A North East council has updated its financial assumptions after completing an extensive consultation on savings to help balance its budget next year.
Durham County Council’s Cabinet will be given an update on the authority’s Medium Term Financial Plan (MTFP) for 2026/27 to 2029/30. This has been revised following the government’s Provisional Local Government Finance Settlement (LGFS), published in December, and public and stakeholder feedback on the authority’s budget proposals.
Cabinet will hear that, for the first time in several years, the LGFS has provided a multi-year settlement and an indication of what funding the council will receive over the next three years. This is instead of the usual one-year settlements that have affected the council’s medium term financial planning for over a decade.
Councillors will be told that, while this will make financial planning across the next three years more certain, the authority still faces significant financial challenges. These are driven by inflation and rising demand for statutory services, such as social care and SEND provision, and will outstrip funding the council will receive.
Cabinet will also hear that the government continues to place a reliance on local authorities applying maximum council tax increases of five per cent per year to help balance their budgets. Based on the updated forecasts, the council’s Cabinet will hear that if the authority does not increase its council tax, the forecast budget deficit will be £9.344 million in 2026/27 and £51.792 million across the four-year MTFP planning period.
Without the identified £12.941 million of budget savings next year and £15.79 million across the four years of the MTFP period, the council would have faced a £22.2 million budget deficit next year and a £67.511 million over the four years.
To balance the budget in 2026/27, the council would need to increase council tax by 3.1 per cent. Final decisions on council tax proposals will be made in February as part of the final budget-setting process.
Ahead of finalising the budget, Cabinet will also be asked to consider proposals to align the authority’s council tax reduction policy for long term empty properties and second homes premiums with national guidelines. This would end additional discretionary relief for empty properties and second homes after 12 months.
This recommendation aligns with other local authorities and aims to encourage the use of empty homes and help address the national housing shortage.
Cllr Darren Grimes, Deputy Leader of Durham County Council, said: “We continue to face significant financial challenges, driven by increasing demand for statutory services, inflationary pressures, and changes in national funding policy. These are all factors which are out of our control, however we are working hard to set a balanced budget which protects vital services without putting additional cost onto the taxpayer.
“While the LGFS gives us better clarity in terms of our funding position over the next three years, the government has based its figures on the assumption that councils will raise council tax by the maximum amount available. Once again, we are being asked to put the burden of balancing our budget onto the taxpayer, which we are trying to avoid.
“In order to avoid following the government’s assumption of a maximum council tax increase next year, we have identified savings which have been thoroughly consulted on. We would like to thank every resident who has given feedback on our proposals, which have been factored in as we look to set our final budget.
“Some difficult decisions will need to be made ahead of the approval of the budget in February, however I am confident we have identified proposals which will protect our financial position while ensuring we can continue to deliver effective services for our residents and communities. The proposals will also help us limit council tax increases next year to below inflation, and below that which has been applied previously in County Durham, and certainly below what other councils are likely to apply.”
Cabinet will discuss the council’s budget when it meets on Wednesday 21 January.
The council will then finalise its proposals and present its final budget to Cabinet and full council in February.
