are working up plans to help balance the budget and details of any savings to be factored into the budget will be presented in future reports.

The Northern Echo: Cllr Amanda Hopgood. Picture: Northern Echo.Cllr Amanda Hopgood. Picture: Northern Echo.

"It is inevitable that savings will undoubtedly be required. Wherever possible these will seek to limit impacts on frontline service delivery.

"Cllr Bell has and will continue to lobby government directly for the additional financial support we need."

Last October Cllr Bell said there was a £45.7m funding gap over the next four years and warned of "some difficult choices to be made".

Read more: Durham County Council - £46m shortfall means ‘difficult choices’

A savings shortfall of £29.987m over the next four years was forecast in a report to the council's budget-setting meeting in February.

Councillors were warned this could rise significantly at a corporate scrutiny meeting last month - now it is forecast at £54.7m.

The cabinet has also voted to continue its council tax reduction scheme, matching old council tax benefits, for the next year - the only North East council to do so.

Cllr Bell added: "This is an important part of the council doing its bit to support our less well-off residents during this difficult time.

"Clearly this decision does come at a cost in terms of lost council tax revenue, and is something few other councils do across the country."

Cllr Hopgood said: "This is the right thing to do given the hardship faced by so many residents, particularly at this time as we continue our post-Covid recovery and in light of the current squeeze on household incomes."


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