Chichester District Council forecasted to move into budget deficit

During a meeting of the cabinet on Tuesday (November 7), Mark Chilton, cabinet member for finance, presented a report on the council’s financial strategy & plan up to 2028/29.

It forecast a surplus of £484k in the next financial year and another in 2025/26 – before a budget gap of more than £1.6m in 2026/27 which will widen to more than £3.1m in 2028/29.

Mr Chilton said: “The reason we’ll move into deficit is not because this council is going to be inefficient.

“It is purely because of the projected loss of government funding, totally and entirely.”

The strategy is reviewed each year to help the council spot any funding gaps at an early stage.

One such review in 2020 saw £8m moved to the revenue budget to deal with any financial issues raised by the pandemic.

That money was not touched, so the cabinet has recommended to the full council that it be moved back into the general fund reserve.

While the council’s finances look healthier than many other local authorities up and down the country, there are still plenty of hurdles ahead.

Significant uncertainty around the national economy, a forthcoming General Election, inflation and the cost of living crisis all remain ‘significant pressures’.

Another uncertainty centres around changes to government policy when it comes to the collection of food waste.

Since officers filed the finance report to the cabinet, announcements have been made about waste reforms – but not enough detail has been provided by the government to prove useful to councils trying to prepare their budgets.

Mr Chilton said he had expected the reforms to be ‘kicked into the long grass’ – but now it has been confirmed that separate food collections must be in place by March 2026.

He added: “This crystallises one of the fundamental risks that the council now faces.

“At this stage we don’t know the precise cost of the new mandated service or the extent to which government will fund it.”

As such, the predicted deficits for later years is likely to be higher than forecast.

Mr Chilton said: “Due to so much uncertainty, the forecast for the five-year model is based on no new policy options but reflects known cost pressures that the council has no choice but to build into the forecast, such as pay and increased service demands due to the current cost of living crisis.”

He told the meeting that the plan was to increase all of the council’s income streams – such as parking charges – by the assumed inflation rate of 6.7 per cent.

On top of that, the assumption is that council tax will also increase by the maximum allowed each year – though that will be decided by full council.

In the meantime, a budget review group has been set up which will look into ways to plug the estimated funding gaps and highlight priorities and saving.

Leader Adrian Moss said: “We do have really challenging times over the next few years.

“There are uncertainties and I think it’s really important that the budget review group and the reviews that we’ll be undertaking over the next few weeks and months really focus on those to ensure that this council continues to be really financially prudent.

“We are seeing a number of councils are under real financial pressure – and there will be new pressures coming on this council that we’ll have to be aware of.

“It’s important that we really look at our budgets over the next few years.”