Essex County Council now facing £120m budget gap
The local authority is facing having to make further cuts to balance the books
Essex County Council’s budget gap it projected at the at the beginning of the year to rise to almost £120m by 2025 is set to worsen.
Figures in January indicated the difference between the authority’s expected expenditure and income to be £24m in 2023/24, which will then increase to £59m the year after and then to £119m in 2025/26.
The council forecasts a funding gap in future years even after delivering 100 per cent of all existing planned savings.
However this mid range scenario was predicted to change given the context of the Fair Funding Review for local government from 2023/24.
The Government has now indicted there will be no fair funding review during this spending review period, placing further pressure on town hall budgets.
Since 2016, the Fair Funding Review technical working group has been considering how to better fund local government – and with many council budgets at breaking point, with income streams severely depleted following Covid-19, increasing service demands and significant, and growing, inflationary pressures – it had been hoped the review would improve incomes.
The leaders of two nearby county councils called for urgent financial help from the government.
In mid November given its own serious financial situation Kent County Council warned of fears of tax rises and frontline service cuts to offset a projected £50.6m gap by June 2023. Hampshire County Council is expecting a £200m budget black hole in the next four years.
Councillor Chris Whitbread, Essex County Council’s cabinet member for finance, resources and corporate affairs, indicated to a corporate policy and scrutiny committee on November 24 that the £119m gap is likely to worsen.
He said: “We have to be realistic what councils up and down the country are facing at the moment. And if you look at what Kent and Hampshire said we all understand the challenges we face.
“But I have to say, as I always do, that we are going through a very robust budget process to address those challenges.”
Stephanie Mitchener, director of finance at Essex County Council, said: “The fair funding review has not commenced. All the insights we have from Government are that it is unlikely to progress, certainly for the next funding round. So we do not expect any direct implications as a result of that.
“Of course all the other elements we discussed last time when we brought the budget process to this committee are all the factors we are trying to work though currently in terms at arriving at a revised position for next year’s and future years’ budget gaps.”