Homelessness and inflation pose £7m danger to South Norfolk Council’s finances

A Norfolk council faces a £6.8 million deficit if increased funding is not provided in the next few years.

Officials at South Norfolk Council have warned that inflationary pressures and the cost of tackling homelessness could leave it millions of pounds short at the end of the decade.

It is among a host of authorities across the country grappling with financial pressures and potentially needing to make huge cuts to balance the books.

The worst-case scenario could see the council left with a funding gap of nearly £7 million if costs continue to rise over the coming years.

The extent of this gap will vary depending on inflationary pressures and the amount of money received from the Government in grants.

But it is expected that any funding received will not keep pace with fast-rising costs and could leave the council with a budget gap of £6.8 million.

Daniel Elmer, leader of the Conservative-run authority, said: “This is not the likely outcome, but it is possible.

“We are feeling relatively confident and the scale of the problem is significantly worse in other parts of the country.”

Cllr Elmer said one of the biggest financial pressures facing the council was providing temporary accommodation for homeless people across the district.

Council officials said the authority was in a good position at the moment and stressed that current forecasts could also see it end the decade with a small budget surplus.

Much remains uncertain while local authorities await confirmation about the degree of government funding they will be given in the next financial year, which is expected to be announced in the coming weeks.

Councils across England, Scotland and Wales have a collective hole in their finances amounting to more than £4 billion for the coming financial year, threatening fresh cuts to services, new research suggests.

Seven have issued section 114 notices declaring effective bankruptcy since 2020.