Millions needed to balance Nottinghamshire councils’ books as inflation and energy crisis takes toll on budgets

Council tax increases, the use of reserves and potential cuts or changes to services are on the horizon for some authorities as they try to claw back cash.

The current 10.1 per cent inflation rate is causing budgets to soar above levels previously forecast in February and March, when financial papers were first approved.

Some district and borough authorities need to find gaps exceeding £2 million, while the two larger councils face shortfalls in the tens of millions.

The has caused concerns among some authorities that services will need to be reduced or removed altogether if councils are to even out their balance sheets in 2023/24.

Budgets for gas and electricity bills are increasing by hundreds of thousands of pounds as councils join households in facing the cost of living crisis.

Mansfield Council, for example, says it has seen its electricity bills rise by £332,000 and gas budgets soar by £254,000.

The Labour-run authority faces a £1.9m budget shortfall next year and has identified ‘establishment savings’ of £755,000, plus £142,000 from income generation and £9,000 in ‘cost reduction’ to claw this back.

Council tax rises are also being investigated.

Nottinghamshire Council is also expecting a council tax rise and the need to find savings as it faces a £24m black hole in 2023.

Over the next three years, the Conservative-led authority expects a funding gap of at least £59m – slightly more than 10 per cent of a single-year budget.

Other councils are also facing gaps from April, fuelled by the ongoing cash crisis.

Labour-led Broxtowe Council faces a £2.2m shortfall in 2023/24 and has identified potential measures totalling about £675,000 to bridge the gap.

This includes a growth in business rates, a council tax increase, inflationary rises in fees and charges and “staffing efficiencies”.

The remaining gap, the council says, will be met from reserves.

It has called for the Government to issue a financial settlement reflecting inflationary rises and to outline the threshold councils will be allowed to rise council tax by in 2023/24.

A spokesman said: “The council would welcome a financial settlement that properly reflects the current inflation pressures on pay awards and energy prices to help mitigate the impact of the cost of living crisis.

“The Government could also consider lifting the referendum limits on council tax setting.”

In the previous financial year, district and borough councils could raise bills by either £5 on a Band D property or 1.99 per cent – whichever was higher – without holding a referendum.

The threshold has not been confirmed for next year but could be outlined in Chancellor Jeremy Hunt’s autumn statement on November 17.

However, councils may not find longer-term answers in this statement after Mr Hunt warned of “difficult decisions” and possible public spending cuts to bridge Whitehall gaps.

Councils are currently budgeting on the basis of Government grant support remaining the same in the coming financial year as it was in 2022/23.

At the time, this was put forward as a two-year settlement to give councils medium-term clarity about their financial positions.

But this only reflected a 3.3 per cent inflationary rate and did not take into account the current 40-year high.

Bassetlaw Council, which faces a £1.36m gap spread across its general fund and housing account, has called on Whitehall to address this in next month’s statement.

A spokesman said: “Government should recognise the 3.3 per cent inflation provided in last year’s settlement is not enough.

“It should uplift to current inflation in a multi-year settlement to provide councils with the ability to plan in the medium term.”

The Labour-run authority plans a council tax rise, increased income from business rates, a review of services and “possibly reducing or discontinuing discretionary services” to balance its books.

Neighbouring Tory-led Newark & Sherwood Council, which needs to find £3.6m in 2023/24, says it plans to find cash through “dividends, savings and increased income”.

The budget gap is slightly lower in Ashfield, where the Ashfield Independents-run council says it is facing a £3m shortfall fuelled by the energy and inflation crisis.

Coun Jason Zadrozny, council leader, previously said ‘easy options’ to make quick savings were made during the period of austerity and warned service reductions could be needed without Whitehall’s help.

The wider budgeting issues come as councils also manage rising staff wages amid an expected local government pay award of £1,925 per employee.

The national rise, put forward to help staff cope with the cost of living crisis, is costing Nottinghamshire councils millions in total for extra wage costs.

It has already added a predicted £1m onto the current-year budget at Ashfield Council.

There is a further £875,000 needed in Broxtowe, £700,000 in Newark & Sherwood and £617,000 in Bassetlaw.

All authorities await clarity from the Treasury about what support they will receive from 2023/24.

The Government did not respond to a request for comment about the financial position of Nottinghamshire authorities.

But a Treasury spokesman previously said: “While driving economic growth and tackling high inflation, we will continue to take a responsible and disciplined approach to spending.

“It’s more important than ever that departments work efficiently to manage within existing budgets, focusing on unlocking growth and delivering high-quality public services.”