Chesterfield Council weighs 2.99% council tax rise while facing ‘significant financial challenges’
The local authority is blaming the economy and rates of inflation for having to hike bills
Chesterfield Borough Council’s Cabinet has agreed to recommend plans for a balanced budget with a 2.99per cent increase in its share of residents’ overall council tax bills for the forthcoming 2026-27 financial year as it continues to face ‘significant financial challenges’.
The Labour-controlled council’s Cabinet approved its recommendations, at a meeting, on February 24, for its 2026-27 Budget and its Medium-Term Financial Plan for 2026-27 to 2028-29 ahead of today’s Full Council meeting, on February 25, where these financial matters will go to a vote and be decided upon.
A council spokesperson stated: “Like all local authorities, Chesterfield Borough Council continues to face significant financial challenges.
“The current economic climate and continued high rates of inflation have impacted on the council’s financial position.
“In response to these challenges, the council has already made significant savings over many years and taken steps to manage demand and deliver services in the most economic, efficient and effective way.”
The council’s previous MTFP was approved in February, 2025, and projected a challenging outlook from 2026-27 onwards with financial gaps of £2.5m in 2026-27 rising to £3.5m by 2027-28.
A council report stressed that to maintain and protect services the authority’s MTFP assumes a council tax increase of 2.99per cent for its precept of residents’ overall council tax bills which is the highest possible increase allowed by the Government without having to trigger a referendum.
If the 2.99per cent council tax increase is approved, the council tax for Band D properties would increase by £5.88 from £196.51 to £202.39 for the 2026-27 financial year this would mean an extra £5.88 per annum or just over 11 pence per week for a Band D property.
For a Band A property, which is more than half the properties in the borough, the increase is equivalent to an extra £3.92 per annum or just under 8 pence per week.
The council has stated that a 2.99per cent increase together with the increase in tax base would contribute an additional £200,000 over and above that which had been assumed in the council’s original MTFP assumptions for 2026-27 which will be invested in local service provision.
It is also recommending its Local Council Tax Support Scheme remains unchanged which only requires struggling property occupiers of working age to pay at least the first 8.5per cent of the council tax liability for their property, and those of pensionable age should continue to receive up to 100per cent support for 2026-27.
The council says it will continue to work with householders and local advice agencies to ensure that those experiencing difficulties paying their council tax bills receive appropriate advice and support.
A long-delayed new multi-year financial funding settlement provided by the Government has also been welcomed by the council as providing a level of stability over the immediate future by assisting longer medium-term financial planning and it should provide a more certain basis to deliver the council’s approved budget strategy.
But a council spokesperson added: “It is important to note that the settlement is based on a number of assumptions regarding the tax base for business rates and council tax and assumes all authorities will increase council tax by the maximum permitted without holding a referendum.”
The council says it also has to continue to provide a robust MTFP even with the Government’s planned Local Government Reorganisation expected by April, 2028, with the possible merging of district, borough, city and county councils to form one or two single unitary councils in Derbyshire.
A council spokesperson stated: “The key aims of the budget strategy are to ensure that sufficient funding, deliverable cost reductions, and additional income are identified to set a balanced budget for 2026-27 and over the medium-term.”
The MTFP also assumes the eventual delivery of £903,000 of new savings approved as part of the 2025-26 budget setting process which were mainly related to better than expected outcomes from budget savings delivered in previous financial years.
These have included increased income from charging for garden waste, a new and more efficient leisure centre operating model, a new cultural services model with savings from the Winding Wheel theatre’s operations, alongside reduced vacant post rates among most services.
The council’s expected outturn position for the 2025-26 financial year which ends on April 5 presents a surplus of £774,000 based on activity to the end of December and includes projected trends in income and expenditure.
A council spokesperson stated: “It is proposed that the strategy for the remainder of the year should be to maintain and, where possible, increase the level of managed underspend.
“This approach will help to strengthen the council’s overall financial resilience, support the delivery of a balanced budget in 2026-27 and mitigate the impact of anticipated cost pressures within the Medium-Term Financial Plan.”
The council noted that the Government funding towards the increased cost of employer’s national insurance contributions was £200,000 in 2025-26 which was significantly lower than the actual cost to the council.
A final estimate of business rates income included in the MTFP, after the tariff payment to the Government, stands at £4.3m for 2026-27 and EMCCA has allocated £150,000 of revenue funding to support the work of the Staveley and Chesterfield East Midlands Investment Zone sites.
In addition, the impact of the 2025-26 Local Government pay award agreed at 3.2per cent upon 2026-27 meant the final pay award was higher than originally assumed in the previous MTFP and as a consequence £300,000 has been added into 2026-27 to compensate.
The council has also expressed concerns about inflation after Office for National Statistics’ figures showed prices rose in the year to December by 3.4per cent and the inflation rate continues to drive upward pressure across a range of expenditure budgets.
It has also pointed out that energy costs remain a key risk and a further £200,000 has been set aside as a contractual inflation contingency and will be allocated in-year to service budgets as appropriate.
Service pressures have also been identified with unavoidable additional costs to continue their delivery, according to the council, with extra costs related to new burdens imposed on the authority.
These include a weekly food waste collection, the new Stephenson Memorial Hall, and a reduction from the Pavements Shopping Centre and commercial property income, and maintaining the Careline service.
But after the Cabinet previously approved a fees and charges schedule for 2026-27 in January, 2026, for parks and open spaces, garden waste, Queens Park Sports Centre, and car parks, these updated prices and charges are expected to generate £220,000 of additional annual income.
A council report has also stated that approved 2024-25 and 2025-26 budgets introduced several savings and efficiencies that continue into 2026-27 and 2027-28 in the refreshed MTFP.
To help legally balance the overall 2026-27 budget an additional one-off £273,000 use of the Budget Risk Reserve has been assumed but the council has stated that continuing to use reserves is not sustainable so the 2027-28 budget process will need to start earlier for the development and delivery of further budget savings options.
The council says that to address a projected £2.842m gap for 2027-28 it is likely ongoing savings and efficiencies will need to be developed as other factors have already been included in the refreshed MTFP.
These factors include an unlikelihood of any significant additional Government funding due to the multi-year settlement arrangement, budgeted income expectations, that maximum future Band D council tax increases will be assumed, that there is an unlikelihood of adding any further investment, and that available resources will need to be best utilised.
The Budget Risk Reserve has been classified as an earmarked reserve and its projected balance is £1.757m.
Another concern is the estimated LGR transition costs at around £2m, according to the council, which means the MTFP presumes these costs will be funded from capital receipts flexibility.
However, if this approach is not possible a review of all the authority’s earmarked reserves will need to be conducted to identify whether reserves can be released for the changes.
The council says it is subject to significant market uncertainties that make the estimation of costs and income difficult and it has to consider that inflation remains high, and the labour market is difficult with many areas of the council finding staff recruitment and retention difficult with a need to take on interim staff to maintain service delivery.
It added that adverse economic conditions are leading to an increase in service demands and as a result of these challenges the estimates contained within the budgets are inevitably less robust than the council would prefer.
To recognise the financial risks the council currently faces, the cabinet has recommended the council approves the estimates for its financial reserves including maintaining a General Working Balance at £1.5m.
It has also recommended approving the transfer of £145,000 to the council’s Service Improvement Reserve from the Budget Risk Reserve to ensure £500,000 resources are available for potential investment in ICT improvements.
A council spokesperson stated: “Returning to the General Fund revenue budget, the Chief Financial Officer considers the budget estimates for the financial year 2026-27 to be robust and the financial reserves, up to March 31, 2027, to be adequate.
“However, it should be noted that the position in future financial years will depend on the council’s success in delivering planned budget savings and controlling costs, and its ability to apply surpluses to maintain and bolster the levels of both earmarked and unearmarked reserves.
“Given the financial challenges, and the size and scale of future budget gaps, the Chief Financial Officer advises that the 2027-28 budget process will require an early focus to allow maximum time for the development and delivery of future budget savings.”
The Cabinet also considered the rent and service charge levels for 2026-27 in January and agreed a social housing rent increase of 4.8per cent based on the latest Government policy and various service charge increases which have been built into the 2026-27 budget forecast.
The Housing Revenue Account business plan is seen by the council as ‘generally positive’ following its first year of operation and, based on current assumptions, remains financially viable over the full 30-year planning period which its says demonstrates the council can continue to meet its statutory obligations, maintain its housing stock, and support investment in services for tenants.
However, a council spokesperson added: “Whilst increasing rent by 4.8per cent in 2026-27 will provide additional income to the Housing Revenue Account, it falls short of covering off a range of additional cost pressures impacting the council’s housing service.
“Like the General Fund, the HRA has also been impacted by inflationary increases, which have resulted in additional costs relating to pay awards, utilities and contracts, material, fuel, and labour cost increases, both in the current financial year, as well as across the MTFP.”
Chesterfield Borough Council is due to consider other financial plans for 2026-27 including its Treasury Management Strategy, the Housing Revenue Account Budget, its Housing Capital Programme, its General Fund Capital Programme at its Full Council meeting this evening, February 25.
The overall council tax bill for Derbyshire residents includes an accumulation of numerous precepts determined by the county council and relevant local authorities including district or borough councils, parish or town councils and the police and fire authorities as part of their annual budget arrangements.