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County council chiefs say they will have to make "difficult decisions" if they are to avoid going bankrupt.

Durham County Council says it is facing a gap of more than £40m between what it needs to spend in the next four years and the funds it will probably have available.

Councillors have warned cuts could "impact on frontline services".

The council also plans to increase council tax in April by 4.99%.

Durham County Council, which has no overall party in control, is expected to approve the council tax hike in February, with officers taking urgent measures to cut the financial deficit.

'No choice'

Councils who fear they are about to run out of money must issue what is known as a Section 114 notice.

Four authorities did so in 2023, and the Local Government Association, which represents them, .

Conservative councillor Richard Bell, the cabinet member for finance, told a cabinet meeting: “This will require some very difficult decisions being made, and these may well impact on frontline services.

"We have no choice but to grasp this nettle and make tough decisions, as the alternative would lead to a Section 114 position – something we simply cannot countenance.”

The council had lobbied central government and applied for extra funding but had been unsuccessful, said Mr Bell.

He said a perceived £6m increase in spending power was misleading because of a higher demand for social care.

Inflation had also seen costs rise, he added.

'Not sustainable'

The council’s reserves have previously been used to balance budgets, but the meeting was told that was not possible this time, according to the Local Democracy Reporting Service.

Paul Darby, corporate director of resources, said failing to increase council tax “would not be a strategy I would recommend and would create a significant budget challenge”.

Mr Darby said: “Utilising £6.5m of reserves to balance the budget next year is not a sustainable strategy and comes on the back of using £10m of reserves in the current year.”

He told the meeting there remained significant financial uncertainty beyond 2025 as well.

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