Burnley Council faces £1.7m budget shortfall

Burnley Council still needs to find almost £1.7 million of savings over the next three years despite having already delivered £29.5 million of cuts and efficiencies since 2010, new financial planning documents reveal.

A report to a meeting of the authority’s executive on Wednesday shows the council is forecasting a funding gap of £1.682m between 2027/28 and 2029/30, first identified in March, with officers warning that no new savings proposals have yet been identified to close the gap.

The shortfall is made up of £594,000 in 2027/28, £727,000 in 2028/29 and £361,000 in 2029/30. Even after previously approved savings worth £160,000 are taken into account, the council says further measures will be needed before budgets can be balanced.

Finance officers said that the reason for Burnley’s financial difficulties is that the borough continues to be affected by long-term reductions in government support, that cannot be wholly fixed by raising Council Tax.

According to the report, government settlement funding has fallen by 58 per cent, or £9.7m, since 2010.

Changes introduced through the Government’s Fair Funding Review have altered the way funding is calculated, reducing the apparent fall to 31 per cent, or £5.1m, but officers say the authority has nevertheless had to find £29.5m of savings over the past 16 years to balance its books amid growing demand and dwindling budgets.

Burnley Council’s executive heard that continuing concerns about future funding settlements will see the borough’s funding fall from £12.133m in 2026/27 to £10.253m by 2029/30. Officers describe this as a ‘significant reduction’ despite Burnley’s high levels of deprivation.

With limited revenue raising power, one of the few levers that the council could pull is to increase Council Tax, but the authority’s own modelling shows that this would do little to change the growing gap between income and revenue.

The medium-term financial strategy assumes a council tax rise of 1.99 per cent in 2027/28. Under that scenario the budget gap remains £1.682m. However, the report models an alternative scenario where council tax is increased by the maximum 2.99 per cent.

In that case, the overall shortfall would reduce to £1.422m, around £260,000 lower across the three-year period.

Reports noted by the executive at Wednesday night’s meeting revealed that there are also a number of longer-term challenges that are emerging that will make it harder to balance Burnley’s books.

Revenue monitoring papers submitted to the executive show the council is currently forecasting a £176,000 overspend in 2026/27, although officers expect that position to be recovered by the end of the financial year. The forecast includes £176,000 of savings which have yet to be identified.

Among the biggest budget pressures this year is a projected £150,000 shortfall in cremation, burial and internment income, alongside higher fuel and utility costs linked to the Iran war and its impact on energy market volatility.

The report also points to several wider financial risks that could worsen the medium-term outlook.

These include uncertainty over whether a £600,000 funding adjustment secured after lobbying by the council and Burnley’s MP Oliver Ryan will continue beyond 2026/27, inflationary pressures, future pay awards, energy costs and the financial performance of major regeneration schemes.

Officers specifically warn that developments including Pioneer Place and the Manchester Road regeneration scheme, now occupied by Lidl, required substantial long-term borrowing and depend on achieving forecast income levels over coming decades. The report describes them as presenting a “significant financial risk” to the authority.

The financial planning report notes that proposals to close the remaining budget gap will be developed before the 2027/28 budget is presented to Full Council next March.

After the report was read to the council, Cllr Lishman noted the volatility facing council finances in the coming years, saying: “There is no certainty, so we will have to wait and see.”