TOWN Hall chiefs say inflation had an “enormous impact” on the council’s revenue budget.

The financial monitoring report for period one of 2023-24 will come before the cabinet at its meeting on Wednesday.

Financial position

It will provide members with the forecast financial position in relation to the revenue and capital budget for 2023-24, summarises the reserves and balances position and includes the treasury management position statement.

The cabinet is recommended to note the latest revised budget and forecast revenue position for 2023-24, and note the latest position with regard to the implementation of the 2023-24 budget savings and prior-year savings that “were not fully implemented” in 2022-23.

Overspend

The report states that, based on current forecasting, there will be a service overspend of £3.010 million against the updated service revenue budget of £177.356 million.

But this excludes a “potential underspend” of around £1 million on gas and electricity.

“It should be noted that the environment in which the council is operating is volatile and uncertain, and that financial modelling to quantify the implications of external events on the revenue budgets is ongoing,” it adds.

“The impact of the current inflationary environment and legacy Covid-19 pressures continues to be monitored.

"Corporate variances will offset the overspend by £0.100m, resulting in a forecast net budget overspend variation of £2.910m.

"Inflation had an enormous impact on the revenue budget in 2022-23.

Relentless increase

“The rate of inflation relentlessly moved upwards throughout the year, reaching a 40-year high of 11.1% in October 2022.

"This was driven by a combination of demand for consumer goods, labour market shortages, the war in Ukraine and rising energy prices.

“Whilst the rate of inflation has since decreased slightly and is forecast to continue to decrease, inflationary pressures will continue to be felt in 2023-24.”