Ashfield Council risks running out of money as cost of living crisis burdens authority’s budgets

The offices of Ashfield District Council.
By Andrew Topping, Local Democracy Reporter

Ashfield District Council risks running out of money and funding only essential services unless more Government support arrives, the authority’s leader has said.

The council is projecting a £3m funding gap in the next financial year – a situation worsened by £1m as rising inflationary pressures and a projected surge in council wages were confirmed this month.

It has led to Councillor Jason Zadrozny (Ash Ind), the council’s leader, warning the authority is “running out of options” when it comes to clawing back cash.

He says all the “easy options”, where the council can make small adjustments to its budgets, have already been taken in the past.

This, he says, has left the authority with an “impossible challenge” unless Whitehall funding models change.

Speaking in the cabinet meeting on Tuesday (September 27), he revealed the council’s revenue support grant has been slashed from £15m to about £104,000 over the past decade – totalling about £50m in lost income.

But he says the authority has continued to provide the same services, leaving it in a position where it’s struggling to find extra cash without “significantly reducing” its offer to residents.

He said: “We’re one of the only councils still running, for example, a 100 per cent council tax support scheme for residents and these are the things that are going to have to fall in the next year or so.

“We’re trying to protect people as much as we can but there are no more easy options, there’s no meat on the bone left and there’s no financial padding in the council.

“We’re getting very close to having a cost of living emergency here within the council. We’re close to only doing discretionary services like emptying the bins and burying people.

“There’s virtually nothing left at our council that we’re able to choose to do.

“Without our work to bring in millions of pounds in external funding, and without the commercial stuff that brings in extra millions each year, we’d be absolutely screwed.”

Local authorities must set balanced three-year budgets each year to prove they will not fall into financial ruin in the future.

However, this is dependent on how much grant support they are due to receive from the Government each year.

Currently, the authority does not expect to receive guidance on its grant support for 2023/24 until December this year, with the council’s financial boss warning there is likely to be “a lot of uncertainty”.

Peter Hudson, corporate finance manager, said: “Regarding the financial position at the council as a whole, we do have a significant funding gap for next year.

“We have huge challenges going forwards and what we don’t know is whether Government is going to provide any additional funding.

“We’re not likely to find that out until December so there’s likely to be a lot of uncertainty at the moment.”

Their comments came as cabinet members approved a significant uplift to the amount council tenants must pay for their heating charges.

The move doubled weekly charges for all households, with council tax Band A homes paying £11.04 more and Band D homes paying £13.24 more per week.

It was described as a “necessary” move to help the authority in meeting the rising cost of gas and electricity also being felt by millions of households nationwide.

Cllr Zadrozny added: “Given the changes to energy prices because of inflation, even after doubling costs to the heating means we’re still subsidising every single unit by £500 per year.

“The gap in our budget next year because of energy cost prices and petrol is another £1m so this measure still gets us nowhere.

“In all my time as a councillor I’ve never faced anything this scary, the financial situation for councils across the country is going to be terrifying.

“It will be about whether councils can keep people safe in their homes while providing vital services and, in seriousness, I think the answer is no.”

Responding to concerns about council finances, a Treasury spokesperson said: “While driving economic growth and tackling high inflation, we will continue to take a responsible and disciplined approach to spending.

“It’s more important than ever that departments work efficiently to manage within existing budgets, focusing on unlocking growth and delivering high-quality public services.”

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