Council sets out plans to modernise services and address financial pressures

Councillors will receive an update on work to help secure the long-term financial future of Durham County Council to ensure it can balance its budget in 2027/28 and beyond when they meet next week.

The council is forecasting a budget deficit of £83.662 million over the next four years, with savings of £23.278 million required in 2027/28 alone before any new savings or council tax increases are considered.

Next Wednesday (16 September), the local authority’s Cabinet will discuss the budget forecasts for next financial year (2027/28), along with the development of a Medium Term Financial Plan (MTFP) for the period up to 2030/31. This will set out how the costs of the services on which County Durham communities rely will rise over the next four years based on assumptions around inflation and other unavoidable demand pressures.

Statutory social care, for both adults and children, along with home to school transport, and energy and waste management costs continue to present the largest budget challenges for the council.

The report sets out a range of new savings proposals, totalling £21.5 million, that have been developed to help meet the financial challenge the council faces and will form part of its far-reaching transformation programme. It is the first time the council has introduced a single integrated programme to align financial planning, customer experience, increasing use of digital technologies and redesigning and improving the way services are delivered.

Councillors will be asked to approve an initial public consultation to gather residents’ views on the budget forecasts, the proposed savings and options for council tax increases, alongside the work already underway to improve efficiency through the transformation programme.

Running from Monday 21 September to Sunday 15 November, the consultation will also highlight the extremely challenging financial position faced by Durham and many other local authorities across the country. All feedback would be reported to Cabinet in January 2027.

However, even if all the proposed savings are delivered, a significant budget deficit of £62.143 million will remain across the MTFP period. Closing this gap will require additional government funding, further savings, council tax increases or a combination of these measures.

Cabinet will hear that it is not prudent or sustainable to use reserves to balance the budget as this does not address the underlying financial position, and that the deficit the council faces is more than it holds in its MTFP support reserves in any event. The report highlights how local authorities that have taken this approach have found themselves in financial distress and have had to apply for Exceptional Financial Support from the Government. No additional funding is provided by the Government under this regime. Instead, these councils are allowed to borrow more, resulting in further debt costs in the long-term, and are forced to raise council tax by more than five per cent and make cuts to recover their position.

Cllr Darren Grimes, Deputy Leader and Cabinet member for finance, said: “As a council, our top priority is to deliver high-quality services for County Durham communities, while ensuring the best possible value for money for council tax payers.

“Our transformation programme is helping us to become the modern, confident and financially sustainable council we strive to be. It has already identified more than £20 million of savings, while also driving improvements in the way we operate, how we use technology and how we can enhance the way we serve our communities.

“Unfortunately, this alone is not enough to meet the pressures we are facing. The so-called Fair Funding Review, and the introduction of three-year funding settlements, last year have provided a greater degree of certainty for local authorities in the short-term. However, the funding remains insufficient to meet our unavoidable cost pressures. I will once again be writing to ministers to point out the inequalities in the system, which fails to take account of the pressures councils like ours are facing from inflation and matters entirely out of our control.

“It is inevitable that we will have to make some difficult choices in the months ahead, both in terms of the range and types of services we can afford to deliver and on council tax, with the Government’s expectation councils will increase by 4.99 per cent hard wired into its funding allocations.

“That’s why it’s so important as many people as possible take part in our consultation. We want to know what matters most to you before any decisions are made.”

As part of the consultation, residents will also be asked for their views on options to increase council tax, from no increase at all up to 4.99 per cent. This is the maximum increase allowed and is the amount the Government assumes councils will implement each year when it allocates local authority funding.

If given the go ahead by Cabinet, the consultation would be launched on the council’s online engagement platform Let’s Talk County Durham on Monday 21 September. This can be accessed at www.letstalkcountydurham.co.uk. Paper copies would also be available at council libraries and customer access points.Project: Help shape the Council Plan 2027-2031 | Durham County Council

Cabinet will meet at Salvus House in Aykley Heads at 10am on Wednesday 16 September. The meeting will also be streamed online on the Durham County Council YouTube channel.