Reading Borough Council could have a budget deficit of millions of pounds in coming years, according to a prediction.

At the start of each year, the council’s budget is set for the financial year, which begins in April and ends in March the following year.

A report from the BBC Shared Data Unit shows that  Reading Borough Council is set to have a ‘predicted cumulative shortfall’ of £5.69 million for the 2025/26 financial year.

That is a two-year shortfall as a proportion of the net budget of 3.5 per cent.

The shortfall means that the council is expecting to gain less money in income.

A council finance officer’s report stated that the budget for 2025 is predicted to be in deficit due to a potential change in how much tax from businesses, called ‘Business Rates’ are collected.

In order to deal with the shortfall, the council can make funding cuts, undertake further efficiencies in working, or increase charges for council services to balance the budget.

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Budget projections are being undertaken as the 2025/26 financial year is part of the council’s Medium Term Financial Strategy, which runs from 2022 to 2026.

However, a spokesperson for the council said that the final budget positions will be set in February 2025.

Prior to that, the council will have to set its 2024/25 budget at a meeting in February next year.

The council’s finance officer is predicting a budget surplus in 2024/25.

The financial position of the council was recently discussed at a policy committee meeting, where councillors received a financial report for the first quarter of 2023/24.

At the meeting, it was revealed that the council will have an early projected deficit of £3.806 million for the 2023/24 financial year. A major reason for the rise in spending is the increasing amount of families and people presenting as homeless to the council. 

Councillor Rob White (Green, Park) the leader of the opposition said: “As we all know, behind the money there are people and families that are in real tough situations.”

Earlier, he called the escalating costs of providing homelessness support “eye-watering.”

Members of the council’s Labour administration expressed concern that both Birmingham City Council and Woking Borough Council have declared themselves bankrupt this year by issuing Section 114 notices to the government.

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Jason Brock (Labour, Southcote), the council leader, said: “The only people who really suffer when section 114 notices are issued are the residents themselves who find their services hacked to the bone by commissioners in an effort to ‘put things right’ when it could have all been avoided by much better financial planning by the government.”

At the policy committee meeting, councillors acknowledged the £3.806 million overspend and approved a series of changes to the council’s capital programme, which included investing £36.442 million in the council’s housing revenues account (HRA) for this financial year.

The HRA receives income from rent, with money being spent on managing council houses.

The meeting was held on Monday, September 25.