Colchester Borough Council has confirmed stark financial forecasts that suggest it is facing at least £2.9m worth of extra pressure next year, as it wrestles with higher energy bills, contract inflation, and rising staff pay.
The soaring costs are unlikely to be matched by increased funding or income, with the council currently forecasting a major budget deficit of £3.6m for the 2024/25 financial year.
In response, the council said a “root and branch” review of the organisation, strategic priorities and service priorities had started before the latest difficult economic news and that this would continue, adding it was confident a way ahead would be found and escalating bills met by a mixture of revenue-raising, higher fees and charges, and tax and business rates. It would also have to look at increased savings and the use of its reserves, in the region of £2m, over the next two years.
Council Leader David King said: “Like many residents struggling with a sharp rise in the cost of living, the council is facing some very stark financial challenges. We all face high and sustained inflation.
“For us, the increased supplier and in-house costs add significant pressure to the wage bill. This will require us to make some difficult decisions in the coming months. We have already started to look at our organisation, strategic priorities and the many pressures on our staff and budget, in particular inflation-hit capital projects.
“We have also just undergone a peer review. I am confident, like those who undertook the review, that we will find our way through. Soaring costs and volatility of energy prices alone means we have a very steep mountain to climb and we must balance the books, but we are an award-winning council with a plan to meet these challenges whilst continuing to engage with and support our residents and businesses in every way we can.
“To this end, we will involve cross-party colleagues and partners and begin a public discussion with our residents to inform our future priorities. As a council we remain committed, as ever, to supporting our residents and delivering the services they need and deserve. I encourage all residents to engage with the consultation process when it launches next week.”
Cllr Mark Cory, Portfolio Holder for Resources, added: “These are tough times for families and individuals across Colchester, made worse in the last week by the government's mishandled mini budget. The impacts are even greater for a large organisation like the council, which will be hit by increasing borrowing costs, inflationary impacts on energy, fuel, resources, and staff pay
“No government help has yet been offered, so we must face these challenges alone.
“The council has been financially stable and well-run over recent years, so we are well-placed to get through these difficult times – but we must act now and face up to the fact that we can no longer trim services or make efficiencies as we have in the past. We must now look at fundamental transformation. We are embarking on this journey now, with an open mind and in dialogue with residents, businesses and cross-party councillors.”