Derby City Council looking for more help to meet demand of housing and social care in budget

Additional funding in keys areas such as social care and housing in the Government's autumn budget statement on Wednesday (October 30) would go some way to easing the financial burden locally, according to Derby City Council. It is hoping that the cap could be lifted on housing benefit that is claimed from the Government by the council, which would give it £4 million more in the coffers.

And introducing a cap on fees that councils pay for care would help ease the pressure on social care, according to Councillor Kathy Kozlowski, council cabinet member for governance and finance.

Councils across the country, including Derby City Council, will be watching with interest to see what, if any, action will be taken to address the financial challenges faced by local government sector.

In Derby, the council is reporting a predicted £9.6 million overspend on its revenue budget – which funds most of its services outside of housing, education, and capital projects – at the end of the first quarter of 2024/25.

Demand and costs have continued to rise at a much higher rate than forecast, mainly for services affecting the city’s most vulnerable citizens such as social care and homelessness. This is not unique to Derby and is affecting councils across the country. The council has been lobbying the Government for changes to the way it is funded, together with local Government colleagues nationally.

Derby City Council’s quarter two financial update will be presented to cabinet in November, but over the medium term the council faces the challenge of closing a significant budget gap which was estimated to be £13.9 million for 2025/26 before any of the new pressures on services emerged this year. The council’s medium term financial strategy, which is also being considered by council cabinet in November, will provide further details on this position.

As a result, the council is already in the process of planning a balanced budget for 2025/26, which is a legal requirement, ready to present it to councillors in December before it goes out to consultation. Although the council won’t know for certain how much money it will receive from the Government until around the same time, it is hoped the autumn statement will provide some additional financial support.

The Government currently funds councils through one-year grant settlements, supplemented by additional grants which can only be used for specific purposes. Shortfalls therefore have to be met from council tax and business rates. While the new Government has indicated that it will move towards multi-year settlements that make it easier to plan for the mid-term, it is not known when this will happen.

Ms Kozlowski said: "We have to be realistic. We are not expecting the Government to announce multi-year grant funding settlements in the statement. However there are some small changes they could announce which we’ve lobbied for, and would be ‘quick wins’ for local government. They would certainly make a difference to us in Derby.

"A shortage of affordable accommodation means that homeless families are having to stay in temporary accommodation for longer. The amount of housing benefit we can claim back from the Government for this is capped, and if this cap was lifted we would be £4 million better off. A review of the right to buy legislation would allow councils to maintain their levels of social housing.

"Costs in the social care market are spiralling, and introducing caps on fees that councils pay for care would help ease the pressure on social care. A commitment to the much-awaited funding reforms for local government would also see a redistribution of funding to those areas that need it the most.

"We would welcome any additional funding that the new Government can provide, however we are aware that there is no easy solution to the financial challenges that lie ahead, especially when we have no control over rising costs and demand. Any new burdens on local government need to be adequately funded."

The Chancellor of the Exchequer Rachel Reeves will present her budget statement in the House of Commons from around 12.30pm.