Harrogate council could dip into reserves to cover soaring energy costs

The authority has proposed to set aside half-a-million pounds in emergency money in case it is unable to balance the books at the end of its final year.

With sharp rises in energy prices expected in autumn, the council has forecast to spend an extra £1 million on gas, £750,000 on electricity and £366,000 on fuel to keep its buildings and services running this year.

Paul Foster, head of finance at the council, told an overview and scrutiny meeting on Monday that it would be a "worst case scenario" if cash reserves were used and that it was still "early days" in predicting how the year would pan out.

He said: "There is an overspend position which is not something we have experienced - even during Covid we managed to out-turn on budget.

"Hopefully the position on utilities may improve.

"We haven't had any bills yet and this will be updated as the year progresses."

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Mr Foster added the increased energy costs was expected to be partially offset from extra recycling income.

He also said money was being saved due to staff vacancies and that these savings were expected to rise further as the council is currently experiencing a high turnover of workers.

Yet the forecast still represents a cause for concern for the authority which this time last year was predicting an underspend of £32,000 for 2022/23.

Meanwhile, households have been warned annual energy bills could hit £4,266 next year.

The estimate from consultancy firm Cornwall Insight means the average household would be paying £355 a month, instead of £164 a month currently.

The government has already announced all households will receive £400 off their fuel bills this autumn when eight million of the poorest will get an additional £325.

There will be a separate £300 payment to help pensioners - also expected to assist eight million households.

But Labour has called on the government to go further, with party leader Keir Starmer set to call for a freeze on the energy price cap which determines the maximum amount suppliers can charge customers.

Previously, the level of the cap was only reviewed every six months, but UK energy regulator Ofgem changed the rules this year, meaning that it is expected to rise in both October and again in January.

By Jacob Webster, Local Democracy Reporter