Redcar Council reduces predicted multi-million overspend

After a number of “in year mitigation measures” were put in place by the local authority the updated forecast is currently for an overspend of £4.6m.

Councils are legally required to ensure they spend only what they can afford by producing balanced budgets, but a number in recent years have declared effective bankruptcy after being unable to mitigate pressures on their finances.

Cabinet member for resources, Councillor Christopher Massey told a full council meeting the local authority was trying to hold vacancies where appropriate and take out costs when it could, but may have to use reserves to fill in any remaining shortfall.

He said: “In year all we can do at this point is manage that [the overspend] down, if we can’t it is going to have to be reserves.

Councillor Christopher Massey

“We are aware reserves can only be used once, once they have gone they have gone and we need long-term solutions.”

A financial update for the second quarter of 2023/24 said the main drivers were high demand and complexity for children in care cases, along with the likes of increased home to school transport costs, use of agency workers and increased fleet hire and waste management costs, with other continued factors being high and continually persistent inflationary pressures.

Cllr Massey conceded that more and more councils were “getting closer to the cliff edge”.

But he rejected the idea of a merger with neighbouring Middlesbrough – which arguably is in a worse financial position – something recently suggested by Middlesbrough South and East Cleveland MP Simon Clarke who said it “might create a more resilient and sustainable local authority”.

Sir Simon Clarke, the Conservative MP for Middlesbrough South and East Cleveland

He said: “The solution to Redcar and Cleveland’s problems can be found in the paperwork of our budget, which is going to come next year, and not in the scheme suggested by the member for Middlesbrough South and East Cleveland.

“This council is a sustainable council and we are going to strive towards it as part of our corporate plan.

“We can also make decisions that put us on the front foot so that we can set a balanced budget moving forward and hopefully reap some of the benefits that the area might see over the next five to ten years.”

Cllr Massey went on: “In my opinion as a Redcar and Cleveland councillor it would not be the sensible thing to merge with a council that has a best value notice served on it and is also going through some of the challenges it is going through at the moment.

“My heart goes out to Middlesbrough Council and I don’t think a lot of the things that are problems there are things they have done on their own.

“The challenges of local Government is that it is chronically underfunded at a national level.”

Council leader Alec Brown had also previously rejected any idea of a merger.

Cllr Massey reiterated that children’s social care was the “number one cost” to the council and other local authorities.

He added: “Tory councils are going bust, there are some Labour councils going bust, there is a Lib Dem council going to the wall.

“That suggests a bigger problem than those three parties in local Government.”

The update report described staff savings and increased grant income opportunities that had been identified within the council’s children and families department and efforts to increase the provision of local care placements which, particularly when organised out of the area, can be hugely expensive.

It also referred to a forecast £1m deficit in the council’s collection fund, which accounts for council tax and business rates income.

The council had committed to deliver £6.4m of so-called ‘driving change’ efficiencies in 2023/24 to address the “very significant” financial challenges it faces with to-date £4.7m of these being achieved, £1.2m still in progress and £400,000 still outstanding.

Councillors have also agreed a reallocation of some capital funding, including £980,000 received from the Tees Valley Combined Authority for walking and cycling improvements to go to specific town centre projects instead in order to avoid the potential of these not being delivered due to increased costs.

These are specifically the Temperance Square development in Loftus, improvements to Redcar Station and the leisure offer in Coatham.

Meanwhile, last month the council’s cabinet signed off proposals to make more than £9m in savings in future years, including charging for garden waste collections and higher car parking fees, plans which are to go out to public consultation.

A 2.99% council tax rise in 2024/25 and 2% increase to the adult social care precept that local authorities can levy has also been suggested, which will require final approval by council members in February.