Stoke-on-Trent City Council has warned it is at “significant risk” of not being able to set a balanced budget for the 2024/25 financial year.
A budget gap of £8.5m this year will put the authority in that precarious position, according to a report on its first quarter financial performance, which will be discussed at a cabinet meeting next week (12 September).
The report, authored by Nick Edmonds, section 151 officer and director of strategy and resources, noted the impact of the “increasing demand for core personalised services such as care for the elderly and placements for children coming into care”, alongside financial pressures such as “the continued and sustained impact of rising inflation on the council’s pay bill and the cost of goods and services”.
The authority is warning that without a reduction in demand for care services and a rapid decrease in inflation, or significant direct support from government, it will not be able to sustain services.
Stoke-on-Trent City Council leaders have called for a national overhaul in the funding of social care services, while the report proposes engagement with the Department for Levelling Up, Housing & Communities (DLUHC) to outline the rapidly emerging current position.
As previously reported, the authority revealed in June that it was forced to make one-off mitigations of about £15m to balance its books in the 2022/23 financial year. At that time, the council said it would seek financial support from central government.
Among the main pressures on the council’s budget position are continuing record numbers of children in care – currently at 1,121 children – coupled with high costs of placements. Forecast pressures to support children’s social care are currently £9.1m.
The report also identified increased demand for adult social care as a major factor. There are high unit costs of placements, particularly in working age adults, residential and nursing, and home care. Forecast pressures to support adult social care are currently £5.2m.
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The report also noted the possible impact of a proposed pay offer by National Employers that would result in an estimated £1.1m in-year budget pressure, if accepted by trade unions.
A programme of work to develop immediate mitigations and options to address the financial gap and strengthen financial processes is in progress and will be reported on an ongoing basis, the report said.
The report also proposes appointing and undertaking a number of independent financial reviews that will “support the council in reviewing and addressing the challenges faced”. As well as engaging with DLUHC, this could mean a Local Government Association (LGA) resource review of children’s services; the use of a resources review of adult social care including support from the LGA; an independent financial advisory panel; and the appointment of independent audit committee members, in-line with the Redmond Review.
Alastair Watson, cabinet member for finance and corporate services, said: “Since coming into office in May we’ve been scrutinising all spend by the council and it’s become very clear that we’ve inherited a very perilous financial situation.
“We’ve hit the ground running in these four months […] while insisting on tight spending controls in response to the financial position we’ve inherited. So far, we’ve reduced a potential £13m budget gap down to £8.5m.
“But as it stands, with record numbers of children in care, with high inflation that increases the unit cost of care for children and adults along with the cost of so many goods and services that we purchase for the benefit of residents, we are spending more money than we can afford – we cannot sustain services like this.
“Ten years ago, we had 655 children in the council’s care, we now have more than 1,100. The cost for us to care for the high number of vulnerable children and adults has very nearly doubled over this period. Yet over the same 10 years the council has been forced to make £250m in austerity savings.
“We’re calling on government to listen to our situation – we are not reckless with public money, we spend wisely for the benefit of local people. If we cannot afford to provide the services we deliver in these circumstances, then the system is broken, not local government. We’re lobbying government for immediate action to help stem this tide.”
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