Redcar & Cleveland’s (R&C) revenue budget was hardest hit of all councils in the North East during the seven austerity years between 2017-18 and 2023-24, closely followed by Newcastle and Hartlepool, according to new official figures. Darlington was most successful (or luckiest) in avoiding the worst of the financial squeeze, followed by North Tyneside. R&C, Newcastle and Hartlepool were so badly hit by austerity that their spending even in cash terms did not keep up with inflation, meaning real-terms cuts. Most others enjoyed only small rises in spending after taking account of inflation.
While the costs of social care for both children and adults took up a large and rising share of every council’s budget, only three kept their education budgets above the inflation waterline – and only marginally so in two of these cases. Only two saw real increases in transport revenue spending.
In spite of this tight squeeze, many councils did manage to find money for real rises in some services which they regarded as priorities, with extra for the environment and culture in seven councils out of ten, planning & development in six, housing in four and public health in two.
Caveats
The multi-year statistics discussed here come from the Revenue Outturn time series data for 2017-18 to 2023-24 published by the Ministry of Housing, Communities and Local Government. This is the first time series of this dataset to have been published and comes in response to the Review of Local Government Finance Statistics 2022 in order to make them machine-readable and improve their presentation and accessibility. So they are worth a look. But there are caveats:
- The statistics relate to revenue (day to day) spending such as pay and running costs, not capital investment;
- they are in cash terms and not adjusted for inflation, which cumulatively was about 26% in the period under consideration. So spending had to increase by at least that amount to avoid being a real-terms cut;
- they only cover the seven years 2017-18 to 2023-24; austerity started in 2010;
- they are based on spending per council, not per head of population;
- they are expenditure, not income, figures; though they are net of council sales, fees and changes, they do not take account of local authorities’ main sources of income – government grants, council tax and retained business rates;
- Northumberland and Durham are not covered here (though they are included in the dataset) because their rural character presents different issues and because as recently as 2009 the county councils became unitary authorities taking on the responsibilities of districts which no longer exist; they may still have been adjusting to this major structural change.
Nevertheless, the statistics do tell us quite a lot and prompt us to ask questions. The way individual service budgets rose or fell over time tells us, for example, how each council chose to cope differently with the squeeze on its finances and which services it regarded as priorities, and encourages the curious to ask why.
Social care
Social care for both children and adults takes the lion’s share of council budgets and the North East is no exception. By the 2023-24 financial year the cost of care for these two groups had risen over the seven years throughout England from £24.16bn to a massive £38.09bn. Budgets for many other services have had to be restricted to meet the statutory requirement to fund care costs.
For metropolitan districts and unitary authorities in the North East, all of which are responsible for social care, the position is even more burdensome. Hartlepool saw its spending on children’s care rocket by 95% between 2017-18 and 2023-24 and its budget for adult care rise by 44% over the same period – both well ahead of the cumulative increase in inflation of 26%. These budgets now account for £82.7mn – 44% of the town’s total budget.
In Sunderland the cost to the council of children’s and adult care respectively rose by 41% (the lowest in the region) and 68% respectively and together now take up £212.3mn, or 46.7% of the city’s total budget.
Education
In R&C, where the cost of children’s care rose by 75% and adult care by 41%, the education budget fell by an apparently shocking 20% over the seven years. It suffered a series of steep annual reductions over the four years 2017-18 to 2020-21, taking it from £74.1m to £45mn before recovering some of its losses to reach £58.9mn in 2023-24.
But not all is at seems. Many education services previously funded through the council’s core education budget, such as special schools, early years provision and inclusion services, were reclassified under Dedicated Schools Grant (DSG), which is managed separately.
Hartlepool’s education budget also suffered a fall, but a much more modest one of 1% caused by the diversion of funds to help pay the rocketing bill for children’s social care as well as general factors like inflation.
At the other end of the scale North Tyneside managed to increase its education spending by 37% and South Tyneside and Darlington by 27% over seven years (a meagre 1% in real terms, don’t forget).
Highways and transport
Council revenue spending in Newcastle on highways and transport fell by a surprising 89% between 2017-18 and 2023-24. Even more startlingly, it plunged from £3.4mn to a mere £375,000 between 2022-23 and 2023-24. And in another apparent anomaly it spiked sharply up from £3.7mn 2019-20 to £11.3mn the following year then fell straight back down.
These quirks have everything to do with how the figures are presented and nothing to do with actual spending on highways and transport. In 2023-24 Newcastle received £11.9mn in capital grants from the Department for Transport (DfT) and a further £431,000 capital earmarked specifically for resurfacing and maintenance. And of course capital spending does not appear in revenue budgets. This creative accounting meant that Newcastle was able to complete 18,179 repairs at an apparent cost of only £385,272. That’s just £21.19 per pothole. Well done lads.
While not completely clear why Newcastle’s spending on highways and transport spiked at £11.3mn in 2020-21, the reason is probably largely because the council, like other local authorities, received one-off government grants to support transport services during Covid-19 lockdowns. It received emergency support for public transport operators, temporary traffic management schemes such as pop-up cycle lanes and pedestrian zones, and reallocation of road space to support social distancing.
Elsewhere in the region, council spending on highways and transport fell by 17% in Middlesbrough and 14% in R&C but rose by healthy 60% in Stockton. The increase in Stockton occurred almost entirely between 2022-23 and 2023-24, when the council decided to spend more on future-proofing its transport infrastructure. The result was a sharp increase that year from £8.5mn to £12.4mn.
Public health
Council spending on public health rose by 43% in R&C, the biggest increase in the North East and not far short of three times the national average of 16%. Not surprisingly, R&C’s spending on public health jumped in 2020-21 at the start of Covid, rising by 19% in a single year to £15.1mn and has remained high ever since.
South Tyneside, in contrast, was the only council in the region to end the seven-year period with lower public health spending than it began it – down by 5.7% from £15mn to £14.2mn. But even here there was a spike at the time of Covid – up to a peak of £18.4mn in 2021-22 – before falling back again.
Housing
Many councils are moving back into social housing after many years outsourcing to housing associations or arms-length management organisations (ALMOs), with major consequences for their budgets, though not all are adopting the same model. Sunderland increased its spending on housing by 149% over the seven years, well ahead of second-placed Gateshead, with a rise of 118% and followed at a distance by Darlington (+78%) and Stockton (+75%).
Sunderland registered as a social housing provider in 2019 and is building new homes from scratch through its affordable homes programme and regenerating old properties through schemes like Riverside Sunderland. The council welcomed its first tenant in September 2020 and by December 2024 had 170.
This is a different social housing model from that adopted by councils like Gateshead and some others which dissolved ALMOs and took existing stock back in-house. Gateshead Council, as a result, manages around 20,000 homes and South Tyneside about 18,000. Darlington Council has long been the largest social housing provider in the town. Stockton Council is not a social housing provider and its 75% spending increase between 2017-18 and 2023-24 is accounted for by other policies designed to provide more – particularly affordable – homes.
Culture vultures
The North East council with the biggest increase in culture spending was Darlington, with a 73% increase over seven years. In 2022, the council adopted a culture strategy aiming to make the town a place “where culture enriches lives, involves people and is central to identity and prosperity”. Five priorities were set, including celebrating Darlington’s railway heritage, supporting a thriving theatre scene and boosting youth engagement.
The strategy was backed up the with a bumper rise of 41.8%, from £5.2mn to £7.4mn in 2022-23 as preparations got under way for the 200th anniversary celebrations of the Stockton & Darlington Railway in 2025 and other initiatives.
Gateshead continued its tradition of big spending on culture, with a 65% increase over the seven years. Spending has been erratic but on an upward trend, marked by notable increases from £9.7mn to £16.3mn in 2020-21 (up 67.8%) and from £14.8mn to £17.4mn in 2023-24 (up 17.4%).
Gateshead is proud of its history of supporting major cultural projects such as The Glasshouse concert hall and Baltic art gallery and is currently trying to find funding for an arena and conference venue. Its big spending may be due in part to attempts to exploit its cultural assets to attract businesses and visitors to the town and thus boost the economy.
Middlesbrough, on the other hand, under severe financial pressures and close government scrutiny, increased spending on culture by a paltry 3%, the lowest in the region. After increasing its culture budget modestly and somewhat erratically from £5mn to £6.2mn it cut it sharply by 17.8% to £5.1mn after being served with a best value notice by the government in January 2023. When the chips are down, culture is not a priority in the Boro.
Environment and regulation
Green policies pushed up spending on the environment and regulation in most North East councils, with Sunderland and Darlington leading the way. Sunderland increased its spending in this category by 93% from £17.9mn to £34.5mn between 2017-18 and 2023-24 and Darlington by 73% from £6.7mn to £11.7mn.
Sunderland declared a climate emergency in 2019 and adopted a Low Carbon Action Plan in 2021 including investments in renewable energy, sustainable transport, waste reduction, and green infrastructure. Its money has also gone on initiatives like EcoFest, Refill Sunderland and the North East Community Forest.
Darlington, among other measures, accelerated its carbon neutral target date from 2050 to 2040; planted over 47,000 trees; and cut energy bills by £5mn over three years by a 12-fold increase in solar panels.
Other councils in the region increased their spending on environment and regulation by more than inflation with the exceptions of Gateshead, where it rose by 17%, South Tyneside, 15%, and Hartlepool up only 6%. Hartlepool, beset by other demands on its budget, did not declare a climate emergency during the period under review.
South Tyneside Council did adopt a carbon-neutral strategy, including heat networks, fleet decarbonisation, and biodiversity enhancement. However, many of these initiatives were capital, not revenue, funded. Viking Energy Network and Hebburn Energy Scheme eliminated gas emissions from key buildings but were financed through external grants and borrowing.
Planning and development
There were massive differences between the North East’s councils in the way spending on planning and development changed between 2017-18 and 2023-24, far greater than for any other council service. In Gateshead the increase was a huge rise of 486% and in South Tyneside not far behind at 445%; there was also a hefty increase of 187% in Darlington. But in Newcastle – where so much development was (and is) taking place at highly visible central locations like Pilgrim Street East and the Helix – the figure fell over the seven years by 64% and in Hartlepool it was down by 78%. This is a puzzle.
Gateshead’s planning and development budget rose over the seven years from £1.3mn to £7.9mn as the council struggled with major regeneration schemes like Baltic Quarter, Gateshead Quays and town centre redevelopment. There was a slight fall in the budget in 2021-22, probably due to a slowdown in activity during Covid, but otherwise a consistently steep rise.
South Tyneside’s almost equally whopping rise of 445% – though from a low start of just £888,000 – is probably also due to ambitious capital regeneration programmes such as town centre redevelopments, coastal improvements, and infrastructure upgrades which usually require enhanced planning capacity and preparatory work funded through revenue budgets. There was a notably large jump in the budget of 176% in 2020-21.
Darlington, the third council to see a big increase in planning and development, was engaged at the time in major projects like the government’s economic campus, Bank Top Station redevelopment and Northern Echo building conversion.
Hartlepool Council’s budget, on the other hand, was on a consistent downward trend interrupted only in 2020-21, when it rose from £3.3mn to £4mn, perhaps due to the establishment of the Hartlepool Mayoral Development Corporation. However, and surprisingly, planning expenditure in Hartlepool 2017-18 had been the highest in the North East, probably because it was working on a new local plan, adopted in May 2018.
The anomaly in Newcastle of a falling budget at a time of huge redevelopment is almost certainly due to the fact that schemes like Pilgrim Street East and the Helix were planned years in advance and the actual construction is being financed by sources external to the council such as developers and government grants. Sunderland, also undergoing extensive city centre regeneration, was the region’s biggest spender in cash terms at the end of the review period, paying out more than £9mn in 2023-24.
Central services
Changes in spending by councils in the region on central services, though relatively small, still ran into millions of pounds and varied quite widely between authorities, often depending on whether services were administered by their own departments or centrally.
The biggest increase was 108% in Darlington, while in R&C there was a cut of 13% from £6.9mn to £6mn. A special factor in the case of R&C was the cyberattack it suffered in February 2020, following which the council received £3.68mn in exceptional financial support from the government. This allowed it to absorb one-off costs in 2020–21, reducing the need for central services spending in 2021–22.
Conclusion
This is a massive dataset full of gems of information for those interested in where their taxes go, and they may well find it worth while digging deeper. One lesson though – don’t always take the statistics at face value
*My colleague Artificial Intelligence contributed to this report.
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