South Tyneside Council reports financial improvements but budget pressures remain
South Tyneside Council has reported an improvement in its in-year financial position.
The local authority’s Quarter 3 Budget Monitoring Report for 2025/26 has shown an improved in-year financial position but the wider financial outlook going into 2026/27 remains extremely difficult.
As a result, South Tyneside Council has stressed that substantial savings will still be required in order to achieve a sustainable financial footing.
The Budget Monitoring Report, which will be considered by the Council’s Cabinet on March 11, has highlighted a projected £7.628 million overspend for 2025/26.
It represented a marked improvement of £5.316 million compared with the Quarter 2 forecast.
Despite improvements, South Tyneside Council continues to face huge financial pressures that are caused by rising demand in Children’s and Adults’ Social Care, increasing numbers of pupils requiring specialist SEND transport, inflationary impacts across every major contract, and higher-than-expected costs within key frontline services.
The local authority has stated that these are pressures that are being mirrors in funding challenges faced by councils across the country.
Cllr Jim Foreman, Lead Member for Governance, Finance and Corporate Services, has welcomed the improved financial position but warned residents of the “stark” financial outlook for 2026/27.
He said: “We are starting to see the impact of the tough decisions we have taken throughout this year.
“The improvement since Quarter 2 shows that teams right across the Council have worked extremely hard to reduce and re-profile spending, generate income as well as manage demand.
“I want to thank staff for their continued commitment during what I know has been a very challenging period.
“However, we must be completely honest with our residents: this improvement does not mean the pressure has gone away.
“The financial outlook for 2026/27 is really stark.
“The underlying cost drivers, particularly in social care and SEND, continue to rise faster than the funding available to councils. Without ongoing and significant action, we could face unsustainable pressure on our reserves.
“Our priority remains protecting vital services, especially for those with the greatest need.
“We will continue our lobbying to Government for fairer funding for South Tyneside, and we will keep taking responsible decisions to ensure we remain financially resilient.”
South Tyneside Council introduced a number of cost-saving measures earlier in the year, including reductions in agency staffing, strengthened vacancy controls, clearer oversight of high cost social care placements, reductions in discretionary spend, and better use of grants and income.
The Budget Monitoring Report reiterates that without continued significant action, the scale of pressures on South Tyneside Council could lead to further erosion of reserves and increased risk of the Council having to consider Exceptional Financial Support (EFS) from the Government.
You can find out more about South Tyneside Council’s budget by visiting: https://www.southtyneside.gov.uk/article/1347/Council-budget.
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