Durham County Council has warned it must make £12.1million in budget savings – and could increase council tax. 

The local authority is forecasting a budget gap of £56million over the next four years, as it revealed it is currently overspending to fund its Children and Young People’s and Regeneration, Economy and Growth departments.

This financial position was reported to the council’s Cabinet in July, when measures that will save the council £2.2million next year were also agreed.

Now, council officers are considering new proposals to save an additional £3.7million.

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Residents are being asked to help the council identify service areas from which the remaining £6.2million could be saved, and for their views on a council tax increase.

Cllr Richard Bell, deputy leader and portfolio holder for finance, told members that the authority is facing ‘unavoidable pressures’ at a cabinet meeting on Wednesday. He added: “We continue to operate in an environment of significant uncertainty and financial volatility, which is why we must always maintain a strong grip on our budgets. 

“To put it into perspective – we spend 47 per cent of our budget on providing adults’ and children’s social care to 2.5 per cent of the population.

“It is increasingly challenging to balance our budgets with the funding received from the Government and the income we are allowed to raise locally, which is primarily through council tax.

“That makes this another year in which we have some incredibly difficult decisions to make and we have no certainty about local government funding beyond next year, which also makes it very difficult to plan ahead.”

Increasing council tax by one per cent is expected to raise around £2.675million in income. Yet, putting council tax up by less than the maximum permitted would result in the budget deficit increasing and more reductions to services being required to balance the books, the meeting heard. 

Cllr Bell added: “Making decisions between council tax increases and service reductions is never easy. We very much understand the financial challenges many of our residents are facing, which is why we’re also proposing that we continue to protect the most vulnerable by extending our Local Council Tax Reduction Scheme in its existing form.”

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The scheme offers a council tax discount to eligible residents on low incomes whether in work, unemployed or retired and is uncapped. 

“We have written to the Government and to the leadership of all the main political parties asking for a fundamental review of the system of financing councils.,” the Conservative councillor said. 

A seven-week consultation on the budget changes is underway, and closes on October 20. Residents can take part online or by completing a form in-person, available from libraries and Customer Access Points.