Council proposes a responsible and balanced budget in extremely challenging year

Published: 12 December 2023

Derby City Council is proposing a responsible, balanced budget for the next financial year, as the national financial position for the local government sector continues to remain extremely challenging.  

High inflation, interest rates and prices have continued to make it more expensive for councils to provide services. Meanwhile demand for services continues to grow for councils across the country. In Derby we’re particularly feeling the pressure of supporting the most vulnerable children and older people in the city, as well as rising pressures for homelessness services.  

Several councils, most recently Nottingham City, have had to make a Section 114 declaration, meaning they are unable to set a balanced budget and require Government intervention.  

Derby City Council is not facing that prospect this year, but recognises that without a reform of national funding, this risk remains for future years. Looking ahead to 2024/25 reductions and changes will be required for the Council to deliver services. 

Massive reductions in Government funding since 2010 has left councils less resilient to recent economic shocks and rising demands, with Derby and the wider local government sector being forced to put precious resources into extensive lobbying for funding reform.  

Last month’s Autumn Statement, which usually gives some indication of priorities for local government spending, gave no additional money, which has previously been in the region of £2 million to £4 million.  

In Derby, the Council plans to consult on a balanced budget for 2024/25. This would be achieved through a mixture of proposed reductions to some services, continued transformation of the Council to become more efficient and manage demand, and an increase in Council Tax. The proposals will go to public consultation after the Council’s Cabinet review them on Wednesday 20 December.  

£25 million of additional resources have been invested into services to deal with in-year pressures, of which £10 million has been invested in social care to protect our most vulnerable people.  

The Council is also protecting its support for Derby Museums Trust, particularly following the recent floods, and this year’s Christmas offer will be maintained after cuts of £50,000 by the previous administration were overturned. 

This year’s proposals would see Council Tax increased by 4.99%, with 2% of this ringfenced for social care, which is the assumption used by Government in its funding allocation and was a feature of the previous administration’s Mid-Term Financial Strategy. Any change risks destabilising our financial position further. 

Proposed savings for the year ahead have been achieved without significant cuts in the number of staff, with the majority of reductions from the deletion of a small number of vacant posts. 

However, residents are likely to see a reduction in some services, changes in the way others are delivered, and an increase in fees and charges in some areas.  

£8.3 million of savings have had to be found across all services, including: 

• A review of Adult Social Care packages and rationalisation of Home Care fees 
• Further savings to Home to School Transport, following implementation of a four-year contract with a transport operator 
• A review of fees across parking and engineering services 
• An options appraisal to review the Council’s remaining leisure facilities.  

The proposed budget recommends putting £2.6 million back into General Fund and £1 million into the Budget Risk Reserve to mitigate the use of reserves over the last five years and to address the overspends. 

Meanwhile the Council is continuing to transform its services through its Delivery Board, which was set up this year, and with strict controls on spending. It is also increasing income by leasing office space in the Council House to public sector partners, and by becoming more commercial.  

Derby is also pioneering the use of emerging technology in the local government sector to transform services. Greater and appropriate use of this technology will enable the Council to manage the increasing demand for services, but always with staff members overseeing its use.  

Derby City Council’s true financial position will depend on its funding settlement from the Government, which is expected later this month. 

Councillor Baggy Shanker, Council Leader and Cabinet Member for Strategy, Governance and Finance, said:  

This is not the budget we wanted to propose in our first year leading this administration, however it is a responsible one. We are caught between a rock and a much harder place. Either we make further cuts now to balance our budget, or we face the consequences of issuing a Section 114 notice, which would constrain our ambition for the city considerably. 

Being in this position is unacceptable and the result of having £225 million in funding cut by Government since 2010. The previous administration depleted the Budget Risk Reserve from £36 million to potentially zero. We’re being responsible in managing our in-year overspend and recognise the importance of the Council’s continued financial resilience by replenishing the reserves. 

However, we need to be able to protect our most vulnerable citizens, at a critical time for many, as the cost of living continues to rise. I would urge everyone who lives, works or studies in our city to have their say when this budget goes to consultation next week. 

Despite these challenges, remaining ambitious for Derby is our priority, and is hardwired into our future planning. We are turning the promises of our manifesto into actions - this year’s Christmas offer has been the best it’s been for years - and we’re committed to working with our partners to make our city vibrant and resilient for the future.

Democracy