Cash-strapped South Tyneside Council overspends by £4.5m

South Shields Town Hall.
South Shields Town Hall.

Cash-strapped council chiefs in South Tyneside overspent by £4.5m in the last financial year.

A report, which will be going to the audit committee on Monday, reveals the council has ‘faced significant financial pressures’ during 2015/16.

We have faced far higher demands for services

Council spokesman

Council bosses say the expenses are due to a higher demand in services, coupled with Government funding reductions.

During the last financial year, the local authority had to make efficiency savings of £22m – in addition to the £100m plus efficiencies had to be achieved since 2010.

The biggest area which was overspent was in adult and children’s social care services, where £75.6m had been budgeted for but £86.4m was spent.

However, due to an under-spend in business and resources - which £33.6m was earmarked for but only £27m was used – and a £0.3 under-spend in economic regeneration, and a further differences on housing budgets - the total overspend works out at £4.5m.

On Monday, members will be asked to consider a number of contributions and transfers to and from earmarked reserves to help balance the books.

The report, called the 2015/16 outrun position statement, stated: “The council has faced significant demand-led pressures for adult care and children and families together with ongoing substantial reductions in funding from Government. This has resulted in a £4.5m cost pressure which has been funded from reserves.”

This financial year a 2% levy was added to the borough’s council tax – making it 3.95% – which will be used on adult social care costs.

But council chiefs say even this won’t cover the likely deficit for next year. They were unable is unable to increase council tax higher than 2% without holding a referendum.

A spokesman for the council said: “We have faced far higher demand for council services, particularly in areas such as adult social care, coupled with significant ongoing reductions in funding from Government.

“The council has delivered £126m of efficiencies in recent years, but last year demand simply outstripped resources.

“The decision by the Chancellor to boost adult social care spending by levying two per cent on Council Tax goes nowhere near covering our growing demand pressures.”

In 2015/16 South Tyneside Council had a net revenue budget of £136m. For 2016/17 the net revenue budget is £131m.