Chesterfield Borough Council is accused of being a ‘zombie council’ as it approves budget ahead of Local Government Reorganisation plans

The Labour-controlled council approved financial plans at a meeting on February 25, at Chesterfield Town Hall, for a balanced budget with a 2.99per cent increase in its share of residents’ overall council tax bills for the forthcoming 2026-27 financial year after highlighting continued pressures.

Councillors voted in favour of approving the plans as part of its 2026-2027 Budget and its Medium-Term Financial Plan for 2026-27 to 2028-29 along with other financial matters.

But opposition Liberal Democrat Group Leader, Cllr Paul Holmes, argued plans for unitary councils in England to take over from boroughs and districts will see an increase in council tax while the council’s capital expenditure is expected to reduce and he described the authority as a ‘zombie council’ with LGR hanging over every council like the ‘Sword of Damocles’.

He said: “LGR is happening and it’s having a massive effect on the council two years before the council reaches its end.

“I think it’s a sad state of affairs but it’s something any rational council has to plan for because it simply won’t exist in two years.”

Cllr Holmes claimed there has been no research to show the Government’s plans to introduce LGR in two-tier areas with district, borough and county councils will save money and he believes new unitary councils will result in an increase in council tax and that Chesterfield residents will be paying more than anyone in Derbyshire.

He added: “This is the last real budget that the council is ever going to pass because the one next year is at the start of the full-on zombified council.”

As part of the council’s budget strategy, it has had to consider the Government’s LGR plans expected to be introduced by April, 2028, with the possible merging of district, borough, city and county councils to form one or two single unitary councils in Derbyshire.

Another concern is the estimated LGR transition costs at around £2m, according to the council, which means the MTFP presumes these costs will be funded from capital receipts flexibility but if this is not possible a review of earmarked reserves is expected to identify whether reserves can be released.

Council Leader, Cllr Tricia Gilby, said she is great supporter of unitary authorities with ‘greater opportunities for efficiences’ and she argued that the two-tier system with county and borough councils ‘does not serve the people of Chesterfield at all’.

Deputy Leader, Cllr Amanda Serjeant, Cabinet Member for Finance and Asset Management, said: “This council remains an ambitious council for the people of Chesterfield and it’s an improving council that will take its responsibilities seriously. It will take this council into a strong position under LGR.”

The Government is planning for new LGR areas to include elected mayors with more powers on planning and transport and it has argued that the changes will create savings, create greater efficiency, improve public services, and support economic growth.

But critics are concerned about the loss of councils and councillors with Derbyshire to be reduced from 447 councillors to 162 if the LGR plans go ahead alongside concerns for the future of jobs.

Critics also fear a loss of local control with a risk of greater Government influence, the removal of local decision-making, tax increases, powers being taken away from communities and doubts about whether the plans will create savings.

Chesterfield Borough Councillors voted on the council’s latest budget plans after considering a report that stressed the need for a 2.99per cent council tax increase in the authority’s precept for 2026-27 to maintain and protect services, to sustain the MTFP and to address continuing financial challenges.

The council has conceded in its budget and MTFP report that maximum future Band D council tax increases will be expected to address a projected £2.842m gap for 2027-28.

Council Leader, Cllr Tricia Gilby, told the meeting: “2025-26 has proved to be another challenging financial year for the council. Our revenue budgets have continued to come under pressure from inflationary costs in reaction to pay and contracts leading to increased costs of service delivery.”

However, Cllr Gilby added that she was pleased to report the council has remained resolute in its commitment to delivering high quality services and it has prepared a budget for 2026-27 that enables the council to deliver against its ambitions.

The council stressed the key aims of its budget strategy are to ensure sufficient funding, deliverable cost reductions, and additional income are identified to set a balanced budget for 2026-27 and over the medium-term.

Chesterfield Borough Council’s previous MTFP was approved in February, 2025, and projected a challenging outlook from 2026-27 onwards with financial gaps of £2.5m in 2026-27 rising to £3.5m by 2027-28.

Its approved 2.99per cent council tax increase means the authority’s council tax for Band D properties will increase by £5.88 from £196.51 to £202.39 for the 2026-27 financial year which will mean an extra £5.88 per annum or just over 11 pence per week for a Band D property.

For a Band A property, which includes more than half the properties in the borough, the increase will be equivalent to an extra £3.92 per annum or just under 8 pence per week.

The council stated that a 2.99per cent increase together with the increase in tax base would contribute an additional £200,000 over and above that which had been assumed in the council’s original MTFP assumptions for 2026-27 which will be invested in services.

It also agreed that the authority’s Local Council Tax Support Scheme remains unchanged helping those with financial difficulties and pensioners and it will continue to work to ensure those with difficulties receive support.

Derbyshire residents’ overall council tax bills include an accumulation of numerous precepts determined by the county council and relevant local authorities including district or borough councils, parish or town councils and the police and fire authorities as part of their annual budget arrangements.

Cllr Gilby added: “This council’s financial strategy remains to be to maintain financial stability of the Medium-Term Financial Plan.

“It’s intention therefore is a rational act to raise council tax for the coming financial year to make sure we have the resources in our vision to meet our priorities – making Chesterfield a thriving borough, improving the quality of life for local people and build a more resilient council now and for the future.”

The Government’s new multi-year financial funding settlement, instead of the previous one-year arrangement, has been welcomed to help longer medium-term planning but it is based on assumptions regarding the tax base for business rates and that all authorities will increase council tax by the maximum allowed without holding a referendum.

Chesterfield Borough Council’s budget report stated that the previously approved 2024-25 and 2025-26 budgets introduced several savings and efficiencies that continue into 2026-27 and 2027-28 in the refreshed MTFP.

The council’s MTFP assumes the eventual delivery of £903,000 of new savings approved as part of the 2025-26 budget setting process with increased income from charging for garden waste, a new and more efficient leisure centre operating model, a new cultural services model with savings from the Winding Wheel theatre’s operations, alongside reduced vacant post rates among most services.

Its expected outturn position for the 2025-26 financial year which ends on April 5 presents a surplus of £774,000 based on activity to the end of December and projected trends in income and expenditure.

But the council noted Government funding towards the increased cost of employer’s national insurance contributions was £200,000 in 2025-26 which was significantly lower than the actual cost to the council.

In addition, the impact of the 2025-26 Local Government pay award agreed at 3.2per cent upon 2026-27 meant the final pay award was higher than originally assumed in the previous MTFP and as a consequence £300,000 has been added into 2026-27 to compensate.

A final estimate of business rates income included in the MTFP, after the tariff payment to the Government, stands at £4.3m for 2026-27 and EMCCA has allocated £150,000 of revenue funding to support the work of the Staveley and Chesterfield East Midlands Investment Zone sites.

The council has expressed concerns about inflation which it fears will continue to drive upward pressure across a range of expenditure budgets.

It is also concerned about energy costs and a further £200,000 has been set aside as a contractual inflation contingency.

Service pressures have also been identified with unavoidable additional costs, according to the council, with extra costs related to new burdens imposed on the authority including a weekly food waste collection, the new Stephenson Memorial Hall, and a reduction from the Pavements Shopping Centre and commercial property income, and maintaining the Careline service.

But after the Cabinet previously approved a fees and charges schedule in January, 2026, for 2026-27 for parks and open spaces, garden waste, Queens Park Sports Centre, and car parks, these updated prices and charges are expected to generate £220,000 of additional annual income.

To help balance the overall 2026-27 budget an additional one-off £273,000 use of the Budget Risk Reserve has been assumed but the council has stated that continuing to use reserves is not sustainable so the 2027-28 budget process will need to start earlier with further expected budget savings.

The council says that to address a projected £2.842m gap for 2027-28 it is likely ongoing savings and efficiencies will be needed after considering the MTFP with no expected further Government funding beyond its multi-year settlement, budgeted income expectations, limited further investment, and that maximum future Band D council tax increases will be expected as the council makes the most of its available resources.

Chesterfield Borough Council says it is subject to significant market uncertainties that make the estimation of costs and income difficult and it has to consider that inflation remains high, and the labour market is difficult with many areas of the council finding staff recruitment and retention difficult with a need to take on interim staff to maintain service delivery.

It added that adverse economic conditions are leading to an increase in service demands and as a result of these challenges the estimates contained within the budgets are inevitably less robust than the council would prefer.

To recognise the financial risks the council approved estimates for its financial reserves including maintaining a revenue General Working Balance at £1.5m.

Cllr Gilby also confirmed that the council holds £8.7m in reserves which is allocated for expenditures or specific risks.

The Budget Risk Reserve has been classified as an earmarked reserve and its projected balance is £1.757m.

The council also approved the transfer of £145,000 to the council’s Service Improvement Reserve from the Budget Risk Reserve to ensure £500,000 resources are available for potential investment in ICT improvements.

Concerning the General Fund revenue budget, the council stated that its Chief Financial Officer considers the budget estimates for the financial year 2026-27 to be robust and the financial reserves, up to March 31, 2027, to be adequate.

But the council’s budget report noted the position in future financial years will depend on the council’s success in delivering planned budget savings and controlling costs, and its ability to apply surpluses to maintain and bolster the levels of both earmarked and unearmarked reserves.

It added that given the financial challenges, and the size and scale of future budget gaps, the Chief Financial Officer advises that the 2027-28 budget process will require an early focus to allow maximum time for the development and delivery of future budget savings.

The Cabinet previously considered social housing rent and service charge levels in January for 2026-27 and agreed a rent increase of 4.8per cent based on the latest Government policy and various service charge increases which have been built into the 2026-27 budget forecast.

Councillors also approved other financial plans at its latest meeting for 2026-27 including the council’s Treasury Management Strategy, the Housing Revenue Account Budget, its Housing Capital Programme and its General Fund Capital Programme.