Nottinghamshire County Council faces a challenging financial landscape as it strives to produce a balanced budget for 2024/25.
The Council is navigating through a period marked by increasing demand for services, inflationary pressures, and limited government funding, which pose significant threats to its financial stability.
It faces a total £55m funding gap for the three years until 2026/27.
A Challenging Financial Context
The Budget Update Report for 2024/25, which will be presented to the Overview Committee next week, highlights several key challenges:
- Increasing Costs and Limited Funding: The Council contends with the rising cost of delivering services, driven by inflation and increased demand, particularly in social care. Despite a steady increase in overall Council funding over the past five years, this has been insufficient to keep pace with escalating costs.
- Economic Uncertainty: Global issues, including the ongoing conflict in Ukraine, have exacerbated uncertainties, particularly in relation to energy and food supplies. Consumer Price Inflation (CPI) in the UK stood at 3.9% in November 2023, with forecasts suggesting a gradual decline.
- Demographic Pressures: Demand for Adult Social Care, Children’s Services, and Transport Services continues to grow. For instance, the Council anticipates a significant increase in the costs associated with Looked After Children due to higher numbers and the complexity of cases.
Strategies for Financial Sustainability
The Council is adopting a multi-faceted approach to address these challenges:
- Long-Term Planning: Emphasising prevention and early help to reduce demand for expensive acute services over time. This involves transforming service delivery and fostering community and individual resilience.
- Service Transformation: The Council is undertaking numerous service transformation programs, focusing on ‘prevention’ services to reduce the need for acute and expensive services.
- Efficient Resource Allocation: The Council plans to realign its spending, prioritising key service areas and moving funds to where they are most needed. This includes projects like reducing office estate to direct funding towards core services.
- Medium-Term Financial Strategy (MTFS): This four-year rolling strategy aims to ensure financial resilience and stability, forecasting resources and expenditures to meet the Council’s strategic objectives.
- Budget Consultation: Involving stakeholders in the budget-setting process, the Council has conducted consultations to understand public opinion on service priorities and the potential for Council Tax increases.
Navigating the Funding Shortfall
The Council faces a significant funding shortfall, which it plans to manage through a combination of strategies:
- Utilising Reserves: The Council plans to use earmarked reserves to provide temporary relief and facilitate the transformation required for long-term sustainability.
- Council Tax Adjustments: Considering different levels of Council Tax increases to mitigate the financial challenge. The MTFS includes a proposed 1.99% increase to Council Tax from 2024/25, with an additional 1.00% Adult Social Care Precept in 2024/25.
- Savings and Reforms: The Council is exploring further savings proposals and transformative reforms to bridge the funding gap.
Councillor Richard Jackson (Con) said:
“The financial situation has improved, although we’ve had one or two setbacks. We’ve been working on addressing spending pressures that have emerged for the next year and reducing the funding gap,” he said.
“We are confident now that we will have a balanced budget for the next couple of years.
“We are looking at maintaining services but doing them in a different way. This includes working with community groups, district councils and the third sector, and delivering those services more efficiently.
“Our starting point is to maintain services and make ourselves more efficient. Part of that is moving out of this big, expensive building to a purpose-built one elsewhere.
“It’s a constant challenge to find the balance. Our budget consultation showed that people are open to the idea of council tax increases, which we would prefer to budget cuts.”
Councils across the country are being stretched by inflation and growing demand for services, but Cllr Jackson offered assurances the authority was “a million miles away” from declaring effective bankruptcy, as Nottingham City Council did in November.
“Difficult decisions that we have made locally have put our finances in a really sound position,” he said.
“We have accrued reserves, which we can spend now we are now in exceptional times. It’s not sustainable in the long-term, but it allows us to work through the savings we need to make.”
He said leader Councillor Ben Bradley – also MP for Mansfield – would continue to lobby for increased government funding.