Three significant issues are likely to cost Lincolnshire County Council millions of pounds extra in the coming years.
Councillors have been told that costs are set to rise in several key areas, but have been assured that the council is prepared for any shocks.
Andrew Crookham, the executive director for resources, told a meeting of the audit committee that planning for the future was increasingly tricky.
“We update the medium-term financial plan on an annual basis, which is becoming a difficult task at the moment. There are three key pressures which are different to previous years,” he told councillors.
“The first issue causing uncertainty is the public sector pay debate. We budgeted for a rise of 2%, as every other council did. However, the discussion around this is now talking about a minimum of 4% next year.
“When you’re talking £1.7m to £2m for every 1% increase, this can compound quite quickly.
“Like householders, we are also seeing an increase in energy costs coming down the line. We will experience this from October when our current deal will run out. This could add anywhere from £3m to £5million.
“We also have to be conscious of the national living wage for outsourced contracts, which is also sizeable.”
He add that the council’s financial volatility reserve is currently more than £40million, which would help it through uncertain periods.
“Over the coming period, we need to have a sustainable budget, whatever that looks like. We are resilient but we can’t rest on our laurels,” he warned.
“We’ve seen that councils which don’t take difficult decisions are the ones that get in trouble.”
The Covid pandemic continued to pressure the council’s latest budget, although some government grants were still available.
Councillor Peter Coupland said: “Given all the inflation, inevitable public pay increases and other events going on around the world, we need to know how resilient we are.
“We always have reserves. With the increasing costs hitting us over the next few years, how are we going to cover that? You can’t keep pulling on reserves all the time or you end up with nothing. This is important to every single resident in Lincolnshire.”
Councillor Susan Rawlings added: “These are challenging times, and are likely to remain so for the foreseeable future.”