Drastic measures see Derbyshire council cut crippling £46 million budget black hole - but face further “difficult” decisions
In September, Derbyshire County Council detailed that it was on track to overspend on this year’s budget by £46 million come March 2024 – without enough “rainy day” reserves to plug it.
It announced many of the most drastic measures a local council can legally undertake in order to cut costs, with all non-essential spending frozen, and a comprehensive hiring freeze apart from in some key areas.
Alongside this a review was taken of all agency staff, resulting in job losses, and all projects have been assessed to see which could be paused or deferred to cut costs.
Now the council has detailed that this has all resulted in cutting the black hole by a third, with £33 million more in cutbacks to find – even after taking such significant action.
The council details that all work has been “paused” on the 6km Chesterfield-Staveley Regeneration Route project – the county’s most expensive infrastructure scheme – which increased in price from £130 million to £166 million last December.
The new report also says the council is now looking to rehash its community library project, announced in 2018, which aimed to hand over 20 of its least-used libraries to volunteer-run groups.
Only one library, in Woodville, has been taken on by a voluntary group. So, due to the “limited response”, the council is now, five years later, pivoting to “co-location, relocation, digitisation and self-service”.
Meanwhile, the council has also “paused” and “reduced” all work relating to cutting its carbon footprint, having committed to becoming carbon neutral by 2032 or sooner and to help Derbyshire as a whole get to net-zero emissions by 2050 or sooner.
The new report, while sharing that the black hole is down from £46 million to £33 million, says this has been achieved through using reserves which the council made clear it does not have enough of to plug its shortfall.
Overall this use of reserves has increased by £9 million, with the council now using £33.5 million from its rainy day fund of earmarked reserves – which it had already set aside.
The council does hold a separate pot called the general reserve which it detailed in September was not large enough to cover the gap in costs, especially after having drawn £55 million from it to reach the current year’s budget.
That pot of money stands at £28 million and is “considered to be the minimum level of general reserve for an organisation the size of the council”, indicating that finance officers are looking to avoid using it any further.
This means that if it had not done so the council would have been facing a budget black hole this year of £101 million.
The report also details that the forecasted overspending in children’s services has significantly increased since September from £13.1 million to £17.9 million.
This relates to the continual increase in children requiring council support and the surging costs of that care, particularly school transport spending, placements and a shortage of foster care placements.
The council says vacancy controls it has put in place have already led to slower response times for building repairs and an increased risk of not being able to clear trees and fallen branches from roads and properties – in the wake of recent havoc caused by Storm Babet.
It says budgets for winter road maintenance will be exceeded if this winter is above the “average severity of winter”, meaning temperatures that are colder than experienced in the past five years.
Of the gap closed in the forecasted overspending, £1.5 million comes from within adult social care; £2 million comes from highways and transport; and £3.3 million comes from corporate services and budget.
It also says that while work continues to meet this year’s target, the target for next year’s budget is already starting and “cost pressures and demand for services are expected to remain high”.
Council leader Cllr Barry Lewis said: “We have always been a well-managed, efficient and financially stable council which has balanced our books, maintained a robust level of reserves and been able to support vital, high quality, value-for-money services for our residents across Derbyshire.
“However, the reality is that the financial pressures we are facing, along with other councils and households, are now greater than ever experienced before, with most of these pressures being simply outside our control.
“We took immediate action in September to try to avoid more serious future consequences and due to the hard work of staff across the council steady progress is being made which is to be welcomed.
“However, these huge savings cannot all be found overnight and the structured, carefully planned and measured approach we are taking is the prudent course of action and will ensure longer-term sustainability and protect vital services.
“Although we are still in a challenging position this is not a bankruptcy situation, and we will continue to do all we can in the second part of the financial year to ensure we get back on track and reduce the overspend further.”
Deputy council leader Cllr Simon Spencer said: “Over the past 13 years we have made £300 million of budget savings, and it becomes much harder to find savings from already very lean and efficient services, but we are working hard across the council to tackle the forecast overspend and clear progress is being made.
“This work is running alongside the planning for next year’s budget which is well under way. There is no doubt these challenges will continue well into 2024/25 and we are currently running a consultation where Derbyshire residents can give their views about our services and budget.
“We will continue to do all we can in these challenging times and are continuing to lobby the government for extra funding so that we can continue to run vital services to those who need them most, but we also recognise that even more difficult decisions will need to be made in the months ahead to try to balance the books in future.”