Halfway through the financial year, Derby City Council continues to make every effort to balance its budget by the end of the year.
Continued work to mitigate rising demand and costs means that the predicted revenue overspend for the end of March is currently £8.9 million, a reduction on the figure of £9.6 million at the end of Quarter 1.
The Government’s Autumn budget last week promised an additional £1.3 billion for local government and £1 billion for provision for children with Special Educational Needs and Disabilities (SEND) from next April. However much of this will be offset by increases to the National Living Wage.
While the Council won’t know the details of its funding settlement from Government until December, what is clear is that it will not have a significant impact on Derby’s bottom line. The council remains in an extremely challenging financial position.
The Quarter 2 Financial Monitoring report goes to Cabinet on Wednesday 13 November and outlines the work which is being done to keep the overspend figure moving in the right direction, even though demand for costs and services continue to rise beyond forecasts particularly in social care. Rising homelessness and the need for temporary accommodation emerged as a new pressure last year.
There is still much work to be done. The Council’s Medium Term Financial Strategy (MTFS), which will also be considered by Cabinet at the November meeting, shows that the Council will need to close a significant budget gap over the next three years.
Currently that figure is predicted to be £21 million without mitigations, and the Council is working on plans to deliver a balanced budget for next year detailing savings proposals to be made. Council Cabinet will consider those proposals at their meeting in December followed by a period of consultation.
Councillor Kathy Kozlowski, Cabinet Member for Governance and Finance, said:
We’re not in a unique situation. Councils across the country face the same budget pressures for the same reasons, and the root cause is years of underfunding for local government.
We’ve been mitigating this through careful management of vacancies and expenditure, bringing in more income and introducing programmes to transform how we operate as a Council.
So far, due to the careful management of our finances we’ve done better than some other councils, who have had to make a Section 114 declaration or seek Government assistance to avoid taking this step. This would severely limit what we could do for our city, potentially moving decisions away from us and our elected councillors. We want to do everything we can to avoid being in this situation.
None of the figures in these reports come as a surprise and we’re continuing to manage our finances as best as we can under continued pressure on our budgets. We had a glimmer of hope in the Autumn budget, but we will need to take some tough decisions as we work up our budget proposals for next year.
We are inevitably having to look at making reductions to services but we won’t know what this will look like until we present a balanced budget to Cabinet in December, ready to go out to consultation for our citizens to have their say.
The Cabinet meeting can be viewed online on the Council's YouTube channel at 2pm on Wednesday 13 November.