Stoke-on-Trent City Council is to seek financial support from central government after being forced to make one-off mitigations of about £15m to balance its books in the 2022/23 financial year.
These mitigations included savings resulting from the lump sum payment into the Local Government Pension Scheme (LGPS) and the use of earmarked reserves to support service expenditure.
The authority said a rise in demand for services such as care for the elderly and placements for children coming into care, and the increasing cost of providing social care for children and adults, was adversely impacting its financial position. The council also noted rising levels of inflation, Brexit, the ongoing impact of the Covid-19 pandemic, and the war in Ukraine, as “disproportionately” impacting “on those local authority areas with a relatively low wage economy such as Stoke-on-Trent”.
In a report on financial performance in 2022/23, financial planning officer Teresa D’Angelo noted that although the provisional outturn on the general fund is balanced and on budget, the transformation reserve has been utilised to balance any overspend, while £3.4m has been released from the earmarked reserve to support the overall general fund position.
D’Angelo said the authority’s use of one-off mitigations was “not a sustainable position for future years” and had also “further eroded the weak financial resilience position of the city council”.
Given the “rapidly emerging pressures” in areas such as children’s social care – which are placing “significant further strain” on MTFS projections made in 2022/23 – the council will have to act immediately, the report stated.
“It is clear that rapid and immediate action will need to be taken to address these additional pressures if the city council is to deliver a balanced financial position over the immediate term,” it said. “This will include the development of additional mitigations and savings. There is increased emphasis on having robust financial discipline in place in order to safeguard the city council’s medium-term financial position. The Financial Review Group meet regularly, and have a renewed focus in 2023/24 that will allow directorates to present plans to mitigate any emerging risks within the financial year and deliver a balanced position.”
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On children’s care services, the report said: “Placement sufficiency and the continuing rise in placement costs is part of a national trend and is becoming unsustainable. More specifically in Stoke-on-Trent, Q4 has seen a significant spike in external residential placements rising from 75 to 85 (an increase of 13%). These settings are the most expensive types of placements due to the complexity of need and the prevailing market conditions which are significantly driving up unit costs both locally and nationally. Due to the needs of those placed many of these placements are currently costing over £5,000 per week. This position is financially unsustainable in the medium term.”
Jane Ashworth, new leader of the council, said she would make the case to government for financial assistance to ensure its medium-term health, while looking at ways to improve efficiency in the authority’s relationship with other agencies.
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