'Perfect storm' as cost of living crisis heaps pressure on Telford council finances

Financial forecasts set only months ago at the council are being ripped up as inflation hits 9.9 per cent and energy bills rocket.

In a report to the cabinet next week council finance experts speak of never having seen circumstances like those they have seen in the last few months.

Inflation is already sucking £2.5million from forecasts, officers say.

They have flagged up a series of 'risks' to the council's budget including a "particularly harsh winter which would impact adversely on the winter gritting and adult social care budgets."

The council has a revenue budget of £134.953 million but is projecting spending £138.214 million, and having to use £3.261 million of rainy day contingencies.

It would be left with just £1.673 million of uncommitted contingency funds to "meet any further pressures which may arise in the remainder of the year".

Councillor Rae Evans, the council's cabinet member for finance, governance and customer services, said: “Councils across the country are facing the perfect storm in the coming months.

"Inflation and the spiralling cost of living means that our costs are increasing at a time when more and more people need our support.

“Sound financial management over many years means that Telford & Wrekin Council are in a strong position to manage these significant challenges.

"We are currently expecting to end the year with a budget surplus of around £1million – but we are not immune to the economic shock being felt across the country and we will continue to monitor and review our position."

Across the border at Shropshire Council, finance chiefs at Shirehall have warned that reserves may have to be used as costs rise. Opposition councillors have warned of possible cuts being made.

Officers at Telford & Wrekin Council say that since the their financial strategy was approved at full council on March 3 the economic climate has "radically changed, with a rapid increase in the rate of inflation, increases in interest rates and increasing demand for many services partly fuelled by the cost of living crisis facing our residents."

They add that various factors "combined with the increase in the national debt resulting from recent Government policy decisions combine to make the financial outlook facing the Council more uncertain than ever before."

But they do say that with still some months to go before the end of the 2022/23 financial year the "eventual outturn could be better or worse as projections are refined."

The council is also holding on to nearly £4million to cover a pay award for staff but says an increase in the offer to workers would "put additional pressure on our overall financial position."

Council number crunchers are also expecting the cost of living crisis to hit the amount of money they get from the council tax. They are collecting more business rates than expected at this stage of the year, the report says.

The cabinet meeting will be held from 10am on Thursday, October 13, at the Telford Room, Addenbrooke House, Ironmasters Way, Telford. It will also be broadcast on the council's YouTube channel.