Waverley Borough Council is facing an increasing budget crisis as inflation and the knock-on impacts of the Covid-19 pandemic wreak havoc on its finances, the council’s portfolio holder for finance has said.

Councillor Mark Merryweather (Lib Dem, Weybourne and Badshot Lea) said a period of “eye-watering” cost inflation is expected to add an additional £3 million to the council’s cost base next year, making a total of £4.6 million since the pandemic hit.

He added “cost increases for unavoidable and other growth items” have added pressure on the borough budget. These include an extra £330,000 for the “beefing up” of Waverley’s planning department after a surge of applications post-Covid, and £150,000 allocated for the Local Plan update.

The council’s independent income, from the likes of car parking, leisure centres and property investments, is recovering – but Cllr Merryweather said “it’s still below pre-pandemic levels”.

However, Cllr Merryweather did reveal the council’s collaboration with Guildford is on target to achieve net savings of “at least the £700,000 annually, as originally projected”.

To balance the 2023/24 budget, Waverley will raise its share of council tax by 2.99 per cent in 2022/23, which for a Band D home equates to £5.85 for the year. That compares to £5 last year, which would have equated to a 2.6 per cent rise.

But Cllr Merryweather warned the council’s medium-term financial plan shows a projected “unresolved budget gap”, adding after the meeting this is exacerbated by the threat of “actually having to pay net funding into rather than from central government – on top of losing what’s left of the business rates we’re allowed to keep”.

Again calling for a fair funding formula for local government, Cllr Merryweather pointed out that of the £38 million in business rates Waverley collects every year; £32m goes to central government, and the borough council keeps just £1.9m – with the remaining balance going to Surrey County Council.

The borough council also intends to raise council tenants’ rents, service charges, and energy fees by four per cent in 2023/24, which Cllr Merryweather said is a fair balance between the need to raise money and the impact on tenants.