Darlington Borough Council is unlikely to file for bankruptcy in the near future despite needing to make multi-million pound savings due to funding pressures, councillors have been told.
Council officials distanced themselves from issuing a Section 114 notice - signalling that it does not have the resources to balance its budget - at a meeting on Thursday where members scrutinised the council’s latest budget plans.
New cutbacks aimed at saving £4m per year and £16m by 2027/28 were revealed in November.
A 4.99% council tax increase is proposed as part of plans to raise much-needed funds. Other savings are expected to be made through increased service charges; reduced costs in management, back office and general housekeeping.
Brett Nielson, assistant director of resources, told the meeting: “We don’t need to issue a section 114 notice at this point in time. Obviously there are significant financial challenges on the local authority, but based on the MTFP presented this morning we have a couple of years to address those.”
The Government announced a funding package for councils in December worth over £64 billion to support local authorities in England to deliver frontline services, however that is unlikely to influence any current financial forecasts.
“The draft settlement we’ve received hasn’t given any additional funding and I don't expect it to change particularly in the final draft,” Mr Nielson added.
“As outlined in the plan, we need to look at our budget over the course of the next year to come up with some solutions for the longer term to balance the budget going forward.
“We have based all the assumptions of the MTFP on the best knowledge we have available at this time. The pressures we have experienced in children’s services is really the only big pressure we’ve got and they have been built into the figures going forward.”
The local authority is also unlikely to make any significant job cuts in the immediate future.
Mr Nielson added: “This MTFP isn’t proposing any significant budget reduction proposals at this stage but we will need to balance the budget in future years and there will be a potential impact on headcount once we know where and how we’re going to balance the budget in future years.”
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However, former council leader cllr Heather Scott said she is unable to back the current budget plans. Members were not made aware of the new funding settlement until this week, the Conservative member said.
She told the meeting: “I think we need more time to look at this in more detail. I cannot agree to the MTFP until we have had the opportunity as a group to discuss this before we can say we agree to it.
The final budget proposals are due to be voted on in February.
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