Councillors to agree budget for next four years
LEADERS at the region’s largest council will be asked to agree final budget proposals for next year
and the following three years ahead of them being considered by full council.
On Wednesday 12 February, Durham County Council’s Cabinet will be asked to approve the
council’s final budget proposals for 2025/26 and the following three years. Cabinet will hear that the
council continues to face significant financial challenges, with a budget gap of £45.536 million over
the next four years, despite assumed increases in government funding and expected council tax
increases across the same period.
While the council expects to receive £48.825 million in additional government funding and is able
to raise a further £19.498 million through council tax and local business rates, it is facing additional
unavoidable cost and budget pressures of £89.550 million which significantly exceed this extra
revenue funding. The council still has a funding shortfall of £21.227 million in 2025/26, which is
based on a 4.99 per cent rise in council tax.
To respond to this shortfall, the council has identified £18.036 million of further savings which
would reduce the deficit for 2025/26 to £3.191 million – necessitating a use of its reserves to
balance the budget next year.
Included in the additional government grant is an increase in the Social Care Grant of
£11.979 million next year, which is being provided to help meet the increased costs of children and
adult social care. However, Cabinet will be told this will cover only 35 per cent of the £34.486 million
of unavoidable cost pressures the council faces for social care provision.
Cabinet will also hear that the government has also outlined plans to reform the Local
Government funding distribution system, to be implemented from 2026/27, which would see a
greater proportion of funding going to local authorities with higher levels of deprivation and lower
income-raising capacity. The government also committed to providing multi-year settlements from
2026/27. However, the extent to which these reforms will support the council’s financial position
remains uncertain, and the authority is carrying a budget deficit of £23.040 million into 2026/27.
Cllr Richard Bell, Durham County Council’s deputy leader and Cabinet member for finance, said:
“We are committed to strong financial governance and getting value for money and ensuring that
we set a sustainable balanced budget.
“While we welcome additional government grant funding, our financial position remains very
challenging. We face significant cost pressures in terms of the rising costs and demand pressures
associated with social care, waste management and home to school transport and were very
disappointed that the funding we will receive next year to offset the impact of the increases in
Employers’ National Insurance costs will cover only half of the increase in costs we will face as a
result of these changes.
“To balance the budget, we have identified savings which will reduce the shortfall we predicted in
December. The vast majority of these savings proposals will not impact on frontline services, and we
continue to ensure we deliver vital services. However, the medium-term financial outlook remains
very challenging, and we need to look at more transformative ways in which we deliver services.”
Included in the savings proposals presented to Cabinet is an increase in council tax of 4.99 per
cent, which is made up of a 2.99 per cent council tax increase and a two per cent adult social care
precept, in line with government expectations for local authorities to raise council tax to increase
the funding available to meet rising cost pressures of delivering local services.
The council tax increase proposed next year is expected to generate an additional £14.4 million in
2025/26, of which £5.8 million relates to adult social care.
Cabinet will hear there remains a significant revenue budget gap across the four-year planning
period, of £45.536 million, which needs to be addressed, and planning of which has now started.
If approved by Cabinet next week, the agreed budget and Medium Term Financial
Plan will go to Full Council for approval on Wednesday 19 February.
