Council braced for £35million inflation to add to budget gap

Youth service funding has decreased significantly over the last decade

Council chiefs in Essex have warned about pressures on budgets - Credit: Getty Images/iStockphoto

Council chiefs are facing an “extremely challenging period ahead” as they brace themselves for inflation of £35million to add to the looming £119m budget gap they are expecting.

Earlier this year, Essex County Council (ECC) said it was making a “renewed focus” on finding ways to transform the council as it faces a budget gap of more than £100m within three years.

Figures indicate the difference between expected expenditure and income to be £24m in 2023/24, which will then increase to £59m the year after and then to £119m in 2025/26.

The warning comes after the announcement that council tax for the county council is set to increase by an average of more than £60 a year in 2022/23.

Chris Whitbread, ECC’s cabinet member for finance, resources and corporate affairs, said the effect of the pandemic has and continues to make financial forecasting “uncertain and volatile” – a provisional outturn position for 2021/2022 shows a 1.7% underspend against its total budget.

That £15.6m will be moved to earmarked reserves to mitigate future risks.

He said: “However, this underspend must be viewed within the context of the current economic situation, which is unprecedented.

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“With inflation nearly at 10% nationally, the short, medium and long-term outlook remains incredibly challenging – not just in Essex but across the country.

“As a result, I am proactively moving forward with plans to use last year’s underspend to create a new General Risk Reserve, which will allow us to mitigate risk of further inflation in the future.

“The money generated by increasing council tax for 2022/2023 is not enough to cover increasing costs alone.

“I am confident that our strong track record of financial management will continue to serve us well. We remain as committed as ever to delivering the strategic priorities we set out in ‘Everyone’s Essex’ and achieving our vision of a county where everyone can thrive.”

Councillor Kevin Bentley, leader of ECC, said that an autumn statement will clarify the council’s financial position in October, the challenges ahead and how it intends to tackle them.

He added: “And of course, I’m very clear that no council or Government has money – it has the people’s money. It’s how we then spend and invest, that [is] then how they make their decisions at the ballot box.”