Setting Cornwall Council’s budget for 2025/26 has led to council officers and councillors “tearing their hair out and sleepless nights”, a meeting heard today (Wednesday, November 13).

The council’s Conservative Cabinet met to agree draft budget proposals which include a 4.99 per cent maximum council tax increase which includes a two per cent adult social care precept (for the third year running) and the application of a 100 per cent council tax premium on second homes. The net revenue budget for 2025/26 is £828.866m, which is an increase from 2024/25 of £58m.

In a similar story as heard at previous meetings over the last couple of years, councillors highlighted that the council is on a financial cliff edge without more support from central government, but stressed that unlike many other local authorities across the country it is not facing bankruptcy.

Deputy leader and portfolio holder for resources Cllr David Harris: “We continue to strain every sinew to overcome the pressures. It feels like it’s getting harder and harder and harder. Hopefully one day it will get easier. We can’t and won’t throw the towel in.

“I know it’s hard for officers … to find savings or more money, but I do not want this council to be the latest in a growing number of local authorities effectively throwing the towel in and applying to the government for exceptional financial support. Not on my watch.”

He added: “The Chancellor’s Autumn Statement did provide a glimmer of hope for local government in the shape of a return to multi-year settlements … but not yet … and an up-to-date assessment of needs for local revenues which I’m hoping is code for a fairer funding review. None of that helps for 2025/26.

“What will hopefully help us out – albeit we don’t know to what extent at the moment – is some of the additional funding the Chancellor announced for next year, including £1.3bn for local government of which £600m will be directed to social care. In the absence of clarity of how much of that money will come Cornwall Council’s way, we have had to make some assumptions in order to come up with a balanced draft budget.

“Even if what we receive is more than we’ve assumed, it won’t be £48m more, which was the size of our forecast budget gap when we started this process. Consequently we are in the invidious position of having to bring forward savings proposals to that value. I know that officers and Cabinet members have literally had sleepless nights and have been tearing their hair out on some of this stuff.

“We are faced with making some deeply unpalatable choices.”

Cllr Olly Monk, portfolio holder for housing, pointed out that his department had been able to make savings in temporary and emergency accommodation by re-negotiating rates with providers, which has been “reasonably successful”.

“However, there is still a rising demand for temporary and emergency accommodation. It’s not the council making people homeless – it’s simply the amount of people who find themselves in extremely difficult situations which continues to push on the council’s resources.”

The council’s portfolio holder for the economy, Cllr Louis Gardner, cautiously welcomed the government’s agreement to continue Shared Prosperity Funding (SPF) for Cornwall for at least another year, though there are very few details currently. “SPF has been incredibly successful in Cornwall – £137m of government funding has leveraged an additional £56m of match funding spread over 143 projects, which including projects from the Community Levelling Up Fund and other grants now numbers over 300 projects.”

However, he said that “contrary to some reports by local MPs” the government has not relaxed the end date of March 31, 2025 for the current batch of funding and has stated that if there’s an underspend by that date it will be taken off the following year’s allowance.

“So this is a huge challenge,” said Cllr Gardner. “We still face a cliff edge on March 31, 2025 and we now face a second cliff edge on March 31, 2026. We do not know what the future holds in terms of funding for Year 4. If the government are true to their promise to maintain the same ratio, Cornwall’s allocation would be £49m.

“However, there are a number of factors which lead us to believe that will not be the case, but we do not know and we don’t even know when we will find out.”

Council leader Cllr Linda Taylor said: “One in four councils in England say they are likely to have to apply for emergency government bail-out agreements to stave off bankruptcy in the next two financial years.” She thanked her team at the council because “Cornwall is not in those stats and that has not been an easy task to bring us to this position”.

Liberal Democrat councillor Colin Martin said the Cabinet needed to be clearer about the consequences of some of the budget proposals.

Following the meeting, Independent councillor Julian German told us: “In today’s budget papers, of the additional £23m being raised by the increase second homes council tax, none is being used to address the housing crisis. Despite calls by Independent Cornwall councillors for this money to be ringfenced for addressing the housing crisis, and Cllr Harris verbally agreeing at a full council meeting, none is being used this way. Instead, around £10m is being put into reserves.”

Cllr Harris responded to Cllr German’s accusation, saying: “This is absolutely incorrect, I have never made such a statement, I have been consistent in saying that we need all of this money in our general revenue budget, a significant part of which already goes towards housing as this is one of our priority areas.”

The draft budget proposals will now go out to public consultation from November 15 to January 5.