South Tyneside Council faces ‘tough choices’ ahead of 2026/27 budget plans
South Tyneside Council has outlined the challenges it faces to save money.
South Tyneside Council’s Overview and Scrutiny Call-in Committee is set to be updated on the borough’s financial position as preparations start for the 2026/27 budget and the next Medium Term Financial Plan.
The local authority says it is being transparent about the scale of the challenge ahead, with early modelling suggests savings of at least £7million, and potentially more, could be required over the course of the next year.
The Council states that this is driven by a rising demand for statutory services, ongoing economic pressures, and uncertainty around the Government’s Fair Funding Review.
Councils across the country have had to make significant savings since 2010 due to the reductions in central government funding and a rising demand for services.
Since 2010, South Tyneside Council has delivered more than £210 million in savings despite continuing to invest in services such as social care, school transport, and community support.
To date, the local authority has identified areas where around £5million in savings could be made:
- A major review of adult social care services, forecast to save £3million over two years.
- Transformation projects using modern technology and AI tools, expected to deliver over £2 million in efficiencies.
- Income generation or a reduction in Council subsidies across non statutory services like leisure, car parking, school meals, and more.
South Tyneside Council has also highlighted areas for investment, including proposals to retain the popular Business and Community Responders, currently funded through the UK Shared Prosperity Fund, to respond to anti-social behaviour and assist vulnerable residents and businesses.
Cllr Jim Foreman, Lead Member for Governance, Finance and Corporate Services, has highlighted that the local authority is going to have to make some tough financial decisions at it moves forward.
He said: “We’re being upfront with everyone about the financial pressures we face.
“We’re doing everything we can to protect frontline services and support those who need us most. But the reality is that we may have to make some very difficult decisions.
“Scrutiny plays a vital role in helping us test and refine our plans, and we welcome their input as we move forward.”
South Tyneside Council spends around 80% of its revenue budget delivering services it is required to provide by law - mainly on adult and children’s social care, some elements of home to school transport, highways, waste collection, and disposal.
With the cost of these statutory functions continuing to grow, the local authority needs to deliver the services differently to reduce costs, as well as considering which non statutory services really need to be delivered.
Cllr Foreman added: “Statutory services include things like adult social care and safeguarding children, essential services we’re legally required to deliver.
“Non-statutory services, like welfare support, CAF schemes and events, aren’t required by law, but we provide them because they can help people thrive.
“But here’s the challenge. The cost and demand for statutory services keeps rising, leaving less money for the other things we want to do.
“While a quarter of councils have faced government intervention, South Tyneside Council has not despite significant financial pressures, including an overspend last year and a forecast gap next year, even after substantial investment to meet rising demand.
“That’s why we need to make tough choices. Statutory services must come first and for the rest we’ll target our support to try and make things fairer for those who need our help the most.”
Following questions about debt, South Tyneside Council has confirmed that its capital programme is focused on core assets and externally funded regeneration schemes.
The local authority is forecasting that debt levels will be reduced by 10% over the next three years - helping it to lower long-term servicing costs.
The Council borrowed in the past when interest rates were low, to provide the facilities that people rely on now like major infrastructure works, the Word and leisure facilities in each town.
Now South Tyneside Council relies more on external funding to pay for capital schemes, with the Council’s fixed assets valued at £1,353 million in the latest accounts.
Independent external auditors have ruled that debt levels are not considered unusual for South Tyneside Council’s size and operations.
The Overview and Scrutiny Call-in Committee is also set to be briefed on the potential impact of the Government’s Fair Funding Review, which could shift resources away from areas like South Tyneside.
South Tyneside Council’s Medium Term Financial plan will be brought forward for consideration in early 2026.
You can find out more about the budget, via: https://www.southtyneside.gov.uk/budget.