Less than five months after coming to power, Durham’s Reform UK-controlled county council finds itself facing a £71mn black hole by the end of this decade and with just five months to decide how to fill it.
The party, which took control of the council in May pledged to cut waste and keep council tax as low as possible, will have to set out its Medium-Term Financial Plan (MTFP) for 2026/27 to 2029/30) by January and fix the level of council tax for 2026/27 by February.
If no increases in council tax are imposed, no cuts agreed and no reserves used, the authority will be in the red by £20mn in 2026/27, £16.9mn in 2027/28, £19.9mn in 2028/29 and £14mn in 2029/30 – a total of £71mn over the four-year MTFP period.
This compares with £45.8mn in the remaining three years of the previous MTFP agreed by the council’s previous administration. That Plan ends in 2028/29 and assumed 2.99% annual council tax rises. Comparing like with like, excluding the fourth year of the new MTFP, assuming zero council tax rises and a new government fair funding formula (see below) the updated forecast shortfall for the three years 2026/27 – 2028/29, has increased by £11.1mn.
Without council tax increases the council will have to find savings of £56.8mn over the coming three years, and even with rises of 5%, the maximum allowed, it will have to find £11.3mn over the same period, says a report to next week’s Cabinet meeting by Paul Darby, corporate director of resources, and Councillor Darren Grimes, the council’s deputy leader and finance lead..
The council has reserves of £34.5mn, but the Darby/Grimes report warns: “It will not be financially sustainable to place an over-reliance on the use of this reserve to balance the council’s financial position across the MTFP planning period, and the application of this reserve should only be considered a short-term fix whilst more sustainable solutions are developed.”
For context, any spending reductions to come will follow £288mn cuts already made by the council over the past 16 years. Durham’s total budget this year is £621.1mn.
Tough choices
The new council therefore faces tough choices on the balance between tax increase, cuts in services and the use of its limited reserves. The difficult process will start at a Cabinet meeting at County Hall on 17 September though none of the main decisions is expected on that occasion. They will start being made by the Cabinet on 19 November and be finalised in January and February.
Top officials have started working on options with senior councillors. More job losses on top of 72 over the next three years already agreed have not been ruled out. The Darby/Grimes report warns at the outset: “The council’s medium term financial position remains challenging and, at this stage, uncertain.”
The government is basing its own financial planning calculations, including its funding for councils, on the assumption that all councils will raise council tax by 5% – 3% core council tax and 2% for adult social care.
Durham is among councils likely to benefit from a proposed redistribution of funding allocations for local government (the so-called Fair Funding Review 2.0) – the first major change to the local government finance formulae since 2013/14 – described in the Darby/Grimes report as long overdue. But Durham may have to pay some of its extra money back to help ease in the hit to councils that will be losers under FFR 2.0.
Balanced, sustainable budget
There is no sign that Reform UK intends of drive a coach and horses through normal local government financial rules: “The new leadership of the council recognise the importance of setting a balanced sustainable budget,” says the Darby/Grimes report.”Post the local elections in May 2025, the focus has been on seeking efficiencies and reviewing contracts with a clear focus on ensuring the council secures value for money,..
“Cabinet have expressed a desire to ideally not increase council tax, and where this is unavoidable, limit increases as far as possible. Cabinet have asked officers to consider a range of options in terms of increases to council tax but have been very clear that they wish to ensure council tax increases are kept to an absolute minimum throughout the MTFP period, as the Cabinet seeks to drive further improvements and ways of delivering services to reduce costs and improve efficiencies.”
The Darby/Grimes report includes a pointed reminder to the Cabinet about equality, bearing in mind what Reform UK leader Nigel Farage said in May after his party’s Durham election victory. In a speech at Newton Aycliffe, Farage advised anyone working on climate change or diversity, equity and inclusion initiatives to be “seeking alternative careers very, very quickly.”
But the Darby/Grimes report reminds the Cabinet in some detail of its duties under the Equality Act 2010 to ensure that it avoids unlawful discrimination in its MTFP decisions. “Several successful judicial reviews have reinforced the need for robust consideration of the public sector equality duty and the impact on protected characteristics in the decision-making process,” it warns. “Members will need to take full account of the duty and accompanying evidence when considering the MTFP proposals.”
Comment
Reform UK is not responsible for the budget position it finds itself in today, which it inherited when it took control of Durham County Council on 1 May. But it will be accountable for the tough decisions it will have to make between now and February.
Reform is about to find out that running a big council with a budget of over £600mn, severe pressure on services like social care which must by statute be provided and strictly limited resources is not easy. It will be interesting to see how it copes, and perhaps distressing for some Durham residents.
