A LOCAL authority risks being hit hard by current rampant inflation creating a possible cash gap between income and spending of £23million.

Blackburn with Darwen Council's executive board has been warned that the costs of energy, oil and pay awards could cause it to face a financial crisis.

Its resources boss Vicky McGurk said: "We will be hit by inflation in the same way residents are suffering from the cost of living crisis."

She presented a special financial update report to her senior coleagues to warn of the scale of the problem.

In it she said: "The forecast funding gap for the period to 2025/26 is now estimated to be £13.1m.

"The range of potential positions is a deficit of £3.5m to a deficit of £23m."

Conservative group leader Cllr John Slater thanked for the report and said: "These are major concerns. These are things out of our control and it may get worse before it gets better."

The meeting agreed to write to the Department for Levelling Up, Housing and Communities seeking an increase in the council’s funding settlement for 2022/23 to reflect the significant increase in inflation.

Cllr McGurk's report said: "Key changes to the medium-term financial plan include an update on the inflation assumptions for energy costs to reflect the significant change in the wholesale price of energy and its potential impact on the council’s activities, for example the operation of Leisure Centres. This in turn has impacted on the assumed increase in commissioning costs for both adults and children’s services.

"The key risks to delivery of the budget that executive board need to remain sighted on are:

* the implementation of savings;

* the pay award in 2022/23 currently budgeted at two per cent but with general inflation at seven per cent every likelihood it could be higher than budgeted;

* energy inflation;

* demand for adult and children’s social care; and

* the impact of Covid-19.

On the latter the report said: "Whilst the rates of infection for Covid-19 have fallen, and continue to fall, the risk of new variants remain and with all legal restrictions lifted, there is potential for surge infections to occur.

"The government has provided no new funding so any activity undertaken will have to be funded from within existing resources."