Knowsley’s Cabinet has tonight received an update on the Council’s medium-term financial forecasts, taking into account the significant rises in prices and wage inflation, increased demand and the Government’s announcements regarding local government funding.
Despite the significant challenges arising from the national economy, the Council remains in a relatively stable financial position. While a deficit budget position is forecast over the coming years, the scale of this deficit is far less severe than the positions faced by many other comparable local authorities. This relatively stable position has been made possible by the Council’s ambitious programme for economic growth, the sound approach to financial management and decision making, and effective long-term decisions relating to Council Tax, all of which factors underpin the Council’s financial strategy.
The Government’s most recent high-level announcement in respect of public sector funding is insufficient to fund the impact of price and wage inflation in 2022/23 and 2023/24 and address increases in demand for services. Based on the latest announcement, revised forecasts for the Council’s budget indicate an underlying deficit of £7.8m in 2023/24, rising to £10m in 2024/25. Measures totalling £5.2m to partially mitigate these forecasts have been identified which means that the Council is facing a potential budget deficit of £2.6m in 2023/24.
The strategy for setting the 2023/24 budget will be based on the limited use of one-off resources to balance the budget along with a commitment that appropriate performance-based permanent savings options will be developed over the coming months for consideration during the summer of 2023/24.
The Government has continued its policy of shifting the burden of local government funding onto local residents by announcing a maximum basic Council Tax increase of 3% alongside an additional 2% Adult Social Care Precept (a total maximum Council Tax increase of 5%). If the Council does not increase Council Tax by this amount, it will be forgoing funding which the Government assumes is available when it makes its grant allocations. This would leave the Council facing significantly greater deficits in future years and would necessitate even greater cuts in future to the essential services upon which residents rely. The Council Tax base will be set in January 2023.
Cllr Jayne Aston, Cabinet Member for Resources, said “We are continually lobbying the Government to provide alternative and sufficient grant funding to avoid excessive increases in residents’ Council Tax bills. The Government has failed to listen to these concerns and has instead continued to shift the burden of funding from the Government to local residents.
“The Government’s policies are placing a greater financial burden on residents at a time of increased financial hardship. The Council is continuing to do all it can to support Knowsley residents. This has included the establishment of a significant offer of support for Knowsley residents to help them to deal with the impact of the cost of living crisis, in particular over the difficult winter period. A £9m programme of support is in place, including support on the key issues of food, fuel, and financial advice. This offer is targeted at the most vulnerable people and is being managed through a Knowsley Better Together Partnership approach.
“We will continue to lobby the Government for fairer funding and ensure that allocations are aligned to need.”