Suffolk County Council is forecasting an overspend of £22.3m against its £688.1m budget for this financial year – but the authority emphasised it was “not alone in facing uncertain times”.
Service reductions and spending freezes are likely to be needed, the council said.
Inflation, school transport for children with special educational needs and disability (SEND), and looking after children in care were cited as the main factors causing the overspend, which has been identified in a Q1 monitoring report authored by Andrew Filby, head of corporate finance and deputy section 151 officer.
The report will be presented to a cabinet meeting next week (12 September). In advance of the meeting, Richard Rout, deputy leader of Suffolk County Council and cabinet member for finance and environment, said: “We have a strong track record of managing council finances, but these are unprecedented times and the pressures that impact us in Suffolk, are impacting councils around the country.
“In recent years, the council has had excellent financial management, constantly adapting to operate in a more cost-effective way, whilst not losing any frontline services. In fact, many teams within the council are continuing to make savings, we’re on course to make £20m of savings this year.
“We have also built up appropriate reserves, to use when difficult times arise. These are now difficult times, and we are having to use these savings. But that’s not sustainable.”
The council’s useable reserves are forecast to reduce by £56.850m to £137.933m over the course of 2023-24.
School transport is projected to overspend by £11.4m in the Q1 monitoring report, accounting for 39% of the total overspend. Some £8.3m of this is travel costs for children with SEND. There are more children with SEND needs, the council said, while transport operators are in limited supply and costs are rising as a consequence of inflation.
An overspend of £8.2m is expected in children’s care services, accounting for 28% of the total. Some of those in care “have incredibly complex needs requiring 24-hour care from multiple carers”, the authority noted. “There is currently an unexpectedly higher number of children requiring this support, with this costing an average of £22,700 per week, per child.”
Adult care services is forecast to overspend by £3.5m, some 12% of the total. Again, there has been an increase in demand for services while staffing costs in the sector have risen. “The fees paid for residential and nursing placements remain high with 64% of new residential and nursing packages being above the published rate of £806 per week, with some specialist packages being over £1,500 per week,” the council stated.
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In addition to the net overspend of £22.3m from the main budget, the council is forecasting an overspend of £15.8m against its £256.5m budget from the Dedicated Schools Grant and Pupil Premium Grant. This is money from central government specifically to fund schools and services for pupils.
The authority said the overspend comes “solely” from resources spent on SEND provision, not including school transport. “Suffolk, like many other local authorities, is seeing a continuous increase in demand which is not being met by the same level of increase in funding,” it stated.
The Dedicated Schools Grant reserve is forecast to reduce by £15.838m to -£43.577m over the course of 2023-24.
Rout continued: “With increasing demands and costs, we are seeing councils around the country having to reduce services and put spending freezes in place, so that they can balance their budgets for this year. Unfortunately, we must now have these discussions too.”
Filby’s report concluded that “urgent action” is required to ensure spend is brought back in line with budgets “as soon as possible in order to avoid the council’s reserves being further depleted”. He wrote: “If this is not done, and the position does not improve sufficiently by 2024-25, the council will be in a particularly financially challenging situation, and the section 151 officer will need to exercise her statutory duties as required to manage this.
“Chief officers and lead members will continue to lobby government to ensure they recognise the full extent of the financial pressures that the council and other local authorities are experiencing, and the need to have this reflected in future local government financial settlements.”
Filby also warned that while there were “no significant issues” concerning the delivery of the council’s capital programme in 2023-24, “a combination of increasing interest rates, and a sharp forecast reduction in reserve balances caused by the projected budget overspend, mean that the costs of financing the 2023-27 capital programme are projected to rise sharply from 2023-24, with the capital financing reserves set to become fully depleted by 2025-26 if no remedial action is taken”.
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