Chelmsford City Council considers cutting staff as it faces rocketing costs
The local authority is facing a budget deficit of around ÂŁ8m in the next financial year
Chelmsford City Council has warned it may have to make significant cuts - as it deals with rocketing costs and inflation.
The local authority has admitted parts of its workforce may be at risk of redundancy.
It's facing a budget deficit of around ÂŁ8m in the next financial year.
The authority’s cabinet heard on October 18th that its financial position has worsened since a July forecast, largely from prolonged levels of very high inflation.
It's warned its expenditure could exceed its income by ÂŁ2.5m in the current year.
The council's projected deficit for 2023/24 has now risen to ÂŁ7.9m, from an estimate of ÂŁ4.2m in the summer.
The council has said it may have to look at reducing its workforce, which accounts for two thirds of its expenditure.
It's also said fees and charges – which could including parking – may have to rise as it seeks to balance a budget for next year.
Councillor Chris Davidson, cabinet member for fairer Chelmsford, said interest rate rises are making investment projects more expensive.
Cllr Davidson said: The authority’s cabinet heard on October 18 that its financial position has worsened since a July forecast, largely from prolonged levels of very high inflation and has warned its expenditure could exceed its income by £2.5m in the current year.
Its projected deficit for 2023/24 has now risen to ÂŁ7.9m, from an estimate of ÂŁ4.2m in the summer.
The council has said it may have to look at its workforce which accounts for two thirds of its expenditure. Fees and charges – which could including parking – may have to rise as it seeks to balance a budget for next year.
Councillor Chris Davidson, cabinet member for fairer Chelmsford, said interest rate rises are making investment projects more expensive: “Just like residents in Chelmsford, local authorities are going through their own cost of living crisis, squeezed by inflation, rising costs, and high interest rates, unthinkable just a few months ago.
“This time last year, prices were rising by just over three per cent, and we could manage that. But all that has changed now that inflation has risen to more than 10 per cent.
“In July we forecasted a budget gap for 2023/24 of £4.2m and that’s now risen to £7.9m. We also now expect to report an overspend in the current year 2022/23 of around £2.5m.
“That’s due to a higher pay offer than we had budgeted for and shortfalls in our income. I will, of course, be able to present a balanced budget for next year but we will need to make some significant savings and use reserves to manage some of the increased costs we are facing.”
He added the council needs to carry out an urgent review of fees and charges to “identify any opportunities” to increase income in the current year and thereby protect reserves. He also said a review of its workforce will have to be carried out.
Cllr Davidson said: “I think as we’ve just seen officers tend to be under huge pressure given the amount of work that they need to deliver but clearly we need to look at our workforce if we have to make savings.
“Something like two thirds of our budget is spent on our workforce and that’s an inevitable place where we will need to make some savings.
“As regards the office accommodation that is something that the chief executive is looking at.”
It was also revealed it's now costing ÂŁ19,000 a week to put fuel in bin lorries and the cost of running Chelmsford's leisure centres could be ÂŁ36,000 a week higher next year.
Cllr Davidson added: “So it’s no wonder that many local authorities are talking about closing their swimming pools. I’m very much hopeful that we won’t need to discuss that.”
The maximum amount the council could increase its share of council tax by without holding a referendum next year would raise less than ÂŁ7,000 a week.
Cllr Davidson added: “Our share of council tax, which pays for around a quarter of the city council’s services, can only rise by the greater of two per cent or £5 a year, which is far behind where inflation is now.
“Most of our income comes from charges, such as car parking, leisure centres, hiring out our venues and from rents and financial income. These are all being hit by the current economic disruption.
“On top of all that there seems little prospect of the kind of support we saw from government during the Covid lockdowns, and this leaves us with difficult choices ahead. We are no different from residents struggling to pay bills with prices rising much faster than income.”