Arun District Council is focusing on a financial ‘worst case scenario’ in funding for future budgets.
At the council’s policy and finance committee meeting on Tuesday, July 9, members were shown a report from the council’s Chief Financial Officer, Antony Baden.
He said the council was bracing for a ‘worst case scenario’ in terms of non-ring fence, central government grants on a one year term, saying they ‘don’t know’ if they will be continued or not.
He said they were bringing a report to the council to update members on its financial position and to ‘keep the five year picture’ in members’ minds, as the council’s ‘financial challenges’ still remain.
In October last year, the council was warned by Mr Baden it could run out of money in five years due to forecast budget funding gaps, meaning it would be effectively bankrupt.
The council is set to fall roughly £2.394 million into the negative after a £5.962 million funding gap in its 2028/29 revenue budget, according to the report to the committee.
The report showed the council drew down £900,000 less from its cash reserves than thought for last year’s 2023/24 budget, thanks to income from returns on investments, coming down from £5.1 million to roughly £4.2 million,
However, the report said this would not be the case going forward, forecasting a drop in income from investments of around £350,000, due to more cash reserves needed to plug forecast funding gaps and expected reductions in interest rates.
It sees this year’s 2024/25 budget funding gap at £3.556 million, remaining where it was in February, with the 2025/26 funding gap being reduced by around £1.1 million from where it was last year, to £1.203 million.
The biggest revision was to the 2026/27 funding gap which saw it increase by roughly £1.6 million to total £6.659 million, where the council’s reserves will fall to around £10.1 million, previously sitting at around £25.8 million before the 2023/24 budget.
Although 2026/27 is the biggest funding gap in the current forecast, the following years still see large gaps the council will need to meet in order to avoid effective bankruptcy, with £6.589 million in 2027/28, £5.962 million in 2028/29 and £5.839 million in 2029/30.
Mr Baden said a more detailed forecast of the council’s financial prospects would be coming to the policy and finance committee in October.
