South Tyneside Council bosses warning of big overspend due to rising demand and inflation

The update came as the latest meeting of South Tyneside Council’s ruling cabinet received a budget monitoring report looking at the period from April to September 2024.

Councillor Jane Carter, deputy council leader, outlined how the local authority is currently estimating a £7.089million overspend for its general fund revenue budget for 2024/25.

The cabinet member for governance, finance and corporate services highlighted how this is down to pressures in several areas across the local authority, with many also being issues for other councils across the country.

Cllr Carter, speaking at the meeting (on Wednesday, January 8), stressed “prompt action” is being taken by the council to “mitigate against and reduce the spending pressures” identified.

She said: “This projection takes into account continued increased demand in children’s and adult social care, home to school transport, and persistently higher levels of inflation, especially around pay awards, and contractual inflation across all budget headings.

“The main areas of spending pressures are in children’s and adult social care, learning and early help, place, transport and legal and governance.

“The pressures identified in social care and learning and early help reflect similar pressures being faced by many councils across the country.”

She added steps being taken by the council to help tackle and reduce the overspend include a reduction in agency staff, the introduction of vacancy management and reducing discretionary spend.

The council is also “tightening” projected spend in the capital programme and looking to maximise income, including contributions from partners for social care, and utilisation of grants against existing spend.

Other measures include a full audit of the local authority’s vehicle requirements “to reduce the number of hire vehicles” the council utilises.

Council reports noted the children’s and families social care service is estimating a £6.657million overspend, with learning and early help facing a £3.736million budget pressure and adult social care £2.589million.

Recommendations approved by cabinet included noting “the utilisation of specific reserves is likely to be necessary during the financial year”.

As of April 1, 2024, South Tyneside Council had £56.918million in reserves, however just £15.542million are classed as “accessible reserves” to support budgets moving forward.

Cllr Carter added: “A significant proportion of our reserves are committed for costs which we incur in future years, leaving modest sums to cover unanticipated costs.”