Essex County Council has warned it faces having to implement cost savings or “transformative change plans” as it faces a rocketing budget deficit.

In the seven months since Essex County Council forecasted in February a budget gap of £24m for next year, the deficit has grown by an additional £17m mainly driven by inflationary pressures.

Councillor Whitbread, cabinet member for finance at Essex County Council, indicated the areas that could be particularly stretched.

Between 20 to 25 per cent of the council’s more than £1bn budget is used to support businesses and the economy, developing communities, tackling climate change, education and skills, libraries, tourism, parks and outdoor centres, arts, culture, and heritage assets, as well as registrars, coroners, trading standards and other services.

Essex County Council does get government funding for some of this, but this will not go as far as it has in previous years, Councillor Whitbread added.

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Even before rising inflation, the council already forecast its budget gap would be a significant £119m by 2025/26. That will have now grown further.

The long-term position also affects its large four-year aspirational Capital Programme of £1.3bn, as forecast interest rate rises create additional borrowing cost pressures.

Speaking at Essex County Council on October 11 he said: “We believe that we can get through this year, but future years are an increasing challenge, with huge uncertainty and volatility, that makes setting an accurate budget hard, and keeping net spending within that even more difficult.

“So, now that we’ve looked back and we’ve considered the present, we need to look to the future.

“As we’ve previously set out, back in February we forecast a budget gap of £24m next year- we sit here today in a very different economic environment, facing a much larger gap than originally anticipated – driven by inflation.

“We still want to achieve remarkable things, but this is a great challenge that we face.

“Without any cost savings being taken or transformative change plans, we will not be able to afford the level of expenditure that is required next year.

“We have historically achieved this through intelligent thinking about how we can improve services sustainably – be it innovative technologies in adult social care, or shifting spend to prevention in children’s services – over the last four years we have delivered over £200m of savings.

“We face a tremendous challenge ahead, just like the rest of local government – we will need to further push the envelope on transformation and how we deliver services, but I am confident as an organisation we can do this.”

He added: “A good portion of that last quarter of our budget also funds the capital programme, which we have said many times is ambitious and transformative for our county, enabling growth, including the building of schools, infrastructure, and highways – but we are keeping this constantly under review.

“I, myself, live in Essex and work in Essex – as do the majority of our staff. In our personal lives, we have all seen the cost-of-living sky-rocket – our energy bills multiply and the cost of purchases rise.

“That is no different from the circumstances experienced at the council – infrastructure projects are still needed, for example building schools and roads but the cost of building is substantially more and the cost to heat our premises – such as libraries, has more than doubled.

“This has meant we have needed to draw on our reserves in order to cover energy costs to the tune of £9.5m this year.

“To budget appropriately for these new challenges in the coming years, tough decisions need to be made, however we will do everything we can to protect the services that our residents and business need so much in Essex.”

Councillor Henderson, Labour group leader, said: “This is a very dark day for the future of the residents in Essex. If you look at this statement it says there are more cuts to follow. God knows where those cuts are going to be, god knows who is going to suffer from those cuts in the future.

“The mess that his Government with economic finances of this country is going to see another wave of cuts across public sector services. Right across the board.

“It’s about time this administration stood up to their Government and stood up for the residents of this country and said to the Government ‘enough is enough. We can’t afford any more cuts’.”