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Council to set out financial forecast for next year

Published January 11, 2022 4.05pm

Councillors will hear of our latest budget and medium term financial planning forecasts as we gear up to set our budget and council tax for 2022/23 next month.

Our Cabinet is to be updated on the authority's Medium Term Financial Plan (MTFP) for the next four years after details of the Local Government settlement figures were revealed in December.

Despite a challenging financial outlook, Cabinet will consider including a number of investments in the 2022/23 budget, with £4.4 million proposed for children's social care; £12 million for Adult Social Care fee increases; £100,000 recommended towards bin replacement; the continuation of the Free After 2 parking initiative, which would require £600,000 of investment; and Street Scene Efficiency work totalling £130,000 amongst a range of other areas, which includes investment in allotments, local nature reserves and public rights of way.

Comprehensive Spending Review

The Comprehensive Spending Review (CSR), published in October, announced that about £1.5 billion per year is expected to be allocated nationally to local government funding from 2022/23 onwards. The funding is to be used to cover the increase in employers' national insurance rates as part of the health and social care levy, which is expected to cost the council around £2 million each year from 2022.

The amount of funding we will receive next year is higher than was previously forecast. However, it is far from certain whether a significant proportion of it will be available into future years. County Durham is set to remain below the national average in terms of Core Spending Power per dwelling, with significant uncertainties regarding the impact of the Government's planned Fair Funding Review (FFR) on future years finances.

Setting out forecasts 

A proportion of the new core funding has been provided through an increase in the Social Care grant - equating to 42.4 per cent of the additional funding made available. We will receive £8.1 million of the £636 million provided nationally, increasing the Social Care Grant we will receive to £31million in 2022/23.

The majority of the remaining £1.5 billion of funding is to be provided as a new Services Grant. The national sum is £822million, of which the we will receive £8.8 million, although there is no guarantee that this grant will continue in future years.

The Cabinet report will also set out updated forecasts relating to additional inflationary and other unavoidable budget pressures, as well as a range of proposed investments in members' priorities.

The report sets out details of the council tax referendum limits for 2022/23 and notes that the maximum that the Government will allow the council to increase its council tax by next year is 5 per cent. Final decisions on council tax levels will be made by council in February.

Recommendations for budget 

The Local Government Finance Settlement confirmed that there was no additional coronavirus support funding for local government next year. Council income is areas such as leisure, theatres, car parking and parks is very much linked to the outcome of the pandemic and the impact on the 2022/23 budget will need to be considered further. 

Ongoing pressures 

Cllr Richard Bell, Deputy Leader and Cabinet member for finance, said: "We welcome the news of the latest Local Government settlement figure, which is more generous than we were expecting and will enable some new investment in services. Government are expecting local authorities to increase council tax to help to fund local services, and in particular social care, and we will need to carefully consider this against the need to set a balanced budget next year, as well as considering the financial forecasts for future years that are set out in the report.

"However it is disappointing that the settlement was again only for one year. This, coupled with ongoing budget pressures, and the upcoming Fair Funding Review continues to make financial planning difficult, and depending how things turn out, there are significant challenges to come in 2023/24 which may require difficult choices to be made.

"No final decisions have yet been taken and we will have to be flexible in our approach in planning for the next four financial years in order to support residents in County Durham in the best way we can."

Cabinet will meet at 9.30am on Wednesday 19 January. The meeting is available to view on our YouTube channel