Making the Council's budget work for Derby

Published: 14 June 2023

In the first of a series of updates the new Leader of Derby City Council, Councillor Baggy Shanker, outlines his administration’s plans for dealing with some of the most pressing issues affecting the city:

“One of the items coming to my first Cabinet as Leader this afternoon is the Council’s Final Accounts for the last financial year. While on paper, the figures on the balance sheet may match up, we know that this has come at a huge cost to the residents of Derby.

“Our first task is to go through the Council’s budget, known as the Medium-Term Financial Plan, and see how we are going to make it work for our city.

“Yes, the Council wasn’t immune from the rising energy costs and inflation that everyone has had to deal with in their household budgets over the past few years. These pressures were unanticipated, along with an increase in the cost of looking after children in our care, particularly those needing the most support.

“One of the things that’s instilled in us from an early age is to have savings put by for when times get tough, but we’re facing a situation where the Council’s reserves, our own savings, are seriously depleted because of the extra money we had to find last year.

“Usuable reserves are the Council’s money for a rainy day, but in my view the previous administration has relied on them too much. Alongside doing our best for the people of Derby, we have to look at how we can start building our reserves back up, and work towards managing our budget without depending on them.

“Sadly, we have seen several local authorities issue a Section 114 notice over the last few years, where a Council effectively says it can’t balance its books for the next year. This has largely been down to those authorities taking on unsustainable levels of debt.  

“Derby is not in this position. It does not have a high level of debt that it cannot afford to repay. However, the prospects for local authority funding remain uncertain, demand for our services remains high, and we continue to feel the impact of rising costs of fuel, energy and additional costs passed on by third party providers and suppliers. We also expect our wage bill to be higher. These additional cost pressures mean the risk to the Council’s financial position is greater than it was during my previous time in Cabinet, from 2012 to 2018, where we were also facing some very difficult decisions.

“It’s not a situation that has happened overnight. Cuts to Government spending on public services since austerity mean Derby has lost more than £750m in funding over the years. The reality is we don’t have the resilience when faced with those unexpected shocks to the economy. The Council has made a staggering £226m of savings since 2010.

“Added to that, the Government’s current funding model depends too much on Councils being able to raise their own income through Council Tax. This doesn’t work in a city like Derby, where most of our housing falls within Council Tax Bands A-C, which means what we can generate does not keep pace with inflation, or increasing demand for services. Our core spending power (that is the amount of money we have available to us through local taxation and Government grants) is the lowest in our region.

“People are only just beginning to feel the impact of spending cuts. Reducing services doesn’t mean the demand for them disappears and there’s always the question of where that demand will resurface. We’re committed to working with our partners in the city but there’s only so much you can ask other public services and organisations, facing their own budget challenges, to take on board.

“The whole system of funding for public services needs reform, and we will lobby hard for this. In the meantime, where does this leave the people of Derby?

“We’re facing challenging times, but we’ve pledged to deliver the best for the people of our city. We’ll put people at the heart of everything we do, consider how we can reduce the impact of the economic situation on people’s lives, and ensure the climate is central in our decision making.

“We will work with what we’ve got, however best we can, to deliver the best for Derby, and I look forward to sharing our progress.”

Democracy