Redcar and Cleveland Borough Council today called on the Government to properly fund public services at a time when local authorities nationally are under huge financial pressure.
The Council anticipates an overspend of around £8 million by the financial year-end in March next year. The Council is looking at various options to reduce and minimise this overspend, but some of the causes of the overspend remain very volatile and outside of the Council’s control.
When the Government determined the level of funding required by local government in October 2021, inflation was forecast to peak at 4% this year. However, the most recent figure is around 10% and there is no indication that this will fall in the near future.
This level of inflation has significantly increased the cost of providing Council services and this, along with the price of energy, accounts for a significant proportion of the anticipated overspend.
At the same time. there is also increasing demand for Council services – especially in social care – and the cost of providing these services has risen sharply.
In particular, the Council is experiencing huge demand for services to help and care for children and families and a steep increase in the cost of home to school transport. It is anticipated that these areas alone will be overspent by around £5 million by the end of the financial year.
The Council is preparing its budget proposals for 2023/2024 and there is real concern that the financial pressures and demand for services will increase.
The Government is expected to announce the level of funding for local Government in 2023/2024 in December 2022, which does not provide enough time for adequate financial planning for the 2023/24 financial year. However, the Government have said previously that they are sticking to their 2021 comprehensive spending review, meaning they will not raise our funding in line with inflation, and the Chancellor indicated yesterday that public spending will be cut.
Cllr Glyn Nightingale, Cabinet member for Resources, said: “The financial pressure on the Council is unprecedented and we are not alone – other local authorities across the country are facing the same problems.
“This isn’t about funding lavish spending; it is about our ability to fund the basic services that, by law, we must provide to our residents.
“Redcar and Cleveland has a higher proportion of older people and a higher proportion of children and families living in poverty. This inevitably means there is a proportionately higher demand for social care in our borough, which uses a disproportionately high share of our funding. Our fantastic staff are working in challenging conditions with spiralling prices in the private care sector.
“There is no sign that this demand and the level of inflation and cost of energy will fall in the coming year and we anticipate the Council could be facing a funding shortfall of around £15 million next year.
“This shortfall is unsustainable and we are calling on the Government to work with us – and other councils nationally – to agree-long term realistic funding levels for local authorities, which provides for caring for the most vulnerable in society.
For more information about how the Council is funded and how the money is spent, please go to How the Council is funded | Redcar and Cleveland (redcar-cleveland.gov.uk)