£28m budget black hole: Cash strapped councils face challenging years ahead

Councils across Lincolnshire face challenging times ahead, as their budgets suffer additional pressures from the energy and cost of living crisis.

Data collected by public services union UNISON suggested Lincolnshire district and county councils face budget gaps of more than £16 million for 23/24 and over £28 million by 24/25.

However, councils have said many of the figures are already out of date, having come from the medium-term financial plan prior to the 22/23 budget being agreed.

Lincolnshire County Council figures showed that the authority expected to use £9 million of reserves in 23/24 and £16 million in 24/25.

However,  a spokesperson said that since February, the financial situation had changed at the national level, and the government has now scheduled an autumn statement for this month.

Bosses expect to receive further details on future funding allocations towards the end of the year.

Cllr Martin Hill, leader of Lincolnshire County Council, said: “The government has not yet confirmed how much funding we are to receive in future years – typically there is an announcement towards the end of the year.

“We will then be going through our usual budget setting process in early 2023, when we will address any funding gaps.”

East Lindsey District Council showed figures of £1.6 million and £2.5 million in the UNISON figures.

Craig Leyland, ELDC leader, said the figures had “totally changed” since February due to government decisions to delay such things as the business rate reset.

“While I am confident our finances are well managed, there will be many pressures on the operation of the council,” he said.

He explained the challenges were exacerbated by inflation, the impact of the Ukrainian war on issues such as pay, fuel costs, and the knock-on effect on other costs not directly managed by the council.

He noted Internal Drainage Boards would be “severely impacted” and said solutions were being sought to secure funding.

“We are also concerned with how we can support residents who are enduring the pressures of the cost of living crisis,” he said.

“Overlaying all this is our desire to support the skills agenda and the creation of more employment through growth. There are undoubtedly challenges ahead.”

UNISON’s figures were already said to be out of date but showed the millions councils will have to find in the coming years.

The City of Lincoln Council is listed by UNISON as having to find an extra £898,000 next year, however, leaders said their latest estimates put cost pressures at around £2million in 23/24 rising to £2.4million in 24/25.

Jaclyn Gibson, Chief Financial Officer at City of Lincoln Council, said: “Unfortunately, it isn’t as straight forward as providing a figure for the level of savings we need to make as we, like most councils, are currently in the process of preparing our budgets and medium term financial strategies for 2023/24.”

She said the latest estimates were not savings targets, as they do not include any changes in central government funding.

“The level of savings required will also depend on what other mitigations we put in place, or decisions we take in terms of using reserves to resource these pressures in the short term,” she said.

“No firm decisions have been taken as to what the level of savings will be; we will only determine this when we present the draft budget in January 2023.”

A spokesperson for South Kesteven District Council said the authority’s forecast for 23/24 was being prepared, but would “take into consideration additional pressures brought about by utility and fuel price increases”.

Councillor Owen Bierley, Leader of West Lindsey District Council, said his authority was waiting for the results of the Provisional Government Settlement in December 2022 to confirm funding arrangements for future years.

“We expect the budget setting to be a very challenging process for 2023-24 and years beyond,” he added.

UNISON’s figures estimated that councils across the East Midlands as a whole will need to find more than £181 million in the next financial year, rising to £360 million.

UNISON East Midlands head of local government Rachel Hodson said: “Cash-strapped councils are having to resort to ever more desperate measures after years of austerity just to keep services going.

“Now the government looks set to make their predicament infinitely worse with emergency cuts to spending following the mini-budget fiasco.

“UNISON East Midlands have written to all the region’s Conservative MPs to ask them to sort the crisis in local government funding and give councils the cash they need to save services.”

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