Council finances ‘stabilised’

Council leaders say the authority’s finances have been “stabilised” despite mounting care pressures in County Durham, writes Local Democracy Reporter, Bill Edgar.

A Durham County Council report reviewing the authority’s finances reveals it finished the 2025/26 financial year in a stronger position than expected, but continues to face increased demands from special educational needs (SEND), inflation and other key services.

Cabinet members were told that the authority underspent its £623.1 million revenue budget by £19.5 million during 2025/26 – an improvement of more than £5 million on forecasts made earlier in the year. 

Andrew Husband, council leader, said the figures showed the Reform UK-led administration had put the council in a stronger position to deal with future financial challenges.

He told a cabinet meeting: “This report clearly demonstrates that this cabinet has stabilised the position of the council during 2025/26.

“It ensures our capabilities to weather the significant financial challenges we face in the medium term.”

The report shows the council’s general reserves increased to £39.7 million by the end of March 2026, equivalent to 5.89% of its net budget requirement for the current financial year. It also confirmed almost all of the authority’s planned £18 million savings programme had been delivered during the year.

Despite the improved overall position, the council warned that children’s services remain under severe financial strain.

Although the government has announced plans to cover up to 90% of councils’ accumulated SEND deficits, Durham County Council has set aside £11 million from its own funds to meet the share it expects to remain liable for. 

The authority overspent by £16.7 million on its Dedicated Schools Grant high needs budget, leaving an accumulated deficit of £39.7 million, while demand for children’s social care placements and additional social workers continued to rise.

Mr Husband said the council would remain focused on tackling what he described as a “care emergency”.

He added: “We need to drive forward some very ambitious transformational projects, which will create great efficiencies and enable us to transform frontline services.

“We will be unwavering in our focus on transforming children’s social care and special needs, investing in new facilities to tackle the care emergency and address these significant challenges.”

The council also plans to invest more than £700 million through its capital programme, including spending on children’s social care provision, special educational needs facilities, highways and town regeneration.

However, Deputy council leader Darren Grimes said the authority’s financial performance should not mask what he described as the impact of long-term government underfunding.

“It beggars belief that the hard work and local council taxpayers of County Durham are being asked to bail out national government in this regard,” he told cabinet members.

Cllr Grimes also urged ministers to fully fund councils’ SEND deficits and reimburse authorities for interest costs incurred while carrying the growing shortfall.

Inflationary pressures linked to global instability, particularly energy and fuel prices, would continue to affect future budgets, councillors were warned. 

Cllr Husband said the improved reserves position, combined with plans to attract more inward investment, would help the council prepare for the future, but insisted there was “no room for complacency”.

He added: “It is pleasing to see that officers have substantially delivered all of the planned savings targets in the year, demonstrating the importance of robust financial governance, which needs to underpin everything we do.”

The council’s medium-term financial plan is due to be updated later this year, when members will consider the impact of continuing inflation, rising demand for care services and future government funding settlements.