Council finance lead warns ‘significant’ budget pressures remain

Inflation in July fell to 6.8 per cent from 7.9 per cent in June according to the Office for National Statistics, meaning prices are rising at a slower rate.

But Royal Borough of Windsor and Maidenhead finance lead councillor Lynne Jones cautioned that the new rate of inflation would still present difficulties for the council’s finances.

She said: “I welcome the news that the inflation rate has reduced for the second month in a row, although it is still high.

“Inflation impacts negatively on the council budget in a multitude of ways, such as putting pressures on our care providers, contract uplifts that are directly linked to inflation, or household budgets which in turn may cause more demand for our services.

“This, combined with high interest rates on borrowing, mean that significant pressures on the council budget remain.”

RBWM cabinet considered two reports at its July meeting – which outlined a stark picture of the state of the council’s finances.

An overspend of nearly £5m was forecast against this year’s budget in the reports, which also suggested that savings of £10m could be needed from 2024 to 2029.

Soaring inflation and increases in interest rates were among the difficulties citied contributing to the council’s budgetary woes.

Halving inflation was listed by Prime Minister Rishi Sunak as one of his five priorities at the start of this year, when the rate was north of 10 per cent.

The Bank of England’s Monetary Policy Committee has raised interest rates several times in an effort to reduce inflation towards its government-set target of 2 per cent.

Inflation hit a high of 11.1 per cent last October following sharp increases in 2022.

Windsor MP Adam Afriyie said: “Any fall in inflation back towards 2 per cent is to be welcomed because it will eventually help to ease interest rates on mortgages and hold down the price of food and fuel in the months and years ahead.

“It’s early days but I very much hope that it will become a downward trend towards 2 per cent for the sake of everyone’s budgets.”