An East London council is desperately trying to balance the books as it braces for a £23 million budget gap for the next financial year (2024/25). Barking and Dagenham Council says the £23.3 million budget deficit is down to high inflation, increased interest rates and more demand or a change in needs for existing service users.
Council officers said 2023/24 budgets have already been under 'considerable pressure' and said if the council didn't draw on its reserves for this year, it could have found itself in £26.7 million debt. However using its reserves for 2023/24 could have consequences for the next year, council officers have warned. The council has already projected an overspend of £11.6 million for 2023/24 and if this continues it will also need to be funded from reserves.
In a cabinet report that will be discussed at a meeting next week (December 19), council officers said: "Using reserves in this way is only a temporary measure as reserves are a one-off source of funding. Without identifying plans to address this shortfall in 2023/24, this has added additional pressures onto 2024/25. Reserve draw-downs have also supported the council’s finances last financial year with the result that the council’s earmarked reserves have reduced significantly."
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They added that the council isn't planning its financial strategy further than three years ahead due to 'significant level of uncertainty post 2024/25' as the country gears up for General Election which must take place by January 2025. They went on to say: "Looking at the wider context, Barking and Dagenham is likely to be facing further inflationary pressures, expectations of rising demand for services and/or changes in complexity of need, particularly for social and housing provision."
The council has been instructed to follow a list of financial measures that could be instrumental for having a balanced budget in the future. Measures include developing a 'robust reserves strategy' and an action plan and said the council should continue scrutinising its job vacancies and agency costs.
The council has not yet revealed what ways it will be making savings and if cuts will be made to services, but plans are currently being worked on and will be presented to the overview and scrutiny committee on January 24 next year. Barking and Dagenham's cabinet members will discuss the budget strategies for 2024/25 and 2026/27 at a meeting next Tuesday.
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