A maximum tax hike would net a council £20 million extra but its schools funding hole could mean the need for a Government bailout within two years.
Suffolk County Council is proposing the maximum tax rise of 4.99 per cent for the coming financial year, consisting of a 2.99 per cent increase in Council Tax and two per cent in its social care precept.
If given final approval in February, this would mean a £1.51 weekly increase for a Band D property and £1.17 for Band B.
Suffolk County Council is proposing a maximum rise in Council Tax and social care precept. Picture: iStock.
In total, coupled with an increase in Suffolk’s tax base, the budget proposals would net the council an additional £20.9 million in funding.
The plans include £18.1 million extra for children’s services and £35.2 million for adult care.
These proposals will be considered by the authority’s scrutiny committee next Tuesday alongside an overview of the council’s finances.
The tax rise would net Suffolk County Council an extra £20.9 million in funding. Picture: Suzanne Day.
On reserves, the report to be presented to councillors forecasts a £180 million useable balance by April, decreasing to £146.5 million by 2026 and £131 million by 2029.
However, looming over the authority’s reserves pot, its overspending on the Dedicated Schools Grant (DSG) is predicted to spiral out of control over the next few years.
The DSG is the money local authorities receive from the Government each year to fund schools.
As it stands, councils can accumulate an overspend of the DSG reserve through what is known as ‘statutory override’ until March 2026 without it affecting their own books, at which point they will have to cover the shortfall through their own reserves.
In Suffolk, the DSG reserve is already being overspent, with the report forecasting a £54.1 million shortfall by April, £165.6 million by 2026 and £358.7 million by 2027.
This means if the statutory override runs out as it is meant to, the council would be out of useable reserves as early as 2026 and would require a Government bailout — by 2029 the council’s reserves could be facing a gap as wide as £227.6 million due to rising costs in school funding.
As many as one in four councils may also need a Government bailout within the next couple of years according to a Local Government Association (LGA) survey published last month.