South Tyneside Council is facing a £3.5 million funding gap to balance the books next year, under the latest predictions from finance chiefs.
Figures were revealed this week during an update on the council’s Medium Term Financial Plan, which will include an annual budget for 2023/24.
The finalised budget is normally presented in January or February every year setting out investments and savings the local authority has to make.
Earlier in 2022, a request was made by borough councillors to bring the budget in for discussion at an earlier stage.
This aimed to give the council’s overview and scrutiny coordinating and call-in committee a chance to have more input into the final draft.
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At a council meeting on Tuesday, September 6, the main figures responsible for developing the budget were quizzed on the challenges ahead.
This included Stuart Reid, the council’s director of business and resources, and councillor Joanne Bell, cabinet member for governance, finance and corporate services.
Councillors heard the council was predicting a funding gap of £3.5 million for 2023/24 with “difficult choices” ahead.
Finance chief Stuart Reed added “austerity has not gone away” and that the council needed to spend more money every year to maintain the “same level of service”.
Since 2010, South Tyneside Council has seen millions of pounds of government funding slashed from its budgets, leading to cuts to some services, increases in council tax and reduced staffing numbers.
National factors are expected to impact the council’s books going forward, including social care funding reform, as well as the ‘legacy pressures’ for adult social care services from the Covid-19 crisis.
Other pressures include energy costs for council facilities, pay inflation/ recruitment and school transport costs for those with special educational needs and disabilities.
While pressures remain in day-to-day revenue spending, council chiefs confirmed there would be continued capital investment into town centres and core infrastructure such as highways, ICT and vehicles.
Despite uncertainty around the council’s future financial position due to inflation, Stuart Reed said the council had “managed before and will manage in the future”.
During discussion on the plans, several councillors acknowledged the early funding gap position could change in future.
However members agreed that investment should be focused on core services including area management, such as street maintenance and tackling fly-tipping.
Councillors also heard there was around £1 million in reserves linked to the Covid-19 pandemic, with a proportion expected to be used for additional demand on social care.
In response to a question from councillor Ian Forster about the local authority’s borrowing, council chiefs said the council didn’t expect to have to borrow more in coming years.
This was because loans from the Public Works Loan Board were taken out when rates were low and at fixed rates, meaning they will not change with inflation.
Councillor Joanne Bell, the cabinet member responsible for developing the budget, added spending plans were at the “halfway stage” and that there were “still savings to be made”.
The cabinet member insisted the 2023/24 budget would target investment where it is needed, as well as reacting to wider issues such as rising energy costs, inflation and the cost of living crisis.
Following discussion, the committee made several formal requests.
This included more investment into area management, a request to redirect some of the Covid-19 reserves into the council’s hardship fund and for the budget to come back before Christmas for more discussion and input.
Councillor Ed Malcolm, who chairs the scrutiny panel, said it was important for the committee to monitor the national situation, including changes at the top in Whitehall.
Cllr Malcolm added: “We have got a new Prime Minister and a new economic policy ‘Trussonomics’, whatever that is.
“But we will have to monitor it very closely to see how it affects local government and also the levelling up agenda for the council.”
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