Nottinghamshire County Council reassures residents £60 million predicted deficit from 2024 to 2027 will not lead bankruptcy, and service cuts are not planned

Despite a predicted £60m deficit over the next three years, a council has offered assurances it is “a million miles away” from bankruptcy.

Nottinghamshire County Council’s latest financial report highlights the challenge the authority is facing, with inflation and increased demand for its services driving up costs.

The council has a projected £60.2m shortfall from 2024 to 2027, and amid one in 10 county councils recorded by the County Council Network to be unsure they could balance their budgets this year, Richard Jackson, cabinet member for finance spoke with the Advertiser to assure Nottinghamshire residents, it would not be among them.

“We are a million miles away from that sort of situation,” Mr Jackson said.

“We’ve got some challenges in the finances, particularly around Adult and Children’s Social Care, but we have a good track record of transforming those services and making changes where necessary but still delivering the services that people rely on.

“We are confident we will get to a good position by the time we set our budget in February.”

He confirmed the council was working through its departments to look at further ways to reduce the deficit, and revealed the process of finding savings has been ongoing since 2009.

While high demand for services is driving up costs, the council offered certainty that it was not aiming to reduce them.

“It takes time. It is a big organisation to turn around,” Mr Jackson added.

“We always focus on internal rather than external, different ways of working, different ways of doing things. It’s all about delivering the services that people rely upon as far as we’re concerned.

“It’s also about discussions which are ongoing with the government about the way we are funded. We are not unusual, county councils all over the country have got similar pressures, especially in adult social care and for younger people.”

It was also highlighted how unpredictable events such as the recent flooding caused by Storm Babet could affect council’s budgets, and how the council had a good track record of lobbying for additional resources.

Mr Jackson also confirmed that the council did not plan to roll out the maximum increase in council tax, and many other struggling councils who were predicting similar financial challenges were already accounting for a maximum council tax increase — and some had “tens of millions of pounds of overspend within the financial year” while Nottinghamshire County Council was within “about a million pounds” of its budget.

“In light of inflation, we have done a good job of keeping within our budget,” he added.

Inflationary pressures are largely contributing to the predicted deficit. Consumer Price Inflation is forecast to decrease from 6.7% to around 5% in quarter four of 2023, and to keep falling in 2024 but not reach the 2% target until early 2025, the council’s report outlines, while in September, the Bank of England’s Monetary Policy Committee maintained the Bank Rate of interest at 5.25%.

Many people know the effect inflation is having on their household finances, and it was said this same principal could be applied to the council’s £600m budget.

The cabinet member added: “You can imagine 5% or 6% inflation has an enormous effect on it.

“It’s about putting that back right across everything we do, really. What we don’t want to do is reduce our services by 5%, we need to make ourselves 5% more efficient.”

While early predictions have been made, the council is still awaiting the Autumn Statement which will outline the funding it will receive from the Government for the next financial year, and also does not yet know what the national living wage will be.

“I think the thing to realise is it’s over three years, and it is a prediction at this stage and it’s an interim prediction because we are just over half way through the year,” Mr Jackson added.

“It’s not uncommon at this point in our annual budget cycle to have a large figure.”

While it is awaiting further information to aid its four-year Medium-Term Financial Strategy, Mr Jackson’s report outlines a number of the council’s measures to tackle the predicted budget deficit.

It said “the authority must focus on finding more cost-effective ways to deliver services and take action to manage levels of demand for the most acute and expensive services” and “aim to protect and enhance key services as far as possible, to help improve the lives of local people, and mitigate the impacts of inflation to protect residents from bearing the brunt of these increased costs”.

It moved a focus on early interventions, supporting people to live independently and within their community, which will reduce demand for the most acute and expensive services.

The report is to be presented to the cabinet on Thursday, November 9, where members will be asked to note the “significant challenges presented by the current financial landscape and the measures being developed to address these” ahead of the 2024 to 2025 budget proposals.

The Annual Budget Report for 2024 to 2025 will be presented to full council for approval for the next financial year on February 22, 2024, following the Local Government Settlement, Tax Base Information and approval of a draft by cabinet.

Residents are also encouraged to be involved with the budget, by sharing their views in the Annual Budget Survey.

The formal consultation gives people an opportunity to have their say on how the budget is spent, based on what residents’ priorities are.

“We’d encourage people to get involved with that and tell us where they see our priorities financially and give us an idea as to what they see as fair.”

The consultation is open until Sunday, November 12.