South Tyneside council tax rise and £11m savings plans move a step closer

South Tyneside Council’s ruling Labour cabinet unanimously supported the borough’s medium-term financial plan (MTFP) for 2026-2031 at its latest meeting.

The proposals set out how the authority aims to deliver a balanced budget and continue to invest in residents’ priorities against a backdrop of increasing cost pressures and the “most challenging financial climate in more than a decade”.

Councillor Jim Foreman, cabinet member for governance, finance and corporate services, said they have tried to “minimise” the impact the proposals have on residents but it has been “an extremely difficult period of time”.

To help bridge the funding gap and protect statutory services, the council is proposing a 4.95 per cent council tax increase for 2026/27.

This is made up of a two per cent adult social care precept, reflecting rising pressures in care services, and 2.95 per cent general increase.

For a Band A property, this represents an increase of £66.50 per year, or £1.28 per week.

Support remains available for households facing financial hardship through existing welfare and council tax reduction schemes.

Cllr Foreman, speaking at the meeting at South Shields Town Hall (on Wednesday, February 4), said the council has listened to residents and tried to “protect” services while having to make a “huge amount of savings”.

He said: “If the cabinet are like me they’ve been sleeping, eating and thinking about these proposals for the last 12 months and it’s been a really difficult time.

“We have tried as a cabinet to minimise the impact which it has on our residents, but as I said it’s been an extremely difficult period of time.”

Elsewhere to balance the budget, the council must deliver £11.8 million of savings in 2026/27.

These will be achieved through “targeted efficiencies, service redesigns and income generation”, including streamlining adult social care charging policies to “ensure consistency and sustainability while still protecting the most vulnerable”.

Other proposals include making “small adjustments” to library opening hours to “modernise operations” while keeping all main sites open six days a week.

Additionally the council will update the events programme, including introducing “reasonable charges” for selected summer concerts to help keep “much loved community events sustainable for the future”.

The will also look to make “targeted reductions” to some non-statutory voluntary and community sector grants, while strengthening collaboration and alternative funding routes.

The council said these proposals have been informed by extensive public consultation and are supported by equality impact assessments to ensure fairness and transparency.

Councillor Liz McHugh, cabinet member for children and families social care and education and skills, said: “This budget has been horrendous, for all the portfolios it’s awful, because it’s not something we want to do.”

In total the local authority is anticipating a reduction of around 100 posts over 2026/27, which is approximately three per cent of the council’s 3,500 filled posts.

Local authority bosses have said they will continue to manage staffing levels carefully by only recruiting to essential posts and staffing reductions will be focused on management and back-office functions to protect frontline services.

The council will also consult with staff and trade unions throughout and provide full support to those affected including opportunities for redeployment where feasible.

Councillor Ruth Berkley, cabinet member for adults, health and independence, added: “I want to acknowledge how challenging it has been to comply with our responsibility to produce a balanced budget.

“None of our decisions are made lightly or easily in meeting our fiscal responsibilities and ensuring the best for our communities.”

Local authority bosses have highlighted how rising demand in adult social care, children’s services and SEND transport continues to place substantial strain on budgets.

Meanwhile they added inflation, increased complexity of need and national funding constraints mean the council “must spend significantly more simply to maintain current levels of service”.

To ensure frontline support remains strong, the council is proposing to invest in new care models and prevention services and expand in borough children’s accommodation to reduce costly out of area placements.

Elsewhere they are looking to introduce “innovative” approaches to SEND transport such as independent travel training and personal travel budgets

These measures are designed to “improve outcomes and manage future demand more effectively”.

The council is also prioritising safer, stronger neighbourhoods, with £500,000 allocated to continue its community responders function.

Councillor Jane Carter, deputy council leader, praised the investment, adding it “is no mean feat” given the financial challenges they face.

Elsewhere the council is looking to continue to invest at scale in its people, places and communities using external funding to support capital investment.

Local authority bosses said key regeneration and growth programmes remain at the heart of the council’s ambitions, with various projects lined up.

These include the £95m Tyne Coast College relocation to South Shields, £20million Pride in Place funding in Jarrow, highways upgrades and investments in housing.

Cllr Berkley added they also “retain the vision to improve people’s lives” by building “high quality” extra care accommodation throughout the borough.

Despite the “modest” uplift in core funding announced in the Local Government Finance Settlement for 26/27, the council has warned that this improvement is short-lived, with resources expected to flatline and then fall in the years ahead.

Savings required over the next two years are expected to be in the region of £24million.

Cllr Foreman said: “We know how difficult it’s been this year to get where we are and it’s going to be extremely difficult in the next two years unless we get the fair funding review back on track and in our favour which we all are looking to do.

“We are in for some difficult times.”

Councillor Tracey Dixon, council leader, added it has been “a very difficult, challenging year” and they have been in “constant contact” with the government to lobby for more funding for South Tyneside.

The MTFP is based on robust estimates and sets a “path back toward greater financial resilience, including rebuilding reserves to safe levels”.

After gaining support from cabinet, the draft MTFP, capital and investment strategy, and treasury management strategy will now be considered by borough council for final approval on 26 February 2026.