Labour-run Nottingham City Council is now forecast to be hit with a £13m gap compared to its initial budget predictions. This "frightening position", which is likely to impact frontline services for the people of the city, is largely down to an upcoming 10% pay rise for council workers which would cost the authority £6.9m.
The chair of the National Employers for local government services, Sian Goding, said council employees have been offered a pay increase of £1,925 from April this year, following pressure from various unions representing public sector workers. She says for the lowest paid, who currently earn £18,333 per year, the offer equates to an increase of 10.5%.
According to council documents, the authority had predicted a 2% pay rise in the budget approved in March, but with inflation now sitting around 10% unions have been pressing for more. As such the latest forecast reveals the council would need to shell out £6.9m to meet this.
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The Conservative Government, headed by new Prime Minister Liz Truss, is yet to announce any cash grants to bridge this gap. During a meeting of executive councillors at Loxley House on September 20 councillor Adele Williams, the portfolio holder for finance who represents Sherwood, said: "We are looking at a considerable in-year overspend and we are not at all on our own in that.
"There are plenty of authorities that are giving reports like this. Largely, as in a lot of other local authorities, that would be based on the local government pay settlement.
"The issue, as always, is where is all the funding for that? That is not currently a funded pay rise and it is not currently budgeted by local authorities across the country. So the impact of that is it will add considerably to our in-year overspend and it will also weigh heavily on our thinking in future years.
"The impact of the cost of living is being felt by Nottingham people but will also impact on the cost of services and demand for services in our city. We have seen that already in the costs of things going up.
"I don't think there is anyone in this room that wouldn't want to see our hard-working staff get a pay rise, but we also need to be able to fund that from our budgets and we need the Government to accept and to resource this and to recognise not doing that will have a severe impact on council budgets and our ability to give our citizens what they deserve and need."
The council’s budget for 2022/23 was approved during a meeting on March 7 this year, with a general fund budget of £227.6m. However the forecast for the first quarter of the year is showing an outturn of £240.9m.
This means the council is £13.2m (5.8%) adverse to its original budget. The budget had assumed a 2% pay award and therefore this has resulted in a £6.9m hole. In the finance and resources department the council is also £2.1m adverse, and this is "largely due to previous budget savings which are now assessed as undeliverable", the council says.
Growth and city development is a further £1.8m adverse, with £800,000 of this coming from inflationary pressures on nightly costs for bed and breakfast and temporary accommodation for those who are homeless. Further budget variances, the council says, come from "increased energy disposal costs, Broadmarsh rental income and contributions from Bridge Estate."
"Homelessness looms largely in this as it does across the city and homelessness has been an escalating problem for many years," councillor Williams adds. "While there has been some welcome short-term funding boosts we are not seeing an intervention that changes the long-term picture.
"The continuation of the Right to Buy scheme has absolutely exasperated this crisis and there has been a real absence of effective intervention in this area from central Government.
"We are seeing these impacts on our budgets just like Nottingham citizens are seeing these impacts on their budgets."
And councillor Toby Neal, executive member for housing who represents the Berridge ward, said: "I just want to echo a few points that Adele has made, particularly around the pay offer which is relatively good for lower paid employees within the organisation, but the Government, well, the absence of a Government for the last couple of months at least has left us in a position where we have to dig in deeper and take money out to pay staff who deserve it and earned it, but it is going to mean taking away from frontline services. It is a frightening position to be in."
He added the options to address homelessness in the city are "vanishing for us", with calls made for additional Government policies to assist. Three months into the year the council reported it was £10.9m over budget, meaning this has increased since.
A Department for Levelling Up, Housing and Communities spokeswoman says: "In recognition of the role they play, we have made an additional £3.7 billion available to councils this year to ensure they are able to deliver on local priorities and key public services.
"For Nottingham City Council this represents an increase of £22 million, making more than £309 million available for this financial year so it can deliver for its residents. We stand ready to speak to any councils that have concerns.”
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