A maximum council tax increase for Arun is ‘imperative’ to meet a number of ongoing financial challenges, councillors will hear.
Arun District Council’s funding strategy for the next four years predicts ‘significant budget deficits’ going forward and a maximum council tax increase is being recommended to meet the challenges.
Local councils like Arun will be allowed to raise council tax by £5 or almost 3 per cent next year. The measure was announced in the Chancellor’s Autumn Statement on November 17.
Members of the Policy and Finance Committee will consider the rise on Tuesday (13 December) but any increase would have to be approved by full council in February, alongside the budget.
Increasing council tax by the maximum allowed is unlikely to offset inflationary pressures which alone could cost the council an extra £1.88 million next year.
Arun may have to look to other sources to plug the gap, which could include raising fees and charges, including car parking tariffs, but this would have to be ‘further considered’ in a cost of living crisis.
In addition, Freedom Leisure – which has a contract to run Arun’s leisure centres until 2026 – has asked for a £580,000 payment reduction next year.
The industry had already been hit by Covid closures and membership numbers failing to return to pre-pandemic levels and it is now facing sky-rocketing utility bills.
ADC’s budget has been reviewed ‘line-by-line’ this autumn due to ‘highly dynamic and fast changing circumstances’ which have seen energy, supplier, and staffing costs spiral alongside inflation.
A £4 million budget deficit is currently predicted for 2023-24 with little certainty over central government funding beyond 2025.
A report before the Policy and Finance Committee says the delay is partially down to ‘ministerial changes’ within the Department for Levelling Up, Housing and Communities. Though the department announced on Monday (12 December) that it would increase the revenue support grant available to councils by inflation in 2023-24.
Arun does have a £9 million ‘Financial Resilience Reserve’ but this could be exhausted by 2026.
Projects may also have to be suspended if deemed non-essential, funded through selling off assets, or through borrowing. This would offset some of the immediate pressure but borrowing costs could add up down the line and are yet to be factored in to the projections.
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