Council tax in Northumberland may need to rise to help local authority make savings of up to £98 million

The UK’s ongoing economic crisis means Northumberland County Council needs to save between £57m and £98m between now and 2027.
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And the local authority might be given the go-ahead to increase council tax bills by more than what is currently allowed to help plug the gap, it has been revealed.

Details of next year’s budget and the ‘Medium Term Financial Plan 2023-2027’ are due to be discussed by the council’s cabinet on Thursday, and have already been approved by senior officers and Richard Wearmouth, portfolio holder for corporate services.

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The document states: ‘The financial outlook for the council continues to be extremely challenging. The national finances are in a highly uncertain position due to the aftermath of Covid-19, the impact of the UK exit from the European Union, the war in Ukraine, significant inflation, volatile financial markets and the cost-of-living crisis.’

Northumberland  County Council's County Hall headquarters in Morpeth.Northumberland  County Council's County Hall headquarters in Morpeth.
Northumberland County Council's County Hall headquarters in Morpeth.

It also lays bare the impact on local authorities, stating that when the 2022/23 budget was agreed, the average rate for borrowing was 1.33 per cent. However, on October 24 the average rate for borrowing using the same terms was 4.47 per cent.

This has been reflected in the updated Medium Term Financial Plan modelling – with the required total savings increasing to £57million in what it calls the ‘best case scenario’, £64.5million in the ‘mid-case scenario’ and £98million in the ‘worst case scenario’.

As for council tax, the report states: ‘The government’s Comprehensive Spending Review in October 2021 advised that the council tax referendum limit would be set at two per cent for the three years 2022-23 to 2024-25. It also advised that councils could increase the precept in relation to adult social care at a rate of one per cent annum over those three years.

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‘However, as a result of the recent financial crisis and the increased costs being experienced, it is possible that the referendum limit will be increased.’

Referring to the council’s capital projects, which often require a significant of money, it states: “Some capital projects may need to be deferred or reduced in scope in order to reduce costs and it may also be the case that there are some projects which are no longer affordable, and will only be able to proceed if additional external funding can be secured.”