Budget report sets out ‘unprecedented’ financial challenge for council, Councillors commit to minimising the impact on residents and staff

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A photograph of South Gloucestershire Council's Badminton Road office

South Gloucestershire Council’s budget gap is set to reach £29.3 million next year as the serious financial situation affecting all local authorities intensifies. 

Published today (Friday 30 September), a key report says that the council is in new territory and explains that global events, rising inflation – expected to continue to rise despite recent interventions – and continuingly increasing demand for services, mean costs are rising at an unprecedented rate. 

The report describes how the council’s financial position has changed in a very short space of time. Earlier this year, the council was in a robust financial position with a four-year balanced budget through to 2026/27, based on £20 million in savings identified in the previous year.

Since then, a series of cost increases have put the council under growing financial pressure.  For example, surging energy costs will add £2 million and inflation is expected to add another £10-15 million to running costs, with the nationally negotiated pay offer requiring the council to find an extra £6.4 million each year.

Rapidly growing demand on services, including adult social care, means that the cost of delivering existing services is also likely to go up by £8.5 million every year. Additionally, capital costs – for building roads, schools and other one-off projects – have already escalated and may continue to grow if the recent costs for materials, for example, don’t reverse. 

The council is in a relatively good starting position to manage the challenge it now faces, but despite additional savings of £2.9 million identified this year, and £23.6 million of savings already in the pipeline, these unprecedented factors have created a £29.3 million gap in the budget for 2023/24. 

The report, to be discussed by the council’s Cabinet on Monday 10 October, flags that given the fundamental shift in economic environment, the council is having to look for possible service changes or reductions, some of which may result in redundancies at the council.

Proposals for service reductions and income opportunities are being developed and will be presented to Cabinet in December, with a public consultation set to gather the public’s views on the detail of any proposed changes. 

Leader of South Gloucestershire Council, Councillor Toby Savage, said: “We knew earlier in the year that financial pressure was building and our prudent financial management in recent years means that we begin this process from a position of relative strength, but an unprecedented storm of global events leading to the cost of living crisis, alongside rapidly increasing demand on council services, means we now have to look across the board at all service areas.  

“This is something that councils the length and breadth of the country are all doing and, whilst we are in a relatively stronger position than many, this will still include things that affect our everyday lives.

“No one wants to do have to do this and I’m acutely aware this comes at a time when people are increasingly struggling to make ends meet too.  

“Support for people who need it most will be prioritised and we’re continuing to press our MPs and the Government for increased support for local authorities, to reform special educational needs and disability support and to fully fund the cost of care for our residents who need support.  

“Because of the ongoing cost of living crisis, we know that any increase to council tax will be difficult for people and in setting the upcoming budget we will continue to do everything we can to minimise the impact on residents and staff. But the costs we are facing as a council are increasing by significantly greater degree than any increases to council tax being considered, and we are going to have to make some difficult choices.” 

Cabinet member for Corporate Resources, Councillor Ben Burton, added: “Our financial situation is unprecedented and we will need to reduce spending more significantly and more quickly than we have had to do in the past.

“We are a lean council and have a good track record for absorbing demand and inflationary growth by constantly improving the efficiency and value for money of the services we deliver for residents. 

“By the start of the 2023/24 financial year, we will have already delivered £102 million of annual savings by working tirelessly to realign our resources with council plan priorities.   

“However, the current scale of challenge is too large and too urgent for this approach to be maintained and we now need to find ways to cut services or change how they are delivered.   

“We pride ourselves on doing the best we can with the money we have available, and we have a robust process and track record for doing this.  

“We will of course seek to do these in the least disruptive and detrimental way possible to continue supporting those in our communities who need it most.” 

A one per cent rise in Council Tax generates £1.6 million. Councils are allowed to increase rates by 1.99 per cent without holding a referendum and it is assumed that a further 1 per cent adult social care precept will be permissible for 2023/24. 

The budget update is due to be discussed by the council’s cabinet on Monday 10 October (https://council.southglos.gov.uk/ieListDocuments.aspx?CId=134&MId=16022).

More information on the proposals will be shared through the autumn, and residents are being asked to help shape the council’s future plans. This will be through a public consultation period, starting in October, with more information on potential savings added in early December.

The draft budget published today does not pre-empt or assume the outcome of the funding settlement expected from the government later in the year, which could improve the outlook, but after the council has received that updated information, they will publish detailed four-year budget proposals for further public comment. Final budget decisions will be made by the Council in February 2023.