Town hall bosses in South Tyneside have warned they are predicting a £6 million overspend this year due to rising demand for children’s and adult social care and inflationary pressures.
The estimate was revealed at the latest meeting of South Tyneside Council’s ruling cabinet, which discussed a budget monitoring report looking at “net expenditure for the first nine months of the financial year (2024/25)”.
Councillor Jane Carter, deputy council leader and cabinet member for governance, finance and corporate services, confirmed the local authority is estimating a £6.018 million overspend for its general fund revenue budget for 2024/25.
A report to cabinet stated that the figure was an “improvement of
£1.071 million from the quarter two forecast position reported to cabinet on January 8, 2025”, which covered the period April to September, 2024.
It was also noted that the council has implemented a number of actions to “ensure prompt action is taken to mitigate against and reduce the spending pressures identified”.
This included the reduction of agency staff, a “vacancy management gateway whilst maintaining support to recruit in some specific key areas”, efforts to reduce the number of hire vehicles used and the “tightening of projected spend in the capital programme”.
In addition, “maximising income” was also explored, including “contributions from partners for social care”, along with the “utilisation of grants against existing spend”.
Cabinet documents state the £6.018 million overspend position is linked to “significant pressures carried over from the previous financial year relating principally to children’s social care, learning & early help, adult social care, highways, infrastructure and project delivery, operations and legal and governance”, as well as inflation around pay awards and contracts.
It was noted that “robust financial management processes have identified the cost pressures early in the financial year, which is critical to ensuring that action is taken on a timely basis and that spending pressures are addressed.”
Presenting the report
Councillor Jane Carter presented the budget monitoring report to cabinet at a meeting at The Word on Wednesday, March 19, 2025.
Councillors heard that it was “unlikely” that a “break even budget position” for 2024/25 would be achieved and that the use of council reserves was expected.
“The cabinet report details the reserves which we hold following the close down of the 2023/24 accounts ,” Cllr Carter said.
“Cabinet is reminded that a significant proportion of our reserves are committed for costs which may occur in future years, leaving modest sums to cover unanticipated costs.
“Although it is expected that through action planning the overspend will reduce by the end of 2024/25 , it is unlikely now that a break even budget position will be achieved.
“Reserves will be utilised to cover the overspend and as planned during the financial year as agreed by council in the medium-term financial plan 2024-2029 and this has been built into the medium-term financial plan 2025-30.”
The cabinet meeting heard there were overspends in other council budgets outside of the general fund revenue account, which covers day-to-day council services.
The “overall forecast year-end position at the end of June 2024 against capital budgets projects an overspend of £1.489 million by the end of the financial year”, cabinet papers state.
The council’s housing revenue account is also forecasting an overspend of around £880,000 related to “additional repairs costs, borrowing costs as a result of interest rate increases and one-off costs associated with the transition of services provided by South Tyneside Homes back into the council on October 31, 2024”.
Councillors heard that work was continuing to reduce this overspend through a “planned review and re-profile of non-essential budgets.”
Councillor Jim Foreman, cabinet member for housing and community safety, welcomed the report and update from Cllr Carter.
However, he also raised concerns about the sustainability of funding for councils and called for a “fairer” solution to support local services.
“I’ve listened to what has been said about the overspend, we have been in that position before and we have always tackled it head-on and we’ve never ever been frightened to make difficult decisions,” Cllr Foreman added.
“I think the most important thing for me is the paragraph [in the report] where it talks about the efficiency savings that we have made.
“It’s a huge thanks to the council officers and the members for all the savings that we’re having at this time, as every year it gets more and more difficult to make these efficiency savings.
“The question would be how long can we go on with these efficiency savings and if ever there was a time for a fairer funding element to councils’ money, I think now is the time.
“Whilst it’s great we’re making these savings, it cannot go on forever.”
As of April 1, 2024, South Tyneside Council had £56.918million in reserves, however just £15.542million were classed as “accessible reserves” to support budgets moving forward.
The latest 2024/25 budget monitoring report can be found by visiting South Tyneside Council’s website.
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