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Council takes action to address budget pressures caused by national issues

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Rapidly rising energy and material costs and increasing demand and costs for social care services are among the causes of a £13.6 million projected overspend by the City Council for this year.

A finance monitoring report to be considered by the Council’s Cabinet on 11 August says the scale of the projected shortfall is unprecedented for this stage of the financial year and urgent action is already under way to manage the problem.

Councillor Mark Shayer, Deputy Leader and Cabinet member for Finance and Economy, said: “Many households are now beginning to feel the pinch as the cost of living increases and the Council is facing the same issues. We are now being seriously impacted by rapidly rising costs resulting from the national and global economic situation and the legacy of the pandemic.

“As a result, we are projecting a very sizeable shortfall in this year’s budget which we need to address urgently as we also embark on the considerable challenge of balancing the books for next year’s budget.”

The report says the Council is seeing a huge increase in its energy costs this year, including an additional £1m just for street lighting across the city. It is also seeing a 31 per cent increase in fuel costs for its vehicle fleet, which includes refuse and recycling collection vehicles.

The ongoing impact of the pandemic is also being seen in other rising costs and demand pressures. Changes to people’s working habits have led to an increase in the amount of domestic waste that needs to collected, adding £980,000 to annual collection costs.

There is an ongoing rise in the number of people requiring adult social care services. There has also been an increase this year in the number of people requiring emergency bed and breakfast accommodation from 18 to 180 due in part to rising costs in the private rented sector.

The Council’s Children, Young People and Families department is currently facing projected overspend of £3 million as the cost of specialist residential placements for vulnerable children rises nationally and costs in care and transport for services for young people rise.

Income that is used to support Council services is also decreasing in a number of areas, including parking and libraries and the Council will see an increase in staff costs following national pay agreements.

Council services are already working on potential measures to mitigate the projected overspend and a range of cost reductions totalling more than £8 million are now being worked on. These proposals are being further developed as work continues to identify ways of closing the remaining in-year gap.

At the same time, the Council is also working on how it will deliver a balanced budget for 2023/24 in light of these additional pressures.

Councillor Shayer said: “The scale of the projected in-year overspend is unprecedented at this stage in the year and our position is serious. We are already pulling out all the stops to find ways to reduce spending but we still have a lot of very difficult work ahead to close the remaining gap for this year.

“This will mean some very difficult choices will need to be made and it is clear that the Council won’t be able to continue to do everything it has in the past. There are no easy options and no quick fixes. We aim to work as one Council on this challenge and to listen to our staff and residents as we strive to continue delivering the best services for the people of Plymouth that we can.”