The local authority says it has made significant savings over the past decade to live within its means, as adult social care pressures continue to create additional demand on council services.
The council’s budgeting shows a deficit of £3.184 million next year and an additional savings requirement of £45.778 million over the next four years. Further savings must be found to ensure the council can balance its budget.
“Whilst the £3.184 million budget deficit next year is an improved position compared to the forecasts set out in the December 2024 report, there remains a significant concern over the budget deficit in 2026/27 of £20.078 million,” a council report added.
Richard Bell, cabinet member for finance, told a cabinet meeting: “The updated budget and medium-term financial plan (MTFP) planning assumptions show the significant challenges we continue to face in balancing the books. There is still a lot of uncertainty beyond 2025/26, particularly over what if any government funding increase we will receive from the revised approach to the funding formulae.
“We must all recognise this may require some difficult decisions to be made and the council may transform the way it delivers its services to meet these financial challenges.”
Such pressures mean the local authority has adopted a flexible approach to its financial planning for the future. The council said additional government funding will stabilise some services but will only provide a short-term fix.
Cllr Bell added: “Without significant increases in government funding, there will undoubtedly be significant impacts on front-line services unless things change. We will continue to fight our cause for a fairer deal to offset the pressures we face due to our low tax-raising capacity.
“We hope to expect a bigger slice from what may be a smaller cake. This uncertainty continues to make medium term financial planning difficult. The council and the whole sector need a whole-term settlement so we can plan effectively.”
The proposed 4.99% council tax rise for County Durham residents is set to be approved by councillors in February. But council leaders insisted the decision is not easy.
“While the overall position has improved this is largely down to the government once again passing the burden of balancing our budget onto local taxpayers,” said Council Leader Amanda Hopgood.
“We simply cannot avoid the difficult decisions that are needed to balance the budget and we cannot succumb to the temptation to just use reserves to push away the problem and avoid the difficult decisions that are needed. It is a significant source of concern, that based on these budget forecasts, the council will be faced with a budget deficit of £23.3 million in 2026/27.”
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Liberal Democrat councillor Mark Wilkes criticised Labour’s Autumn Budget for impacting residents. He said: “The budget felt like we were being handed a fiver from the Chancellor while she nicked a tenner out of our back pocket but on a multi-million pound scale.
“The incompetence of this government is pushing costs up across the board. I implore the government to properly fund local councils as a matter of urgency.”