A council is facing a £3.9m budget deficit, from soaring costs and demands in care to low income from parking charges.
Stockton Council is facing “significant financial pressure” this year and may have to dip into its savings to meet it.
It has largely put the funding gap down to higher costs from rising inflation, along with growing demand for services and issues recruiting and keeping council workers.
Bosses have pointed to unprecedented and escalating needs for children in care as a key pressure for the budget.
This “volatile” area could cause a £1m overspend or more, “with one child alone costing in excess of £1m”, says the latest financial report.
Elderly and mental health places have exceeded budgets, along with spiralling costs for school meals, home to school transport, roads, vehicles, bus and taxi fares and museums.
The authority has also found shortfalls of hundreds of thousands of pounds from empty town centre shop units and low income for car parks.
Council bosses are already reviewing services in a transformation programme to make savings and tackle a budget gap of £1.9m reported earlier this year, expected to rise to £8.1m in 2026.
Now the latest financial update from Garry Cummings, deputy chief executive and director of finance, transformation and performance, says there is a projected overspend of £3.9m.
It states: “Effectively the council is on target to achieve the transformation savings but further pressures have created a further budget gap. Growing demand for council services and the increased cost of delivery is putting pressure on several budget headings.”
It says the overspend went over an extra £12.5m added to the budget in February, and reserves would be used to tackle it: “Work is underway to look at ways to mitigate this projected overspend and the position will continue to be closely monitored and managed throughout the remainder of the financial year.”
The council predicts:
- A £1.6m overspend on health and social care for adults, including £829,000 for greater numbers of elderly people and mental health placements needing more care at higher cost, and £665,000 for more people needing care at home. More people need to be assessed for going into a care home or hospital due to lack of mental capacity, specialists on these “deprivation of liberties assessments” are hard to recruit, and buying in this service is expected to cost another £150,000;
- A £1.66m overspend on children’s services with “unprecedented budget pressures in recent years due to huge increases in the cost of residential placements as well as escalating needs requiring greater levels of care” – £1m of this is put down to rising prices in a “very dominant external children’s home market”, £690,000 for agency social workers, £160,000 on rising home to school transport costs, £220,000 on supporting children at home. Meanwhile the council is underspending on foster care by £535,000, “a saving in the wrong area” where it wants to be growing;
- A £1.4m budget pressure or overspends in community services, environment and culture – £400,000 from car parks making income “significantly below the cost of providing and maintaining car parks within town centres”, £350,000 in catering cost rises, particularly in school meals, £366,000 on vehicles, £300,000 on road works with rising prices, £129,000 on home to school transport including higher bus and taxi prices, £170,000 on grounds maintenance and £127,000 on museums;
- A shortfall of £221,000 at Wellington Square from car parking income and vacant units, £150,000 short from planning applications, and £127,000 costs on systems for billing and collecting council tax and business rates.
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The council says it is focusing on children in care in its transformation programme, but “it is difficult to predict financial savings”, according to the financial report. It adds: “These challenges are not unique to Stockton and the financial pressures experienced by many councils across the country is well documented.”
Money which had been set aside for specific reasons could be used to fill the gaps for now, said the report: “If savings do not materialise to fund the overspend, in order to replenish the general fund reserves, we would need to look at redirecting funds from these reserves.”
But it concludes: “The use of reserves to fund overspends is not sustainable and it is a key area that we must work to avoid as part of the transformation programme.” The report and council’s medium term financial plan will be discussed at the cabinet meeting today.
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