Finance chiefs at Durham County Council have confirmed they expect a £15 million overspend in this year’s budget, which means the authority now faces ‘significant challenges’.

The council is planning to ask the Government for more money to help balance the books and will write to new Prime Minister Liz Truss the highlight the financial hardship the public sector is facing.

The crisis has come amid sharp recent rises in inflation, but follows more than a decade of austerity measures, which have seen major cuts to council funding from central Government.

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This year, the council has been severely affected by the impact of Russia’s invasion of Ukraine, particularly around energy and fuel costs, alongside pay and price inflationary impacts on external contracts such as waste disposal services and home-to-school transport.

It has exacerbated unprecedented budget pressures over the last two years due to the coronavirus pandemic and the council said it continues to face lower levels of income from leisure centres.

Councillor Richard Bell, deputy leader and cabinet member for finance, said: “The budget pressures we are facing are beyond our control.

“It is important that Government recognises this and provides us with the resources necessary so we are able to plan effectively.

“We are, therefore, calling on the Government to increase local government funding next year in recognition of the unprecedented and unavoidable pressures we are facing.

“We will also be highlighting the significant financial strain on the council and the wider sector to the new Prime Minister.” 

At a meeting in July, budget concerns were highlighted to the council’s cabinet, in a report which forecast that these pressures were contributing to a need to make £55 million savings over the next four years, with around £22 million of that forecast to fall into 2023/24.

However, the scale of the challenge has further increased since then and it is likely that this sum will be higher than the latest reported forecast.

As a result of the pressures anticipated, cabinet has already agreed to the creation of a Budget Support Reserve of £10 million, which has helped offset the forecast overspend of almost £15 million.

Cllr Bell said: “We face significant challenges in our budget because of rising inflation.

“We are not expecting to receive any additional financial support from Government this financial year which means we will need to rely upon our reserves to finance any overspend in the year.

“This is not a sustainable long-term position.”

The predicted overspend is set to be discussed by councillors next week.

Members will asked to approve a revised capital programme and a range of future budget adjustments.

Cllr Bell said: “There is uncertainty over our financial settlement from Government for this and future years, with the expected consultation on a two-year settlement having been further delayed through the Prime Minister’s resignation and subsequent leadership contest.

“We fully appreciate that residents and businesses are under financial pressure at the minute because of the cost-of-living crisis.

“We remain committed to doing what we can to support everyone and would urge anyone who is facing difficulties to seek help as soon as possible.”

The request for more funding comes under the remit of the Department for Levelling Up, Housing and Communities.

Middlesbrough South and East Cleveland MP Simon Clarke was made Secretary of State for the department by Liz Truss on Tuesday.

The Northern Echo has contacted his office for comment.

Durham County Council will meet to discuss the overspend at 9.30am on Wednesday September 14.

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