Proposed savings to support the most vulnerable to be discussed by councillors

Members of our Cabinet will hear the authority's updated Medium Term Financial Plan (MTFP) forecasts, which have been revised against a background of ongoing significant financial uncertainty for local government.

Finance settlements and service demand

The uncertainty continues to be driven by short-term local government finance settlements alongside significant budget pressures in social care brought about by National Living Wage increases and enduring demographic pressures in children's social care. It also includes the ongoing inflationary impact of pay awards and supplies and service costs, such as in waste and transport, which outstrip the authority's local tax raising capacity.

Cllr Richard Bell, deputy leader and Cabinet member for finance, said: "Despite the increases in grant funding we have been provided with in the current year and the grant we expect to receive next year, our forecasts show that this will fall short of what we need to set a balanced budget next year.

"We simply cannot raise sufficient income locally to meet the unavoidable cost increases we face each year so unless government funding meets the shortfall, difficult choices are always going to be required under the current system of funding. We have and will continue to call for the current system, including council tax, to be reformed.

"Future financial settlements for local government beyond 2024/25 and how available funding will be shared between local authorities under the current system is still unclear. As a result, some tough decisions will continue to need to be made to safeguard support for the most vulnerable, in the face of these unavoidable ongoing cost pressures.

"Such uncertainty continues to make financial planning extremely challenging and requires us to be flexible and adaptable in our approach. However, the strong financial controls we have in place and our track record in terms of managing our budgets and medium term financial planning arrangements, will ensure that we will be able to react effectively to any outcome.

"We remain committed to strong financial governance and getting value for money for public money while ensuring we have a sustainable balanced budget."

Savings and support proposals

Cabinet will hear about the initial measures the council intends to consult upon to begin to meet the £12.135 million required to balance the 2024/25 budget while protecting frontline services and vulnerable residents wherever possible. This is being considered with the assumption that the council agrees to maximise its council tax raising powers when it sets its budget next year.

The council will also consult on proposals to utilise additional council tax raising powers on absent owners of empty and second homes. This would result in a 100 per cent premium being applied to homes that have been empty for more than twelve months, and a 100 per cent premium applied to second homes.

The new savings proposals outlined in the report will be consulted upon across the coming months.

Despite the significant financial pressures faced by the council, it continues to offer a range of support to residents and businesses, recognising the significant impact the cost of living crisis is having right across the county.

Cabinet will be asked to recommend to full council in the autumn that the Local Council Tax Reduction Scheme should remain unchanged for 2024/25, offering eligible residents a discount of up to 100 per cent on their council tax charge.

Protecting vulnerable residents

Cllr Amanda Hopgood, leader of the council, said: "Despite the ongoing pressures and inflationary costs we face in the current climate, we remain committed to supporting our residents in this period of uncertainty. We are the only local authority in the North East to have retained entitlement levels for council tax support within the Local Council Tax Reduction Scheme in line with that available under the Council Tax Benefit system that was abolished in 2013.

"This policy has protected vulnerable residents at a time when welfare reform changes and, more recently, the pressure on household incomes from cost of living increases have had a significant adverse impact.

"We are also committed to our ambition to create better opportunities for our residents. This includes delivering better facilities for education and leisure, putting together a vibrant cultural programme to attract visitors and investment, opportunities for job creation, as well as enhancing the county's transport and digital connectivity."