Millions needed to balance Nottinghamshire councils’ books as inflation and energy crisis takes toll on budgets

Council tax increases, the use of reserves and potential cuts or changes to services are on the horizon for some authorities as they try to claw back cash.

The current 10.1 per cent inflation rate is causing budgets to soar above levels previously forecast in February and March, when financial papers were first approved.

Some district and borough authorities need to find gaps exceeding £2 million, while the two larger councils face shortfalls in the tens of millions.

The has caused concerns among some authorities that services will need to be reduced or removed altogether if councils are to even out their balance sheets in 2023/24.

Budgets for gas and electricity bills are increasing by hundreds of thousands of pounds as councils join households in facing the cost of living crisis.

Mansfield Council, for example, says it has seen its electricity bills rise by £332,000 and gas budgets soar by £254,000.

The Labour-run authority faces a £1.9m budget shortfall next year and has identified ‘establishment savings’ of £755,000, plus £142,000 from income generation and £9,000 in ‘cost reduction’ to claw this back.

Council tax rises are also being investigated.

Nottinghamshire Council is also expecting a council tax rise and the need to find savings as it faces a £24m black hole in 2023.

Over the next three years, the Conservative-led authority expects a funding gap of at least £59m – slightly more than 10 per cent of a single-year budget.

Other councils are also facing gaps from April, fuelled by the ongoing cash crisis.

Labour-led Broxtowe Council faces a £2.2m shortfall in 2023/24 and has identified potential measures totalling about £675,000 to bridge the gap.

This includes a growth in business rates, a council tax increase, inflationary rises in fees and charges and “staffing efficiencies”.

The remaining gap, the council says, will be met from reserves.

It has called for the Government to issue a financial settlement reflecting inflationary rises and to outline the threshold councils will be allowed to rise council tax by in 2023/24.

A spokesman said: “The council would welcome a financial settlement that properly reflects the current inflation pressures on pay awards and energy prices to help mitigate the impact of the cost of living crisis.

“The Government could also consider lifting the referendum limits on council tax setting.”

In the previous financial year, district and borough councils could raise bills by either £5 on a Band D property or 1.99 per cent – whichever was higher – without holding a referendum.

The threshold has not been confirmed for next year but could be outlined in Chancellor Jeremy Hunt’s autumn statement on November 17.