With a projected budget gap of £21 million for 2023-2024, the council leader has warned of the difficult choices that will be made next month in the face of higher inflation and the challenging local government funding settlement from government.
A report going to the council’s Policy & Resources committee on Thursday 19 January has said that millions of pounds of savings needed to be found as well as a proposal to increase council tax by 4.99%.
The council’s 54 councillors, from all political groups and independents, will meet in February to discuss, vote and set the council budget for 2023-24.
Commenting on the budget challenge, Councillor Phélim Mac Cafferty, Leader of the Council, said: “We will do everything possible to protect vital council services, but thirteen years of government cutbacks to our finances mean there are limited funds and limited options left.
"Over that time over £110 million has been wiped off from our annual funding in real terms.
“There is acute pressure on available funding as more people fall into hardship from the cost-of-living crisis, so demand for local services that can help has soared and a sharp increase in need for care for vulnerable adults and children.
“With a projected budget shortfall of £21 million, more cuts and savings are needed to ensure we can balance the budget. The options left locally are difficult and to balance the books, we are facing heartbreakingly tough decisions.
“The government confirmed the local government funding settlement, just before Christmas, offering us little time to plan and leaving us with less than we need.
“Faced with unprecedented demand for our services, the highest inflation in a generation, the impact of a crippling pandemic and the cost-of-living crisis we are having to review all the services the council delivers and find cuts to ‘balance’ our budget, something we are legally required to do.
“It’s deeply upsetting that, like many other councils across the country, this is the financial situation we find ourselves in and that only difficult decisions remain.”
It costs more than £2.3 million to run council services every day. However, with rising inflation and increasing demand, particularly in social services for children and adults, the council is facing more financial pressure.
The impact of inflation on the cost of services for 2023-24 is estimated to be at over £22 million.
The 2023-24 local government financial settlement announced by the UK government at the end of 2022 is £2 million less than expected.
Total additional resources from government grants and Council Tax increases will only provide £18 million next year, not even enough to cover inflation.
On top of inflation the council also expects growth in demand for services and other cost pressures of £17 million. This explains why the council is facing a £21 million funding gap.
About half the budget is restricted by law and must be spent on schools, housing benefits, council housing and public health.
One of the biggest areas of spending is on adult social care for people who are frail, disabled, or have mental health or other conditions.
Council tax provides for only around £1 in every £5 we spend on delivering 700 city services.
The rest comes from fees, charges, rents, retained business rates and government grants.