North East Derbyshire Council aims to hike council tax and rent to deal with 'uncertainty'
The authority has been setting out its budget plans for the coming year
North East Derbyshire District Council is set to increase its part of residents’ council tax bills by 2.99per cent and it aims to increase council tenants’ rent by 2.7per cent as part of plans to manage its budget for the 2025-26 financial year and beyond.
The Labour-controlled council’s Deputy Leader Pat Kerry, who is also the portfolio holder for Strategic Leadership and Finance, told a council meeting on January 27 the council is making good progress in addressing savings to meet a £664,000 shortfall for the 2024-25 financial year’s budget and a budget deficit has been identified for the 2025-26 financial year of £505,000.
Cllr Kerry claims high levels of uncertainty around national plans and reforms mean that beyond the pending 2025-26 financial year’s budget the Medium Term Financial Plan up to 2028-29 will remain uncertain and will likely be subject to change.
He told the meeting: “In 2025-26 the budget gap before any council tax increase is £505,000. This report recommends a council tax increase of 2.99per cent. If approved, this will reduce the gap to £295,000. Based on our track record we are confident that this saving will be achieved during the year.”
New regulations mean the council Housing Revenue Account is also under greater pressure after the introduction of a new inspection scheme in April and costs of delivery are growing but Cllr Kerry says it is continuing to work with housing manager Rykneld Homes to provide high quality housing services.
Cllr Kerry added: “Having taken into account the budget pressures, the impact on tenants and the Rent Standard which allows rent increases up to 2.7per cent next year, the annual rent increase recommended this year is 2.7per cent.”
NE Derbyshire District Council was awarded a C2 grade in May for its housing, with C1 being the highest and C4 being the lowest, and it says it is working with its housing manager Rykneld Homes to deliver improvements to receive a C1 grade in the next 18 months.
Cllr Kerry said that the HRA budget will be £84m over the four years of the MTFP which will include the cost of inspections over the next two years to obtain accurate stock condition data as required by the Building and Safety Consumer Standard regulations.
The council revealed it will receive a new £203,000 Recovery Grant in 2025 to help more deprived areas and even though the two-year Funding Guarantee Grant continues after it was introduced last year the council will not be receiving an allocation in 2025-26 so the council expects to lose £389,000 of funding.
However, Cllr Kerry said that the New Homes Bonus will continue for another year with a similar grant to previous years of £743,000, and apart from the Government’s overall settlement the council has received an income from the Department for the Environment, Food and Rural Affairs for the Extended Producer Repackaging Scheme.
But DEFRA has not confirmed if these Extended Producer Repackaging Scheme payments will continue beyond 2025.
The council also stated that one of the main impacts on its MTFP is pay with an £890,000 layout in 2025 including £497,000 for the national insurance increases to be paid by employers although a £145,000 Government contribution is expected.
Cllr Kerry also said the Town Deal regeneration projects will continue into 2025 when they are scheduled to be completed.
But from 2027-28 budget pressures are expected to increase, according to Cllr Kerry, due to the uncertainty surrounding national funding and reforms which makes forecasting for future plans very difficult but its level of reserves means it should be able to meet any short-term uncertainty if necessary.
The local authority, like many nationwide, is also facing great uncertainty over the Government’s Local Government Reorganisation plans to possibly introduce unitary councils to replace two-tier systems like Derbyshire’s with county and district councils.
Cllr Kerry said: “The long-awaited funding reforms are now promised for the 2026-27 budget cycle but little detail is available yet.
“In addition, there are the waste reforms, the planning reforms, devolution and Local Government Reorganisation.
“This means that other than the 2025-26 budget, the remainder of the plan contains high levels of uncertainty and is subject to significant change as reforms progress.”
Council Leader Nigel Barker also said the budget is probably one of the hardest the council has had to set due to the uncertainties but despite these unknown elements he added that the council remains on a ‘sound financial footing’.
He also pointed out that demand for council housing remains high in the district after he blamed the previous Conservative Government but he argued that a 2.7per rent increase is still well below increases in the private sector.
Opposition Conservative councillors Neil Baker and Alex Dale proposed and seconded an amendment to reduce the council tax precept increase to 1.99per cent but this was defeated by a majority vote.
Cllr Neil Baker had argued councils should be encouraged not to go above the two per cent inflation target with council tax increases and Cllr Dale said he did not feel local rate payers should be punished for the Labour Government’s ‘incompetence’.
But the council approved by a majority vote the ongoing budget for 2024-25 and the budget for 2025-26 for the General Fund, the Housing Revenue Account and the Capital Programme as part of the council’s Medium Term Financial Plan for 2024-25 to 2028-29.
And as part of the budget, it also approved the council’s part of the council tax increase of effectively £6.11 to be levied in respect of a notional Band D property at 2.99per cent, and that the council increases its rent levels for 2025-26 by 2.7per cent with both taking effect from April 1, 2025.
The council also approved a multi-million pound management fee payout for the undertaking of housing services of £12.8m and a management fee of £1.1m to go to Rykneld Homes for 2025-26.