A council’s financial position has improved but it still needs to dip into reserves to fill a budget gap of more than £2m.

Councillors are to hear an update on Stockton Council’s financial performance. This includes a £200,000 improvement, but the authority will still need to use reserves to fill a hole in the finances, and account audits are still delayed in an “incredibly frustrating situation”.

The council had planned to fill a £7.1m gap and balance the budget this year by making £5.1m worth of immediate savings and funding the rest by increasing council tax by almost five per cent this year, including a two per cent rise for adult social care. It is planning a longer-term “transformation programme” to make savings.

The council’s figures show it was £2.3m over its annual budget for 2022 to 2023, though this is £200,000 better than previously predicted.

Children’s services showed a £6.9m overspend – £530,000 more than forecast – with “unprecedented cost pressures” for children in care, including more demand for homes outside the area and more complex needs, says the council’s report.

It says significant additional resources had been put in over recent years: “This continues to be one of the greatest areas of financial challenge for the council and this area will be one of the key focuses of the transformation programme.

“Work is ongoing on the transformation programme to look at financial sustainability and delivery outcomes to maintain vital council services.”

The community services, environment and culture department saved £600,000 on waste disposal costs because of reduced tonnages, as well as a reduction in fuel prices and usage, a mild winter and savings on maintenance and vacant posts.

The figures are outlined in an update on the council’s medium-term financial plan (MTFP), which will go before its executive scrutiny committee tomorrow (Tuesday, September 5).

The council has £8m in its general fund, and it had been planned to use £2.5m from reserves to sort out the budget gap from the previous year and avoid making immediate cuts to services. This will now be reduced by £200,000, says the report.

It refers to delays with the 2021 to 2023 accounts, with an issue relating to the Teesside Pension Fund and a national backlog of council audits: “Many local authorities are affected by the issues outlined… causing the majority of authorities to be delayed in finalising their accounts.

“This is an incredibly frustrating situation, as Stockton-on-Tees Borough Council have an unblemished track record in meeting publication and audit deadlines in relation to our statement of accounts.”

It also says inflation kept costs high, and a employer’s pay award offer for this year which would “create a budget pressure of £1.5m” had been rejected by the trade unions, though energy and fuel costs had started to fall.