Babergh District Council leaders are calling for the Government to address a local authority funding crisis, as it faces a £1.8million budget gap.

Councillors will scrutinise the draft budget for 2024/25 next week, which includes details of the shortfall and proposals to increase the district's share of council tax bills by 2.99%. 

A report to Babergh's Overview and Scrutiny Committee on Monday 22 January shows the cost of providing its services to residents and communities is expected to rise by £2.5m to £15.12m next year – a 21% increase. 

This is mainly due to inflationary pressures, particularly interest rates and salary costs, while there has also been a reduction in planning fees as potential development continues to stall due to the economic downturn. 

Babergh's acting leader and cabinet member for finance, assets and investments, Cllr John Ward, said: "While our costs have risen 21% in the last year, Government funding has increased by just 3.4% in the same period. 

"This alone, however, does not truly reflect the cash crisis faced by councils. The Local Government Association says core council spending power has suffered a 27% real terms cut since 2011.

"Babergh is a well-run authority. We are making savings, driving efficiencies, and reviewing our fees and charges - but this year we will have to spend reserves to balance our budget. That is unsustainable - you can only spend reserves once."

The council is increasing fees and charges to reflect the actual cost of providing licences and services. It also continues to engage with local communities over the introduction of new parking tariffs in Sudbury, Hadleigh and Lavenham.

A savings programme is also expected to achieve savings of £557k. However, the council is still left with a £1.8m gap, requiring 'tough decisions' to be made.   

Cllr Deborah Saw, deputy council leader, added: "The current system of funding local government is broken. Some councils have already gone bust, and others are heading towards a cliff edge. The financial outlook for the coming years gets worse. 

"We urge the Government to review how councils are funded so we can continue delivering the services which our communities rely on."

When the Government announced its annual grants for local authorities in December, it based its forecasts on the assumption all councils would raise their council tax by the maximum allowed.

This would mean a 2.99% increase to Babergh's element of the bill – the equivalent of £5.46 a year, or 10p a week for a Band D home.

The district's share is less than 10% of the total bill, with the remainder going to Suffolk County Council, the Police and Crime Commissioner and town or parish councils.

Council leader Cllr Dave Busby, who has temporarily stepped down from day-to-day council duties while undergoing cancer treatment, said: "From that small proportion of the bill, we need to pay our staff, our suppliers, run vehicles and leisure centres, empty the bins, support local community groups and charities, and provide a vast range of services that our residents and communities need – now more than ever." 

Meanwhile, under the draft budget proposals, council tenants would see a 7.7% increase in rents to try to keep pace with increased costs, and to ensure the necessary investment in repairs and maintenance across the council's social housing stock.

This would mean average weekly social rent increasing by £7.92 from £102.88 to £110.81. For affordable housing, weekly rents would increase by £11.13 from £144.51 to £155.63.

Cllr Ward said: "Any decision to put up bills is not one we take lightly, particularly when people are already feeling the squeeze, and we are determined continue to support those most in need."

Babergh District Council provides advice and support to those struggling to pay their bills, with a council tax reduction of up to 100% for residents with the lowest incomes.