PEOPLE living in Colchester could face a hike in council tax after it was revealed the city's authority is set to overspent by £1.916 million last year. 

Members of Colchester Council's cabinet will discuss the financial planning framework for the next five years at next week’s meeting on July 10. 

A report, which councillors will consider, found Colchester Council overspent on homelessness and temporary housing. 

In a council document, where the outline of the plan is set, it describes Colchester’s finances similar to the national picture. 

The report said: “There is substantial continued pressure on Local Government finances nationally; it is a situation echoed locally here at Colchester Council.” 

The report said the council faced "substantial pressure" throughout the last financial year, where a series of overspends were reported. 

In better news, the council’s reserve levels were called “relatively healthy at this stage”. 

A key part of the financial planning framework, which will be set out for the next financial year 20244/25 as well as the five-year period until 2029/2030, is addressing the projected budget deficit of £1.991million for the next year. 

The report also revealed overspends peaked at £1.916 million last year. 

The report added: “Inflation was a particular problem again in the year, especially on staffing costs, with the eventual pay award for 2023/24 exceeding the council’s budget provision by approximately £600,000.” 

The council also faced a significant overspend of £1.216 million on homelessness and temporary accommodation. 

This is part of the national trend, the report said and mentions as another contributing factor a shortfall in income in the planning and bereavement services, which put more pressure on the finances. 

For the following financial year, staff payment will be an ongoing issue as “pay demands for 2024/25 (from Unions) are already significantly more than the original budget assumption of 3 per cent; there is therefore a risk to established budgets if a local settlement of a similar magnitude is reached in Colchester”. 

The council's Fit for the Future programme aims to save the authority £6.262 million in the next three years while protecting core services.

Another stream of income for the council would be another raise of council tax, as it was raised by 2.99 per cent, the maximum amount allowed without holding a referendum. 

The report added: “Members will – yet again – have a difficult decision in setting the council Tax for 2025/26. Raising it by a similar sum would help balance the books and protect local services.”