Councils hit by ‘massive financial impact’ of UK economic turmoil

Lewes District Council has joined local authorities across the country in warning its finances face ‘significant uncertainty’ due to UK economic conditions. 

Soaring inflation, increased demand for services due to the cost-of-living crisis, supply and demand issues caused by the war in Ukraine, additional energy costs, potential pay awards and ‘decisions made by a government in turmoil' are putting a huge strain on council budgets. 

In 2020, the Council’s financial position - like many other public and private sector organisations - was put under severe stress by the pandemic but a widescale savings and efficiencies programme over the past two years was successful in ensuring stability. 

However, the council has now been dealt a new hand of financial challenges, says Councillor Zoe Nicholson, Deputy Leader and Cabinet Member for Finance and Assets. 

“We are living with high inflation rates that many Lewes district residents will not have experienced in their lifetime as evidenced when people go shopping, buy fuel or receive energy bills,” she said. 

“This was not the case when our budgetary forecasts were made last year and inflation, alongside other factors including dubious decisions made by a government in turmoil, is having a massive financial impact on the council and leaving us with significant uncertainty. 

“In recent weeks we have seen perhaps the biggest U-turn in British economic history and grappling with this constantly changing national picture and how it affects us has been very challenging."

The interim medium term financial strategy (MTFS), which sets the financial direction for the council and forms a framework for fiscal planning, was debated by Cabinet councillors today (November 10).  

Local government is facing a funding gap of £3.4bn in 2023-2024 and £4.5bn in 2024-2025, according to the Local Government Association. Meanwhile, the new Chancellor has announced that more spending cuts will be needed and local authorities are bracing themselves for further details on these. 

Councillor Nicholson added: “While we are not in the dire situation that some councils find themselves in with budget deficits of hundreds of millions of pounds, we nevertheless look with trepidation to the autumn budget and the further financial hardship it might potentially bring. 

“I am proud of our work over the last two years in identifying savings and efficiencies and we remain committed to strong financial governance and providing the best service for residents, now and in the future.”