Durham County Council’s budget forecasts for 2026/27 and for the following three years up to 2029/30 will be discussed by members of the local authority’s Cabinet next week.

Cabinet will be asked to approve an initial public consultation to gather residents’ views on its forecasts as part of the development of the 2026/27 budget and the council’s Medium Term Financial Plan (MTFP) covering the next four years.

Cabinet will hear that, similar to other local authorities across the country, the council’s financial position remains extremely challenging and uncertain.

Last month, the Government published its proposals for the Local Government Fair Funding Review 2.0, which sets out plans to introduce a new formula to determine each council’s funding needs and how much they can be expected to raise locally in council tax.

The new formula should benefit councils like Durham County Council, which have seen the most significant increases in the costs of children and adult social care and are less able to generate revenue through council tax due to lower house prices.

Cabinet will hear how it has proven difficult to fully quantify the additional funding available and even the best case estimates would not be enough to meet the additional rising cost pressures faced by the council.

Also, the fact the reforms are proposed to be phased in over three years – to offset the impact on other local authorities that stand to lose out – means local authorities such as Durham would continue to see Government Funding diverted to more affluent areas over the transition period.

The Government’s plans to undertake a full reset of the baselines for the Business Rates Retention Scheme adds further uncertainty.

Meanwhile, new statutory responsibilities, such as the introduction of weekly Food Waste Collections to all households from April 2026, will add to mounting budget pressures.

Cabinet members will also hear that the Government is expecting local authorities to increase council tax by the maximum amount permitted across the next three years. In County Durham, this would mean an increase of five per cent in each of the next three years.

The Council’s Cabinet has indicated that Council Tax increases should be kept as low as possible, and members will consider a financial forecast based on a zero percent increase when they meet at County Hall on Wednesday 17 September. However, the financial forecasts would indicate that this would result in a £20 million deficit in 2026/2027, and a £71 million deficit over the next four years.

The report will outline the impact of options to increase council tax by varying amounts, with the deficits reducing by £3 million for every one per cent increase in council tax each year.

Cabinet will hear that saving plans are being developed for 2026/27 and beyond to limit reliance on council tax increases and council reserves to balance the budget. These plans will be presented to Cabinet on 19 November 2025. Furthermore, savings previously agreed by the council in February 2025 totalling £5.662 million are proposed to be put through a further phase of consultation.

Cllr Darren Grimes, Durham County Council’s Deputy Leader and Cabinet member for finance, policy and communications, said: “This is a difficult time for local authorities and Durham is no exception. Over the last 15 years, successive governments have failed to provide the funding local authorities like ours need to meet the spiralling costs of delivering essential statutory services such as children’s and adult social care.

“The Government’s recent confirmation that the Chancellor’s Budget will not be published until 26 November means that we are unlikely to receive notification of our funding settlement for 2026/27 until just before Christmas, providing very little time for us to finalise our budget planning.

“We are reluctant to raise council tax and will do everything in our power to avoid doing so or to keep any increases to a minimum. This includes building on the £18 million in savings delivered in 2025/26, while striving to provide the best possible value for money to council taxpayers. We will also continue to lobby the Government for funding allocations that are truly fair and reflect the challenges we face and to avoid passing the buck to the hard working people of County Durham.”

Cabinet will be asked to note the MTFP forecasts and the need to identify additional savings if no council tax increases are made. They will also be asked to agree to an initial MTFP consultation, which would run from Friday 19th September to Friday 14th November.

As well as discussing the MTFP, Cabinet will consider proposals to review and amend discounts to Property owners subject to the Empty Homes Council Tax Premium, which could save the local authority hundreds of thousands of pounds a year.

Currently owners of unfurnished empty properties that have been vacant for more than 12 months are liable for a 100 per cent council tax premium, meaning they pay twice the standard amount. This increases to a 200 per cent premium after five years and a 300 per cent premium after ten years.

Since April this year, second homeowners have also been made subject to a 100 per cent council tax premium. This decision was made to encourage the owners of such properties to bring them back into full time use, and to help maintain the vibrancy of communities while also generating additional spending power for the authority, at a time when it is having to make significant savings. This approach is in line with Government legislation introduced in April 2024.

Durham County Council operates a discretionary relief scheme which removes the premium for both empty and second homes in certain circumstances, such as when properties are up for sale or let; the owners are experiencing legal or technical difficulties in relation to the property; major renovation or repairs are required; or the house is being deliberately kept empty to support a regeneration scheme in the area.

Applications to the scheme are made on an annual basis and there is no limit on the amount of time the relief can be applied. As of 31st July 2025, the owners of 343 long-term empty homes and 16 second homes were receiving relief totalling £849,529.

In November 2024, the Government announced exemptions for council tax premiums for both empty and second homes that fall into certain categories. These exemptions are available for 12 months, with owners of empty or second homes in County Durham able to apply for discretionary relief from the council when the Government award comes to an end.

Cabinet will hear that the discretionary relief Durham County Council applies is above that offered by other local authorities, with the few councils that do provide relief doing so for a limited time period.

A review of the approach has identified three options, which reflect Government guidance and the need to balance the aims of the legislation, the council’s financial challenges and the ongoing support of residents.

The options are:

  • Option 1: Only administer the Government guidance and exemptions, offering no discretionary relief beyond 12 months.
  • Option 2: Introduce a 12-month time limit to the council’s discretionary relief scheme after the Government prescribed exemptions come to end. This would offer a total of 24 months of relief from the premiums.
  • Option 3: Make no changes and leave the support open ended.

Cabinet will be asked to give the go ahead to an eight-week public consultation to gather the views of residents and interested parties ahead of agreeing an approach to the Empty Homes Council Tax Premium discretionary relief scheme. If approved, this consultation would run across October and November.