Finance chiefs in Watford are “more certain” about what the future holds for borough council coffers than they were last year – but the picture looks “more depressing”.

The south-west Hertfordshire authority has agreed to raise its share of council tax by 2.99 per cent from April to help balance the books.

At a meeting on Tuesday, January 30, the Liberal Democrat-run council also agreed to set aside £1million in a “redundancy reserve” to cut staff.

“Doing nothing is not an option,” said Cllr Mark Watkin (LD, Nascot), who is responsible for the authority’s budget.

“When I addressed you last year (January 2023), I stressed how uncertain our financial future was looking.

“This year, the picture is more certain but more depressing.

“As the government has begun to get to grips with inflation, CPI [consumer price index, the 12-month rise in a ‘basket’ of goods and services] now stands at 6.7 per cent, when this time last year it was over 10 per cent, which is positive, I guess.

“On the other hand, lending rates now stand at 5.7 per cent compared to 3.7 per cent this time last year, so the cost of borrowing has gone through the roof.”

September’s CPI inflation stood at 6.7 per cent, according to the Office for National Statistics, but the figure fell to 4 per cent in December 2023.

Cllr Watkin set out several reasons why the authority is facing rising costs.

Prices as part of Watford Borough Council’s contract with French multinational Veolia are going up due to pay and contract inflation.

As part of the agreed 2024/25 budget, councillors have agreed to cut parts of the Veolia contract, including £28,000 per year from Green Flag Award maintenance at Watford’s parks, £9,000 by removing flower towers and hanging baskets, and £12,000 by reducing seasonal bedding and introducing “planting schemes using shrubs”.

Housing teams are “likely to see high demand” for support and temporary accommodation “as the cost of living crisis persists into 2024/25”.

Housebuilders and developers are paying for fewer planning applications “reflecting the challenging economic circumstances”, Cllr Watkin added.

Watford Borough Council will cream £299.55 from the “average” band D council tax bill in 2024/25 – £8.70 more than in 2023/24.

The authority invited staff to apply for voluntary redundancy in December and has set aside a £1m reserve for redundancies as part of its “efficiency savings and savings from service changes” totalling £2.238m.

Among the cuts proposed in a 46-page “budget book”, the authority has agreed to cease its out-of-hours stray dog service saving £15,000 per year.

Also listed is a plan to introduce new technology such as webchats and AI in the customer services department to cut one staffing post to save £24,000 per year from 2025/26.

The authority expects “additional income from commercial lettings [at] Watford Business Park” but “a delay to achieving new lettings or unexpected lease events will create a budget pressure.

To save cash in the short term, councillors agreed to delay some of its projects into the future.

A planned town boundary signage replacement due in 2023/24 has been pushed back to 2026/27.

Improvements to Watford’s parades, Lower High Street and the High Street and shrubs will also be delayed until 2026/27.

The authority has balanced its budget, a legal requirement.

An authority which cannot balance its budget faces filing a Section 114 notice to enter a scenario sometimes known as “effective bankruptcy”.

Several authorities have filed these notices since 2018, including the Conservative-run Northamptonshire County Council and Thurrock Council in Essex, and Labour-run Birmingham and Nottingham city councils.