This article in the Local Government Chronicle by Jessica Hill dated 14 June 2022 doesn’t make for easy reading for although it talks about inflation pressures as it applies to County Council’s (so links directly to those living in near neighbouring Staffordshire) what it says equally applies to Metropolitan Borough Council’s like Walsall MBC.

Council budgets for 2022/23 were set back in February and, although there will be some inbuilt flexibility for the unexpected, it is doubtful that there will be sufficient headroom in the budget to cope with the knock – on effects of the current spiralling inflation.

It will be interesting to see if Council’s consult on any in year cuts to services or job losses they need to make to stop budgets going into the red.

Read on to view the article:

Inflation puts ‘extraordinary’ £729m squeeze on county budgets14 JUNE 2022
BY JESSICA HILL

County and county unitaries now face an extra £729m of inflationary costs, which has prompted warnings that a winter of “difficult decisions” lies ahead.

Costs from inflation have risen from £789m in March, when these councils set their budgets, to £1.5bn this month. This leaves them with £729m of additional unfunded costs according to research by the County Councils Network (CCN) and the Society of County Treasurers.

Within the £729m, adult social care services are expected to be hit with £90m of additional in-year costs. This includes higher fees to care providers to offset their rising costs of running care homes.

Children’s social care faces £31m of additional costs, with budgeted inflation in direct payments for foster care rising 67% from £9m to £15m.

The soaring cost of construction materials means the costs of delivering capital projects has gone up almost fourfold from £102m to £397m, including an additional £163m for building new roads and pothole filling. Building new schools is now £149m more expensive than had been budgeted for in March.CCN now warns these councils could have to introduce unplanned reductions to services as well as cancel or delay construction projects. This could include new roads, amenities and infrastructure upgrades to schools, as well as pothole filling in order to balance their budgets.

Furthermore staff pay rises are expected to add £90m to revenue budgets since March. Initially councils had estimated that there would be a 2.4% pay increase this year. But, in line with speculation that a 4% pay deal is likely to be struck for those councils following the national pay award scheme, this estimate has risen to 3.7%.

The unions are currently pushing for an 11% increase in line with RPI inflation.

Meanwhile rising fuel prices mean bus, taxi and minibus providers are charging councils more for school transport services, almost trebling inflationary pressures in those budgets from £28 to £77m in three months.

The survey, completed by a representative sample of 20 county and county unitary councils with the costs aggregated to the 40 councils represented by the Society for County Treasurers, adds weight to calls from the sector for the chancellor to provide emergency support for councils later this year, as well as reopening the three year Spending Review settlement announced last October for councils for the next financial year to take inflationary rises into account.CCN’s finance spokesperson Carl Les (Con) said: “Global price increases and spiralling inflation are having a major impact on these day-to-day services and construction projects, with our analysis showing that county authorities are facing extraordinary additional costs at a time when budgets were already under strain.

“Councils have a legal obligation to balance their budgets and have very little scope for meeting these pressures without cutting services, cancelling or delaying major infrastructure projects, or proposing even higher council tax rises next year. With inflation likely to rise even further remain high for the foreseeable future, councils face a winter of difficult decisions unless the government provides extra funding to offset these substantial extra costs.”

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