South Tyneside spending chiefs insist they are improving despite 'dismal' probe into finances

Concerns have been raised about South Tyneside Council’s finances following an independent review – but town hall chiefs insist the findings will “assist further improvement”.
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The local authority invited the Chartered Institute of Public Finance and Accountancy (CIPFA) to assess its financial management.

But the final report awarded the borough council just two stars out of a possible five and was skeptical about previous borrowing and budget planning.

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It also recommended an overhaul of oversight on spending, including recruitment of new independent members to the council’s Audit Committee and enhanced training to “increase the level of scrutiny”.

South Shields Town Hall.South Shields Town Hall.
South Shields Town Hall.
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According to CIPFA, the council should plan savings over at least three years, adding that “simply quoting a future savings target which is not based in the realities of the authority’s operations is storing up risk”.

The report also noted the local authority has “one of the highest levels of gross external debt per head of population” compared to its ‘statistical neighbours’.

At the last meeting of the full council (September 29) the CIPFA report sparked criticism from a number of independent opposition councillors, citing concerns over high levels of external debt, “unidentified financial savings” in the medium-term and the “lack of a contingency” for inflationary pressures.

Cllr Joanne Bell.Cllr Joanne Bell.
Cllr Joanne Bell.
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Cllr Glenn Thompson said the two star rating was “dismal” and that the “buck stops” with the council’s Labour Group over historic borrowing.

Cllr Thompson claimed the council has debts worth almost £800 million, including loans and private finance initiative (PFI) obligations which “count as debt”.

Cllr John Robertson said the CIPFA report was “damning”, while Cllr Keith Roberts added South Tyneside Council “needed to be shut down and put in special measures”.

Cllr Glenn Thompson.Cllr Glenn Thompson.
Cllr Glenn Thompson.

But Cllr Joanne Bell, cabinet member for governance, finance and corporate services, hit back, insisting the “vast majority” of UK local authorities two-star rated that South Tyneside was “on the cusp” of a three-star rating.

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Cllr Bell also questioned the debt figures asserted by Cllr Thompson.

And she added CIPFA had “rightly recognised” increased borrowing since 2010 were “not sustainable”, but that previous fixed-rate borrowing would be protected from inflation.

South Tyneside Council has slashed budgets over the last decade and recent estimates predict a funding gap of around £3.5 million for the 2023/24 financial year.

A council spokesperson called the CIPFA report part of a drive to “take a hard look” at the local authority and “create a baseline for improvement”.

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The borough has also pointed to recent single-year funding settlements from the Government, which have stymied long term financial planning.

In terms of historic borrowing, the council stressed this is underpinned by assets worth more than £1.3 billion, including housing stock, community facilities, schools, roads, footpaths and more.

A council spokesperson added: “The current financial climate is very uncertain with a new government in place, no clarity on its future spending plans, high levels of inflation and significant funding reforms around adult social care.

“Our emerging 20-year vision and strategic priorities over the medium-term will further shape our financial plans, providing value for money, protecting frontline services and improving the lives of our residents.

“The council accepts its findings and is working on the planned improvements.”