EMERGING risks which could further jeopardise Barnsley Council’s financial position have been deemed significant by local authority bosses who warned ‘drastic measures’ may be required in the coming years.
A meeting of the local authority’s audit and governance committee, which will take place on Wednesday, will delve into the current financial predicament faced by the council - just two weeks after its budget was set for 2024/25.
A report warned ‘significant’ risks are evolving that could further squeeze the council’s financial viability, with a £15m projected gap identified.
It said: “While the council has set a balanced budget for 2024/25 this assumes all efficiencies are delivered in full and that the cost pressures identified and provided for within the budget do not worsen.
“The council faces several significant emerging risks that are evolving and not fully measured but could potentially endanger the council’s financial viability in the long-term.
“After 2024/25, there is currently a projected gap of £15m based on forecast assumption around demand and inflationary growth.
“This pressure does not include any changes in cost pressures, funding, or priorities.
“There are plans to address this pressure, however the current proposals are in areas that are harder to implement.
“As a result, the chief executive and director of finance are formulating alternative efficiency proposals over and above the current targets for consideration should these be required.”
A 2.99 per cent hike in basic council tax and an additional two per cent for adult social care were given the seal of approval last month, although an extra £35m on day-to-day running costs has been anticipated for the next financial year.
Barnsley remains in a ‘sound position’ this financial year - but it was warned the way local authorities are financed is ‘not sustainable’.
The report added: “Sustainable funding for the local government sector, especially with the lack of longer-term funding certainty as a result of damaged national public finances, heightens the risk of future public sector spending cuts.
“Furthermore, more and more councils across the country have issued Section 114 notices with Birmingham and only recently Nottingham following suit.
“While Barnsley Council is not at this position, the plans implemented need to be delivered otherwise more drastic measures may be required.
“The council has set a balanced budget for 2024/25 which includes an assessment of future cost pressures and proposals to make efficiencies.
“These will be monitored closely throughout the year and furthermore the 2025/26 and 2026/27 position is constantly under review.
“Last year’s local government settlement at the end of December again only provided a one-year only funding settlement.
“We continue to lobby government via various bodies for longer term certainty together with a sustainable and adequate funding package.
“Whilst the settlement did provide additional funding, this was nowhere near sufficient enough to meet current forecast cost pressures.”
Local authorities’ external debts - which refers to the amount councils owe through either short-term or long-term loans - is capped at just over £1bn through the Local Government Act and Barnsley’s figure topped £836m at the end of the 2022/23 financial year.
“Additional services pressures have put significant demands on the council’s finances,” council leader Sir Steve Houghton said.
“However, we have plans in place to deal with these through increased efficiencies and the use of reserves.
“Unlike other councils that are struggling to meet these demands, Barnsley’s overall financial position remains sound.
“The government will need to recognise the huge pressures which exist and reflect these in improved grant settlements to local authorities.
“This will be needed to make sure the sector overall can continue to meet its statutory obligations.
“Our focus in Barnsley is to deliver excellent services while investing in the borough. We do this because we want the town and its communities to thrive.
“We have a balanced budget for 2024/25 and our financial position is well-managed, but things are difficult.
“We’ve had to make some tough decisions, but we can, for this year, keep delivering the services people need./
“We estimate that we’ll spend £35m more on day-to-day running costs next year.
“We predicted that this would be the case, and we’ve set aside some money to help pay for this extra pressure. /
“While we received some additional government funding, it hasn’t made up for the huge cuts since 2010 and doesn’t cover the cost of the increased demand.”
