Large deficit projected at Horsham District Council

Horsham District Council could be facing a £3.4million deficit in several years time unless actions to reduce costs or increase income are taken.

According to council officers, a high level of uncertainty remains as the economy navigates the highest levels of inflation since the early 1990s, pressure from salary increases, and no further clarity on the future of Government’s plans for the reform of business rates, fair funding review and how levelling up will affect HDC.

In a report due to be discussed by cabinet today (Thursday September 29), salary increases could cost £3million above the council’s previous financial assumptions over the next four years.

The impact of inflation on non-salary costs is harder to measure because the council has many contracts with different price and inflation agreements and start dates throughout the year.

The Medium-Term Financial Strategy now assumes six per cent inflation in 2023/24 and then averaging five per cent inflation, adding an additional £0.5m each year compared to before, resulting in a further £2m to the cost base over the period.

During the last 18 months, the council has been working with consultants Ricardo on the options and estimated costs of food waste collection.

The indicative cost is £1.3m for a 3, 2, 1 service where refuse is collected every three weeks, recycling and garden waste fortnightly and food waste weekly.

The MTFS assumes an indicative two per cent increase to HDC’s share of council tax each year, adding around £225,000 of income on average over the period. This equates to around £3.25 a year extra for a Band D property across the four years.

Officers note parking income has largely recovered to pre-pandemic levels in most areas, in part due to a price increase in 2022/23 helping to make up some of the difference of reduced dwell time, but season ticket income though has fallen as hybrid working has changed the frequency of the daily office commute.

Current projections show a possible deficit of £1.8m in 2024/25 rising to £3.4m in 2026/27.

Officers said: “Savings in 2024/25, if needed, may mean the closure or reduction of popular non-statutory public services, or investment that generates income if fees are not increased.”