A huge demand for services and the soaring cost of providing social care has meant Redcar and Cleveland Borough Council is reporting an overspend of £4.6m in the last financial year.
The steep rise in the cost of commissioning placements for vulnerable children and fulfilling its legal requirement to provide home to school transport were among the main contributors to the overspend.
Many councils nationally are also facing a significant challenge in providing services for children and families in need.
Redcar and Cleveland Borough Council now spends 60% of its budget on providing social care and support for vulnerable children and adults.
Other financial pressures at the Council are:
- The rate of inflation, which peaked at 11.1% and currently stands at 8.7%. When allocating local authority funding, the Government factored in inflation at a high of 4%
- Significant rises in energy and fuel costs during the last financial year;
- A higher-than-expected local government pay award;
- High interest rates which have increased the cost of borrowing.
The Council updated its financial strategy to address additional demand for services and pressure caused by inflation, but in some areas, these pressures increased faster than anticipated in the final quarter of the year and are expected to continue in the current financial year.
An efficiency programmed delivered £2.85m of savings and the remaining shortfall will be covered by reserves. However, the Council is warning that it cannot cater for the current level of pressures without cutting services if it does not receive support from government.
Therefore, the Council is calling on the Government to address the soaring cost of funding children in care at a national level to relieve the financial pressure on Redcar and Cleveland Borough Council and other local authorities nationally.
Cllr Christopher Massey, Cabinet member for Resources, said:
“A high proportion of the Council’s overspend is caused by a huge increase in demand within children’s care placements alongside an increased cost for these placements. In addition, the cost in providing home to school transport for these children has also markedly increased.
“Many other local authorities will be facing similar challenges and there is no sign that this pressure will ease in future years. It is a national issue which should be addressed nationally.
“Our administration has only been in place for one month since the May 2023 local elections and we have inherited the current financial challenges. However, a lot of that cost has been entirely unavoidable and we must now protect the services our most vulnerable residents rely on, whilst balancing the budget.
“The Council provides an important safety net for society and we will always help and support those in need. However, a long-term, sustainable national plan is required from the Government to address the many issues in social care across the country which would allow councils to avoid cuts to vital services.”