Four years of council tax rises backed by officers

Council tax bills in Sheffield should rise by almost 5% a year for the next four years to prevent "significant and recurring budget pressure", officers at the local authority have said.

The report, outlining the council's financial outlook between 2027/28 and 2030/31, said rises of 4.99% were "essential to protect the council's long term funding base and financial sustainability".

Any increase of 5% or above would mean a local referendum on the increase would need to be held.

It is elected councillors, rather than officials, who make the final decision on the size of any increase. The report said additional hardship funding would be available to support those hit hardest by any future rises.

The report, covering the four-year period starting next year, outlines that the council needs to make £66.6m of savings but also faces a budget gap of £10.4m by 2030/31.

Officers said this was a stronger financial position than the authority been for many years, but maintaining that funding base remained "critical".

"Maximum council tax increases are essential to protect the council's long-term funding base and financial sustainability," officers wrote in the document.

"Reducing annual increases by just 1% would permanently reduce income by around £36m over the medium term period, creating an unrecoverable structural funding gap.

"Any reduction below the maximum increase would have both an immediate and permanent impact on the council's finances.

"A 1% council tax increase generates approximately £3.2m in 2027/28, meaning that not applying the full increase would create a significant and recurring budget pressure."

The council has dipped into its savings, known as reserves, over the past few years and is now aiming to build these back up.

General reserves were £321m three years ago, but have been used to balance budgets, fund overspends, settle equal pay claims and finance strategic investments.

Total reserves are forecast to reduce to £164m by the end of 2027/28 - which the council says is the lowest level for many years.

The council said it aimed to replenish its reserves to £216m by 2030/31 by using savings in "a planned and deliberate way" rather than to balance budgets in the short term.

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