Struggling councils facing 'tough decisions' - with fears some could go 'bankrupt', North East leaders say

Struggling councils are warning North East local authorities are facing a “challenging” financial outlook over the coming years with “tough decisions” on the horizon for all – and fears some in the UK could go “bankrupt", according to civic chiefs.

The latest meeting of North East Combined Authority (NECA) Leadership Board heard how councils are set to face continued struggles following recent government financial announcements and the cost of living crisis.

Councillor Claire Rowntree, Sunderland City Council deputy leader, said local authorities and partner organisations “must prepare for further budgetary pressures” in the coming years on top of existing challenges.

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She said: “We must all continue to respond to the budgetary challenges we face while keeping an eye on the government’s future plans for public expenditure.

The Deputy leader of Sunderland City Council, Councillor Claire Rowntree. Picture by FRANK REIDThe Deputy leader of Sunderland City Council, Councillor Claire Rowntree. Picture by FRANK REID
The Deputy leader of Sunderland City Council, Councillor Claire Rowntree. Picture by FRANK REID

“In all likelihood the financial outlook for all our organisations and our partners is going to become more challenging and there will be some tough decisions for us all to take.”

She added this comes amid the backdrop of the cost of living crisis which is leaving people to wonder “how they are going to pay bills or wages, cover debts, maintain roofs over their heads or keep their businesses open”.

Cllr Rowntree continued: “Many of the most vulnerable people and businesses in our communities are at crisis point already or under severe pressure due to price rises.

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“It will be absolutely imperative that wherever we can we concentrate on supporting our residents, communities and businesses whilst continuing to drive our innovative and exciting ambitions for our region.”

Councillor Martin Gannon, leader of Gateshead Council and Transport Lead for the NECA, echoed such concerns, warning rising energy and inflation costs have “effectively crippled” budgets for North East local authorities this year.

He added “current Government turmoil” and the expected lack of increased funding is going to cause further problems in the years to come.

Cllr Gannon said: “We are being told that given what has happened, the likely levels of reduction in local government will make the cuts between 2010 and 2015 look small fry. That’s impossible.

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“I genuinely do not know how local authorities in the North East will balance their budgets over the next two or three years.”

He added this is despite the fact local authorities in the area are “well-run, effective and efficient”, even though there are areas of “extreme deprivation”.

He added: “We find ourselves in the middle of an incredibly difficult financial situation as local authorities and the plight that is facing our residents and our ability to be able to respond to that.

“County Durham, South Tyneside, Gateshead, Sunderland… all of our areas have considerable deprivation, with families really struggling at the present time. Our ability to support them is really challenged.”

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“The authorities in the North East are well run, we are effective and efficient. We are not the ones on the edge, despite the fact that we are areas with extreme deprivation.

"The Local Government Association has a list of 100 authorities they are supporting and there is not one of us on that list. There will be a lot on that list across the county that will go bankrupt.”

The comments were made at the meeting held at Sunderland City Hall on Tuesday, October 4.