Spiralling inflation places significant pressure on city council budget
A report setting out the extent to which inflationary and other pressures are estimated to impact on the finances of Norwich City Council over the next four years has been published.
How we intend to continue to meet the rising costs and demand for services will be discussed at a meeting of cabinet on Wednesday 6 July.
The medium-term financial strategy (MTFS) update report also outlines the strategies we’re adopting to ensure we continue with our track record of prudent financial management, which includes a focus on actively managing our assets and developing ways to improve and streamline services.
Whilst some areas have bounced back from the pandemic better than originally anticipated such as our income through parking and commercial rents, the updated medium-term financial strategy shows an increase in the amount required to balance the budget over the four-year period 2023 – 2027 from just under £10m to almost £11m.
In the short term the estimated size of the challenge next year (£6.2m) is also beyond our general reserves capacity of £4.8m – a position that has deteriorated since February when the MTFS was last presented to cabinet and unprecedented for the council, which has always been able to use reserves to smooth the worst impact of any budget gap over a number of years.
The council continues to look for new and improved ways to deliver services in the most cost-effective way, such as the proposed extension to its major waste disposal contract already externally assessed as being at the top end of productivity and providing value for money to residents – which is also on the cabinet agenda for July.
Leader of the council, Councillor Alan Waters “We are doing all we can to maintain a budget to support our city, but there is no doubt that the severity of inflationary pressures are having a significant impact on the council’s finances.
“The cost-of-living crisis means that people are relying more than ever on the council’s services and we’re working incredibly hard to protect them, but local authorities are facing inflation pressures not seen for decades.
“The impact on the city council’s budget next year from inflation is forecast to be £4.2m. This leaves us facing some very difficult choices unless the government provides more funding to help councils ride out the storm.”
Cabinet member for resources, Councillor Paul Kendrick, said: “We know the economic pressures individuals, organisations and businesses are facing means that it has never been more vital that we are able to deliver efficient services that meet local need.
“To ensure our finances are stable, we must continue to adapt, realign, and reimagine services, but doing this while facing rising costs and uncertain government funding means this challenge is greater than ever before. So although we are continually looking at ways to transform our services, we certainly face tough decisions ahead.”
Budget next steps
- Officers continuing to develop and refine savings options, growth requirements and capital proposals – ongoing
- Residents and businesses will be consulted over the council’s budget proposals and the level of any council tax rises proposed as usual in late autumn with Cabinet considering those responses in the round alongside proposals being developed for changes to service provision.
- The budget will be subject to the usual budget scrutiny arrangements with the Cabinet and Council meetings to agree the final position in February 2023.