County Durham residents could face 5% council tax rise

Plans due to be discussed by cabinet members next week could see bills increase by 4.99 per cent to help reduce a significant shortfall in council budgets.

Councillors previously heard the authority needed to make savings of more than £52 million over the next four years, with £37 million of this needing to be achieved in 2023/24.

Now, it says it can cut that by £10 million if council tax is increased and other budgets are revised.

A council tax rise of nearly five per cent will raise £5.1 million between 2023-2024 and by £2.6 million between 2025-2027, reducing the shortfall by £15.4 million over the whole period.

The proposed tax increase would see band A-C households pay between an extra £1.12 and £1.50 per week.

Around 54,000 households on low incomes who qualify for support through the Local Council Tax Reduction Scheme, many of which pay no council tax, would be protected from any increase. A final decision will be made later this year.

The government recently increased the current council tax referendum limit from 1.99 per cent to 2.99 per cent and has enabled local authorities to increase council tax by a further two per cent for an adult social care precept.

Durham County Council says its shortfall is due to the current “unprecedented” strain on budgets and increases in inflation and interest rates, as well as increased demand for social services and adult social care.

Alongside the council tax rise, the authority says government funding, taxbase growth, and updated base budget pressures will reduce the shortfall to £41 million, with £25 million falling into 2023/24. The further £13 million deficit will be paid using council reserves.

Durham County Council consulted residents on its budget in October and November 2022, which included seeking feedback on savings options.

Cllr Richard Bell with council leader, Amanda Hopgood (Image: Sarah Caldecott)

Read next: 

• Voter ID under fire amid worries County Durham residents could be excluded
• Extension to hospital's A&E approved despite concerns over baby memorial garden
• How County Durham could benefit from £500m boost to improve cycle routes

Paul Darby, Durham County Council’s corporate director of resources, said: “The government has reset the referendum limit for council tax increases from next year and provided additional powers in terms of the adult social care precept next year – with the expectation that all authorities implement increases to help us meet the inflationary pressures we are facing and generate the funding needed to help protect essential services.

“Increases in council tax are always difficult decisions to make, but we need to ensure we manage public finances carefully and balance the risks of not doing so, which would significantly worsen our financial position.

"We will continue to operate our council tax reduction scheme, which offers discounts of up to 100 per cent for thousands of eligible residents, along with other forms of financial support.                                                  

“Additional grant funding and council tax raising powers, paired with the efficiencies and savings we are proposing in the budget, will result in an improved financial outlook for the council in the short term.

"The deficit will reduce to around £13 million next year, and we will need to use reserves to plug the gap. However, like many local authorities, significant savings still need to be implemented for us to be able to set a sustainable balanced budget for 2023/24 and beyond.”

Planning for the 2023/24 budget continues, with the final report to be presented to Cabinet and the council in February.