The region’s only scheme to provide a 100 per cent discount on council tax payments to all financially vulnerable households could be extended for another year – despite unprecedented and significant pressures on the local authority’s budget.
Members of Durham County Council’s Cabinet will be asked to approve plans to continue the Local Council Tax Reduction Scheme into 2022/23 when they discuss the authority’s Medium-Term Financial Plan (MTFP) next week.
The report, which sets out the council’s long-term funding outlook and cost pressures, reveals that the authority continues to operate in a period of unprecedented and significant financial uncertainty, with the situation set to remain extremely challenging for the foreseeable future.
This is due to a combination of unavoidable factors, including significant budget pressures in social care and waste services as well as increased inflation which is impacting on energy and fuel costs. This is further compounded by the legacy of the coronavirus pandemic and continued uncertainty over government funding levels.
The report explains that these issues are making it extremely difficult for the authority to plan ahead. The council currently estimates that, even if it applies increases in its council tax in line with referendum limits, without an increase in government funding it will have a budget shortfall of £55 million over the next four years. This includes a shortfall of £21.9 million in 2023/24.
Cllr Amanda Hopgood, Leader of Durham County Council, said: “Once again, we find ourselves in the position of having to plan and prepare our budgets for the coming year in the face of significant financial pressures and uncertainty about future funding.
“It is important that the government makes early announcements on our funding for the coming years and, as part of this, provides the resources we need. We also desperately need a multi-year financial settlement to help us plan effectively going forward.
“The forecasts have assumed at this stage that the government does not provide additional funding, which is why they paint a bleak picture, but we need to plan for this scenario.
“Having robust plans in place for future years enables us to plan for the worst and better react to the outcome of the 2023/24 local government settlement when it is eventually announced. Fortunately, we are in a strong financial position, stronger than many councils, and I fear for the sector should no additional funding be forthcoming. However, it is inevitable that difficult decisions will have to be made at some stage, particularly as our focus in previous years has been to protect frontline services and it is becoming increasingly difficult to do this.”
Cllr Richard Bell, Deputy Leader of Durham County Council and Cabinet member for Finance, said: “We face a significant challenge in balancing our budgets based on these estimates. There are a wide range of factors that need to be taken into account when considering our financial position. Without additional funding, it is clear that these unavoidable cost pressures will mean that some difficult decisions will need to be made.
“We will continue to work together to ensure that, despite the challenging times ahead, we are able to provide the best value for money for council tax-payers.
“Our discussions will be informed by consultation with residents, which will once again take place through our Area Action Partnerships and other partner arrangements.”
The MTFP includes a proposal to continue the council’s Local Council Tax Reduction Scheme, which for the past nine years has offered eligible residents a discount of up to 100 per cent on their council tax charge.
The council is the only authority in the north east, and one of just a handful nationally, to have maintained the scheme in line with the old council tax benefit system despite funding being reduced. Around 54,800 residents in the county currently benefit from this support, including 34,000 working age claimants and 20,800 pensioners.
Should Cabinet approve the recommendations set out in the report the proposals would need to be endorsed by Full Council later in the year, and the scheme would be reviewed in a year’s time in advance of the budget setting for 2024/25.
Cllr Hopgood added: “We will do all we can to support residents, particularly at the current time when we know everyone is under financial pressure. The increase in the cost of living is having an impact on everyone and it is important that we do all that we can to support residents. The continuation of the current policy of providing discounts of up to 100 per cent on council tax payments will, hopefully, help to ease some of the burden on vulnerable households.”
