County Durham residents have been warned “difficult decisions” will be made to ensure the council avoids going bankrupt. 

Cuts to frontline services could be in the firing line in years to come as the local authority continues to balance its budget amid a decline in funding, inflationary pressures and an increased demand in certain services. 

A 4.99 per cent council tax increase is set to be approved by Durham County Council in February, as officers take urgent measures to cut the financial deficit. Councillors have been warned the local authority is facing a £42.183m shortfall over the next four years, with £6.45 million of this falling into 2024/25.  

Councillor Richard Bell, cabinet member for finance, stressed the need to plan for further financial shortfalls and challenges in the future.

He told a cabinet meeting: “We will have to be flexible in our approach in terms of planning for the next four years, so that we can continue to support residents in County Durham. 

“This will require some very difficult decisions being made, and these may well impact on frontline service delivery.

"We have no choice though to grasp this nettle and make tough decisions as the alternative would lead to a Section 114 position - something we simply cannot countenance.”

The Conservative councillor said the council was disappointed to receive no further funding from the government’s provisional financial settlement proposals despite significant lobbying from local authorities.

He argued the £6m increase of the council’s core spending power is misleading due to the high demand for social care services and inflationary costs. 

Cllr Bell added: “The provisional local government finance settlement actually provided a £1.8m reduction in funding, compared to our forecasts, due to some unexpected greater cuts in the services grant.”

Paul Darby, corporate director of resources, told councillors that failing to increase council tax “would not be a strategy I would recommend and would create a significant budget challenge.”

He added that despite the measures, there remains significant financial uncertainty beyond 2025. 

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The council’s reserves have previously been used to balance the budgets but that is not sustainable, the meeting heard. 

Mr Darby added: “Utilising six and a half million pounds of reserves to balance the budget next year is not a sustainable budget strategy and comes on the back of using £10m of reserves in the current year.”

Residents on low incomes will continue to apply for the council’s Council Tax Reduction Scheme.