Redcar & Cleveland Borough Council is proposing measures which would address a multi-million pound budget gap next year caused by inflation and service demand.
The Council faces the shortfall due to an announcement by the Government that local authority funding for 2023/2024 – which is expected to be confirmed next month – won’t reflect the current high level of inflation.
When the Government determined the level of funding required by local government for this year and next, inflation was forecast to peak at 4% this year. However, the most recent figure is 11.1% and there is no indication that this will fall in the near future.
The Council is also experiencing a huge increase in demand for services – especially in social care – and the cost of providing these services has risen sharply.
This is particularly acute in services which help and care for children and families and providing home to school transport.
In his Autumn Statement, the Chancellor, Jeremy Hunt, announced additional funding for social care but the amount the council anticipates receiving leaves a considerable gap between funding and demand in that area.
The Council anticipates an overspend of £5.5m this year. The in-year shortfall was anticipated to be £7.9m but strict cost-control measures implemented by the council have reduced this by £2.4m.
However, demand for social care and home to school transport has meant services for children and families alone is anticipated to be £6.7m over budget this year.
The increased costs of inflation and demand for services is expected to continue into next year and the Council’s Cabinet will consider proposals to save around £9.8m over two years.
If approved, the way some services are provided would change and some charges would be introduced or increased.
It is also proposed to increase Council Tax by 1.99% and the Adult Social Care precept by 2% which, combined, is 1% below the increase assumed by national government.
Full details of the proposals are available at Cabinet papers | Redcar and Cleveland (redcar-cleveland.gov.uk)
Cllr Mary Lanigan, Leader of Redcar and Cleveland Borough Council, said:
“We lobbied Government to set out the financial position we and other councils across the country find ourselves in.
“The majority of the funding we receive is spent on social care for adults and children and the cost of providing this has risen sharply. If someone vulnerable is in need, we can’t look away – we have to help them as they have nowhere else to turn.
“We have no choice in funding services which we are legally obliged to provide and as the cost of these go up, it means we have less to spend on other services which many of our residents use.
“We expect to have a significant shortfall in funding next year due to rising costs and huge demand for our services, but the Chancellor has indicated that we will not receive an increase in funding to cover higher costs caused by inflation. We anticipate receiving extra money for social care but that does not come close to funding the demand we currently have.
“This isn’t lavish spending; the cost of social care has increased with inflation and more and more young and older people are being referred to us. We have a duty to keep the vulnerable safe and our staff do a fantastic job every day making this happen.
“We have faced some very unpalatable decisions about what we can and cannot fund. Councils are the safety net of society, and we must always support vulnerable adults and children in their time of need.
“However, the Government has not recognised the importance of funding this adequately and as a result, I’m afraid that next year we will not be able to provide the levels of service the public need and would like.
“At the same time, we have no choice but to increase Council Tax. I know how much people are struggling with the cost of living, but our only other choice would be to cut the services residents rely on even further.”