Babergh District Council approves budget but ‘difficult decisions’ looming with risk of bankruptcy in two years

A district council could go bankrupt within two years if no ‘difficult’ decisions were taken despite having its budget approved.

On Tuesday, Babergh councillors met to discuss budget proposals for the next financial year. After a lengthy debate, plans were approved with 24 votes for, six against, and one abstention.

The agreed budget included a council tax hike of 2.99 per cent, the maximum allowed, equivalent to £5.46 extra for Band D residents — on top of the £74.61 increase approved by the county council last week.

Cllr John Ward, who is responsible for the budget, said difficult decisions had to be made as a result of national financial pressures, made worse by inadequate Government funding.

He added: “The problems we are facing are national problems caused by the fact that simply there isn’t enough money in the system for local government.

“All councils, whatever their political persuasion, are up against the wall.”

Also discussed and approved on Tuesday were increases in social and affordable rents, of £7.92 and £11.13 per week respectively, as well as an average £72.08 monthly increase for sheltered housing charges — these include service charges, water, and heating.

The council revealed, however, that relief schemes for the most vulnerable, such as the 100 per cent council tax reduction scheme, would continue.

Despite the hikes, however, the council’s deputy s151 officer said in a statement tougher decisions were needed in the next few years.

The statement read: “It is unlikely that the council will be able to set balanced budgets over this planning period if no political and management action to reduce ongoing expenditure and to increase income is identified and implemented.

“This means hard decisions will need to be made. It is my opinion that if these decisions are not made the council will be in S114 position possibly as early as 2025/26.”

A s114 notice is a warning a council issues when it expects its spending to exceed the money it has available, making it effectively bankrupt.

To address this, Cllr Ward guaranteed work on next year’s budget would start as soon as possible.

He added: “We will be starting to look at next year’s budget as soon as we approve this one. There’s a lot that needs to be done and we know that.

“I’m confident that we recognise the situation and we will be able to take the necessary, difficult, decisions to reduce expenditure and increase income.”

In the meantime, to address the current budget, as well as set the stage for the predicted £6.7m gap over the next four years, the council will be repurposing just over £3m of its reserves as well as creating a new £1.4m pot to be drawn on as needed throughout the year.

Savings to the tune of £6.8m will also be achieved by delaying several capital projects, including the Belle Vue refurbishment and improvements to Hadleigh and Kingfisher leisure centres.