Council initially forecasting £12m plus overspend on budget set for 2024/25 financial year

John Sampson, managing director of Redcar and Cleveland Council
-Credit: (Image: Reach Publishing Services Limited)


Redcar and Cleveland Council is predicting it could overspend on its revenue budget by more than £12m come the end of the current financial year without further measures being taken.

A cabinet report which will be considered by councillors next week provided a year end forecast based on number crunching done at the end of the first quarter of 2024/25. The same item also saw the approval of an additional £1.3m worth of spending, including on IT costs, adaptations to the council’s Seafield House in Redcar to accommodate staff and repairs to the Saltburn cliff lift.

The local authority ended the 2023/24 financial year with a £3.3m deficit, lower than earlier anticipated after a package of control measures were implemented. Managing director John Sampson previously said cash reserves were used to cover the “residual overspend position” - councils being legally required to balance the books and ensure income matches their expenditure.

A fresh report by Mr Sampson referred to a significant increase in the first few months of the financial year in the number of complex high cost children’s care placements - about 20 in total with the risk that costs could grow further - and how the council continued to be hamstrung by “inequalities” in the local government funding system.

It said the regeneration of the Teesworks industrial site could offer some financial respite in terms of increased business rates income, although “caution was needed” in assumptions and forecasts. The council can only begin to levy business rates once enterprises become operational with the SeAH wind factory set to be the first off the rank in terms of full completion, while 50% collected goes to the Tees Valley Combined Authority.

Council leader Alec Brown recently posted on social media that potential other business rates income could be “years in the making” depending on progress with other projects. He also said the council still had a “massive gap in funding after austerity, covid and overseas wars”.

Mr Sampson’s report said “decisive action” was needed in the short term to ensure the council could sustain itself and fulfil the statutory obligation of a balanced budget.

He described a pragmatic approach and said immediate mitigation measures through spending controls, flexible use of capital receipts and the application of corporate contingencies could cut the initial £12.3m forecast overspend to £6.3m. This includes management of employee costs through tighter control of recruitment, overtime and use of agency staff, avoidance of non-essential spend within departments and maximisation of income sources, which will contribute £3.4m to the overall reduction.

Meanwhile, strategic reserves worth £7.1m could also be drawn upon. The council’s medium term financial strategy already envisages savings of £9m having to be made in the next financial year, 2025/26.

A continued transformation programme aims to identify and address the root cause of financial pressures; implement measures to enhance operational efficiency; optimise funding and revenue streams to cover the cost of services and align with the council’s priorities and “adjust” the provision of services to match resources, while upholding statutory duties and strategic priorities.

The council has also adopted a financial strategy split into three phrases described as ‘survive’, ‘strive’ and ‘thrive’. Mr Sampson said the council continued to lobby the Government on the “extremely challenging position of tight funding settlements, alongside deprivation linked unfunded and unavoidable cost pressures which far outstrip our ability to raise additional income locally particularly from council tax due to the inherent inequities in the council tax system”.

A footnote to Mr Sampson’s report also revealed the council was writing off more than £68,000 from four separate council tax debts after the debtors concerned were declared bankrupt and no further action was available to recover the funds.

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