Durham Council needs to save £52m in the next four years

The council is putting a £52m gap in its finances over the next few years down to rising inflation, energy and fuel costs putting "unprecedented pressure" on budgets.

They say the "exceptionally difficult" situation is made worse by rising interest rates, demand in children's social care and uncertainty over future Government funding.

The council is already facing an estimated £14.6m overspend this year, which will be covered from its reserves.

Last month council leaders called on the Government to provide urgent and immediate help with the "unprecedented and unavoidable pressures".

They have warned of the need to make "some difficult choices" as they could not keep using up reserves.

A report going to the council's cabinet next week says it will need to make "additional savings of more than £52 million" between 2023 and 2027.

More than 70% of the savings - £37m - needs to be made in the 2023-4 financial year, and this could get worse if Government funding is reduced or more pressures arise.

Now, the council has found savings of £17.7m for the next four years, with £11.8 million of these to be made in 2023-24.

It will consult on these proposals in the coming months, while looking at other possible savings before setting next year's budget in February.

Cllr Richard Bell, deputy council leader and Cabinet member for finance, said: "These are unprecedented times, and we are currently facing more uncertainty than we ever have done, which makes our budget planning very challenging.

"When our budget for the current financial year was approved in February, we were concerned about the ongoing impact of the pandemic and uncertainty about future local Government finance settlements.

"While these issues remain of concern, they have been overshadowed by the forecast impact of high inflation, especially in relation to fuel and energy prices, and wage costs, which are already significantly above our original forecasts.

"We are also facing significantly increased demand on our social care budgets, particularly our budget for looked after children.

"The Government recently announced some welcome changes - to scrap the increase in National Insurance and measures to cap energy costs for an initial period of six months, and, while this support is welcome, much more is needed.

Cllr Richard Bell. Picture: Sarah Caldecott.

"I have already written to the new Prime Minister and Chancellor to outline the challenges the council and the wider sector face and to call for additional resources. We will continue to lobby for this with partners regionally and nationally.

"Local authorities continue to be provided with one-year financial settlements, which provide little certainty or security. The fact these settlements are announced at the end of the year also allows us little time to plan and react.

"While we are in a strong financial position as a council, without significant additional government funding we will be placed in a challenging position and will need to make some very difficult decisions.

"We are planning for the worst while doing everything we can to get more support from Government."

The council said budget pressures were likely to be compounded by pay settlements, future national living wage increases, a "fair cost of care" review in adult care services, and more demand, costs and complex needs for looked after children.