South Tyneside chiefs approve council tax rise and spending cuts amid 'huge turbulence' during covid pandemic

This week, the authority’s ruling cabinet endorsed the Medium Term Financial Plan for 2021-2026, which includes spending plans for the coming financial year.

The council needs to save a further £8million in 2021/22 – on top of the £175million it has already saved since 2010 – due to a tight financial settlement from central Government, as well as the impact of Covid-19, which has both hit income and led to extra spending.

To help balance the budget, proposals are being brought forward to increase council tax by 3.95% from April 2021.

The rise would be split between a 3% precept to be ring-fenced to meet rising adult social care costs and a 0.95% increase in core council tax.

When excluding precepts for the fire service and police, this would be an increase of 83p per week for a Band A household, of which the majority of homes in South Tyneside fall.

Councillor Joanne Bell, the council’s lead member for resources and innovation, introduced the draft budget at a cabinet meeting on Wednesday, February 3.

“The pandemic has caused huge turbulence within our finances, costs have risen and income has fallen,” she said.

“Government has stepped up and in with a range of temporary funding support but off the back of 10 years of extreme austerity we still have to deliver further savings to ensure we’re able to continuously invest in our priority areas.

“The law requires us to balance the budget on a year by year basis but we must also consider ensuring our finances are sustainable over the longer term whilst financial circumstances remain challenging.”

Capital spending of £360million is planned over the next five years on major infrastructure projects, such as sustainable energy projects and improvements to highways and footpaths.

Cllr Bell said the budget would help “strengthen the foundations of economic recovery and growth in the borough,” with funding to support businesses, job growth and to develop town centres and major employment sites.

Wider spending plans include funds for flood defences, continued investment into adult and social care services and expanding provision for those with special educational needs.

The council is also developing plans to ‘directly build council houses’ following the easing of Government restrictions.

Cllr Bell added: “We know that many households are struggling due to the pandemic, especially those on the lowest income.

“Consequently, the proposed budget includes a reduction for 2021/22 of up to £150 in the council tax bill for residents of working age households in receipt of council tax support.

“Whilst we navigate the storms of the pandemic, these robust budget plans will ensure that we remain financially sustainable, invest in priorities and look after the most vulnerable.”

Following cabinet backing, the Medium Term Financial Plan will be presented to full borough council for final decision on February 25.

It is expected the plans will be voted through due to Labour’s large majority on the council.

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