Derbyshire council calls on Chancellor for more resources as it battles ‘£40m’ budget deficit

One of Derbyshire County Council’s main objectives as it continues its battle to overcome an estimated budget shortfall of around £40m for the current 2024/25 financial year with saving plans and cutbacks is to ensure the authority’s General Reserve of back-up cash does not fall below a £25m level.

The Conservative-led council announced at a Cabinet meeting on September 18 that a forecast £30.2m of savings are expected to be delivered for the 2024/25 financial year, according to its Quarter 1 budget report, which only falls short by five percent of an original overall savings target of £31.3m.

However, continuing demand and cost pressures mainly in adult and children’s social care services could result in a forecast overspend of just over £20m for 2024/25, according to the council.

This follows support from the use of £17.727m of the council’s Earmarked Reserves, of which £10.977m was originally allowed for, along with an additional £6.750m expected to be used from General and Earmarked Reserves.

Council Leader, Cllr Barry Lewis, told the meeting: “What we are trying to do is maintain the reserves level so we do not fall below the £25m level.”

The council’s budget report for Quarter 1 states that when the 2024/25 budget was approved in February it was noted that the General Reserve cannot fall below £25m.

It adds that the council’s General Reserve was £35.938m at June 30 but the forecast 2024/25 overspend would reduce the reserve to a balance of £15.794m which it stresses is ‘clearly unacceptable’ and the council will need to take corrective action to reduce its forecast expenditure in 2024/25.

However, the report has also stated that If the actual revenue expenditure by March 31, 2025, requires a further call on reserves then those Earmarked Reserves established for budget management will be used to protect the General Reserve.

Cllr Lewis, who acknowledged the use of £6.750m from reserves, told the meeting the council is in a ‘challenging position’ with an extremely challenging budget position which it shares with quite a lot of local authorities across the country.

He added: “It is not a rosy picture at all. Pretty soon we will call upon the Chancellor for additional resources across the country.”

The council report stated the forecast position follows out-turn positions for 2022/23 and 2023/24 which resulted in the council utilising £54.789m and £58.763m of reserves in each financial year respectively, in order to balance the budget and meet inflationary and demand pressures, particularly in respect of social care services.

Derbyshire County Council has repeatedly stated that like many authorities it has been struggling due to reduced Government funding, the financial impact from the Covid-19 pandemic, high inflation rates, rising costs, the cost of living crisis, and a growing demand on services.

Cllr Lewis has also said that the County Council Network has warned that local services could face a ‘breaking point’ with county authorities facing a £2bn funding black hole over the next two years.

However, Cllr Lewis has also stressed that the council continues to be ‘a well-managed, efficient and financially stable council’ and it is ‘progressing well with the savings plan’.

A number of saving proposals, cutbacks and changes to council services have been put out to public consultations and have either been agreed or are awaiting final decisions but many are still in the planning or consultation stage.

Controversial changes to council services have already included agreeing to close ten children’s centres and the authority is currently considering closing up to eleven residential care homes and eight day opportunity services for the elderly as it argues that high demand and cost pressures across social care continue to challenge its finances.

Some key achievements during the first quarter of 2024/25, according to the council report, include the Bus Service Improvement Programme,  the completion of a £120m highways  improvement programme, the on-going success of the one million trees campaign and the prospect of increased funding with the launch of the East Midlands Combined County Authority.

The Cabinet officially noted and agreed the council’s plan and budget position for 2024/25 as of the first quarter up to June 30 and noted its reserves and what will be needed to reduce significant revenue overspend and to ensure the delivery of planned savings.