Community leaders are facing extra spending of £785,000 in the next year due to staff pay increases and rising inflation - but they have already set aside reserves to deal with the problem.

Mid Suffolk District Council (MSDC) has forecast the figure for the financial year ending April 2023.

However, it plans to use a £500,000 inflationary pressure reserve, set up in 2021–22, to offset part of the overspend.

The rest would be funded through the growth and efficiency fund, which would decrease from £3.351m to £3.065m as a result.

The forecast is set out in a report going to council next Monday.

An MSDC spokesperson said: “Like everyone else, we are facing increasing costs due to inflationary pressures.

“However, we are carefully monitoring any potential overspend through regular quarterly reporting to cabinet and will take action if necessary.

“Thankfully, the council is in a better position than many, and has sufficient reserves – including a £500k Inflationary Pressure Reserve set up in 2021/22 – to ensure we can continue to support our residents, communities, and staff through the financial challenges ahead.”

The area expected to create the highest additional financial burden is employee costs, with the 2.2% increase budgeted by the council in February overshadowed by the national pay award offer tabled in July, which is nearer to 8%. If this goes through, it will result in an additional cost of £638k. This pay increase will impact salaries at all local authorities in the UK.

The second highest extra cost is expected to result from the price of electricity, expected to cost £438k more than budgeted in February due to a 244% forecasted inflation rate.

Of this, £368k for electricity at leisure centres is due to be repaid by the leisure centre providers. So, the estimated additional cost to the council for electricity is £70k. However, the report accepts there is "significant risk" providers will ask for additional support from the council to cover this. Leisure centre buildings are owned by the council, but run by separate providers.

The report also lists risks produced by the changed financial position. Importantly, it describes the likelihood of savings and efficiencies not being delivered as "probable".