Cash-strapped Derbyshire council outlines budget battle plan before Valentine’s Day showdown

The Conservative led council’s cabinet noted and approved a number of matters at a meeting, on Thursday, February 1, relating to its Revenue Budget Report before the budget plan goes before a Full Council meeting on Valentine’s Day, February 14.

Derbyshire County Council’s cabinet has previously voted in favour of supporting recommended saving proposals in its budget report to address a forecast £39.5m budget shortfall for the 2024-25 financial year and this follows on-going work on a forecast budget overspend of £34.1m for the 2023-24 financial year which is being addressed with other cost-saving measures.

Deputy Council Leader Simon Spencer, who is also the cabinet member for corporate services and the budget, told the meeting: “None of us wish to find ourselves in the position we are in today with the challenges we face today but the fact of the matter is we have to deal with these challenges.”

He added: “We must make savings. We have no choice in order for us to legally set a balanced budget and that is not an easy task and there is an enormous amount of effort gone into this.”

Derbyshire County Council reduced its estimated in-year 2023-24 budget shortfall of £46.4m to £34.1m and has now compiled saving proposals to meet an estimated budget deficit of more than £39m for the 2024-25 financial year which begins on April 1.

The council, like many others nationwide, has suffered enormously from high inflation rates, the cost of living crisis, uncertainties with Government funding, rising costs and rising demands on services, and the impact of costly pay awards.

It has also been critical of what it feels has been Government under-funding after the Autumn Budget did councils little or no favours and the £64bn Government funding settlement for local authorities represented only a 6.5per cent increase instead of a desired ten per cent increase and this left councils increasing council tax rates.

However, a share of £500m from an additional £600m Government handout for English councils will be earmarked for adult and children’s social care which are two areas that have been identified by Derbyshire County Council as being in desperate need of support.

The council’s plans include highly-emotive saving proposals that are likely to affect the elderly, disabled and children, and it has already stopped non-essential spending and implemented a hiring freeze, reduced residents’ capital entitlement limit for adult care from £50,000 to £23,250 and has increased the cost of a school meal by about 41per cent.

Derbyshire County Council has also stressed that redundancies among its workforce cannot be ruled out as it examines retraining, redeployment, voluntary redundancies and leaving empty posts unfilled, and it is also hoping to selling its office headquarters, County Hall, at Matlock, which could become a hotel, offices and homes.

The council’s latest reports state that there is no planned further call on the council’s General Reserve forecast balance of £25m, either to meet 2023-24 revenue budget overspends or for a one-off support for the 2024-25 budget because it is anticipated these will be met using the council’s Earmarked Reserves.

The 2024-25 Revenue Budget plans include one-off support from the use of over £21.2m of Earmarked Reserves after the council has been using its reserves to manage its budget to meet inflationary, demand and pay award cost pressures but as reserve balances drop it accepts this will not be sustainable in the medium term.

The council noted that over £31.8m released from Earmarked Reserves is also expected to be fully required to mitigate the forecast 2023-24 overspend with the balance being funded from an Earmarked Reserve to support the budget and ensure that the General Reserve balance remains at a minimum level.

Cllr Spencer said: “We have spent a significant amount of time trawling through the reserves of the authority over and over again to establish our priorities and where we can relocate our reserves to deal with the financial challenges.”

He added that it is the council’s aim to maintain the General Reserve of approximately £25m because it may face further challenges in the future and it may need a further sum to deal with such a situation.

The council has stated that between 2022 and 2025, it expects to have used around £148m of Earmarked Reserves to support its budget and it accepts that this is not sustainable and that it must transform services to ensure financial sustainability.

The council continues to face significant inflationary cost pressures across all services, combined with continued growth in demand for adults services, children’s social care and education, and pressure in maintaining its highways infrastructure.

If any local authority fails to meet its legal obligation to balance its yearly budgets they may have to issue a Section 114 notice which could effectively see them fall into bankruptcy and give up control to Central Government and potentially lose control over their finances and spending.

Since 2020, seven councils have declared themselves bankrupt including three in 2023 after they all failed to balance their budgets.

Council Leader Barry Lewis said: “There are lots and lots of issues pressing down on authorities and others and we are one of the more sensibly managed ones and we are not in Section 114 territory and we desperately want to avoid going into that territory.

“And it is only because we are a sensibly managed authority that we are just about keeping our heads above water.”

Derbyshire County Council faces a significant financial challenge in 2023-24 and 2024-25, and it stated that the financial sustainability of the council is at real risk if the proposed savings and efficiencies for 2024-25 are not delivered.

The council has also stated that it must ensure a continued focus on the delivery of savings to maintain its financial sustainability which it has considered in setting its council tax rates.

The Government allows councils to increase council tax by up to three per cent but local authorities with social care responsibilities, like the county council, are able to allow a further two per cent increase.

Derbyshire County Council subsequently approved a 4.99per cent increase on its part of the council tax rates for 2024-25 which means about an additional £19.5m in council tax income for 2024-25 and in future years for the authority to support the its vital services.

This will also mean Derbyshire residents with a Band D property will face a £73.75 annual increase from April 1 relating to a total county council precept of £1,551.73.

Cllr Lewis said: “While we try to protect the general public from council tax rises, that is something really important to us, and we have done that for a number of years but unfortunately this year we have had to make the maximum allowed of 4.99per cent.”

Current outlined budget savings proposals in the report have also involved reviewing and redesigning some services with changes likely to affect the elderly, disabled and children.

Other saving proposals include changes to waste disposal, libraries and heritage, and converting the council’s multi-million pound County Hall building, at Matlock, into a hotel, residential space, and a new office site.

Budget savings proposals for 2024-25 include: Redesigning five short stay residential homes and four day centres for people with learning disabilities; Redesigning 16 council elderly residential care homes and ten day care centres; Redesigning council care arrangements within extra care settings for older people; Reviewing the delivery of children’s centres and reviewing the children’s services Early Help service; Changing policy for post-16 home to school transport; And reviewing residential short-break and support services for disabled children.

Other savings proposals include: Restricting or charging for waste disposal of tyres and asbestos and generating income by allowing small businesses to use centres for a fee; Modernising the way the council delivers its library and heritage services; Reviewing the usage and options for Derbyshire County Council’s County Hall offices; And ceasing the production of the Derbyshire Now magazine and reducing the council’s countryside grounds maintenance budget.

During the latest meeting, the cabinet noted the council’s position with its Earmarked and General Reserves, its Budget Consultation Results, its Revenue Budget Report, approved its Capital Programme Approvals and adopted its Treasury Management and Capital Strategy.

It also noted a number of budgetary financial matters within the Revenue Budget Report and agreed to take into account the public consultation before the Full Council meeting on February 14 where the budget plan will be considered by all the councillors from all the respective political parties.