Concerned councillors worried about a council’s finances have been told it is “nowhere near” going bankrupt.
Members of Durham County Council’s corporate overview and scrutiny committee were reassured that the local authority is in a stable condition despite budget pressures.
It comes after residents were warned “difficult decisions” will be made to ensure the council avoids issuing a Section 114 notice – in effect declaring itself bankrupt.
A 4.99 per cent council tax increase is set to be approved in February, as officers take urgent measures to cut the financial deficit. Cuts to frontline services could also be in the firing line amid a decline in funding, inflationary pressures and an increased demand for certain services.
And Jeff Garfoot, the council’s finance chief, warned further increases to council tax are expected in years to come.
Conservative councillor Patricia Jopling responded: “I am seriously worried about the council tax increase. What is the alternative and what are the ramifications of not raising it? Is it irresponsible for us to ignore the advice?”
Failing to increase council tax would create significant budget challenges, the council was previously told. It is facing a £42.183m shortfall over the next four years, with £6.45 million falling into 2024/25.
Concerns were raised following the government’s announcement in December of the provisional funding settlement all council’s will receive later this year. Councillor Richard Bell, cabinet member for finance, said the council was disappointed to receive no further funding and argued the £6m increase of the council’s core spending power is misleading
Mr Garfoot added: “After the Autumn Statement we were crestfallen, thinking there’s no more money and then we got the settlement which knocked us further down.
“We’re nowhere near going bankrupt. I’m not going to say there won’t be difficult decisions because there will have to be. We need a long-term financial settlement.
“I can guarantee that we need to make £20m savings. You won’t like them but they have to happen, we will be planning for the worst and will continue to balance the budgets.
He warned once well-run councils are now hitting the wall after getting into financial difficulties, but added: “we’re in a much better position but there will be difficult choices.”