Fears of 'lifetime cost' for children as North East councils face £196m financial black hole

Experts worry services for the most vulnerable are bearing the brunt of a cash crisis in which councils across the UK face a combined deficit of more than £5.7 billion, according to BBC analysis

Children’s wellbeing is at risk because of a “miserable” council funding crisis that leaves North East authorities needing to cut almost £200 million of public spending by 2027.

Experts have warned that services for the most vulnerable are bearing the brunt of a “really desperate situation” in which councils across the UK face a combined deficit of more than £5.7 billion, according to analysis of town hall finances by the BBC.

Data shows that the seven local authorities in Tyne and Wear, Northumberland and County Durham have approved almost £73 million worth of savings in the current financial year, while also spending £53.8 million of their reserves, but face a shortfall totalling £195.9 million by 2026/27.

The Local Government Information Unit (LGIU) cautioned that councils had already carried out cuts to the “easy stuff” years ago, amid massive budget reductions since 2010, and warned the results will now be people receiving fewer hours of care and support being reduced for children with special educational needs and disabilities (SEND). Its chief executive, Dr Jonathan Carr-West, said the bleak financial picture had been compounded by the growing demand for, and the increasing cost of, services to look after an ageing population and people with complex needs.

Children’s Commissioner Dame Rachel de Souza added that many of the cuts imposed by local authorities will “disproportionately impact children who rely on the state for protection and a stable home environment”, while Barnardo’s chief executive Lynn Perry warned that they risked a “lifetime cost for a generation of children.”

Durham’s £45.4 million is the largest projected shortfall by 2026/7 in the North East, followed by Newcastle City Council on £38.2 million and Northumberland’s £30.9 million. Gateshead Council is predicting a £27.5 million deficit over that time, Sunderland £27.1 million, North Tyneside Council £22.1 million and South Tyneside £4.8 million, according to the BBC’s Shared Data Unit.

Newcastle City Council finance chief Mark Nicholson warned recently that meeting the needs of an increasing number of SEND children was the “single biggest financial challenge we have”, with the city predicting an £8.1 million overspend on educational support for SEND pupils this year. The council, which has slashed its overall budget by £369 million since 2010, also recently consulted on budget-cutting plans that could see it scrap free home to school transport for all post-16 learners in Newcastle.

Newly-elected city council leader, Karen Kilgour, told the Chronicle this week she would be lobbying the Labour government for “fairer” funding for the city and for longer-term grants that would offer councils far greater certainty in their financial planning. She said: “We have had 14 years of austerity and that has had a massive impact, it would be ridiculous to pretend otherwise. But we have had really good, prudent financial management in this city and we are in a much stronger position than some of our peers are.”

According to the BBC, Leeds Council’s £152.4 million is the biggest predicted council deficit in the country. Coun Kilgour added that, despite the Labour Government’s cuts to the winter fuel allowances and warnings of more “tough choices” to come, she believed ministers understood “that you cannot deliver any of their priorities without local government”.

Durham County Council recently reported that it has a predicted £64.1 million shortfall over the next four years, which is higher than expected due to growing pressures, primarily in children’s social care and home to school transport. Amanda Hopgood, the Lib Dem leader of the county’s coalition administration, said in September there appeared to be “little cause for optimism at this stage that we will see the increases in funding that we desperately need based on all the noises that are coming out of the new government so far”.

She added: “This council cannot be left in limbo and urgent action is required to address the urgent, immediate pressures.”

Louise Gittins, chair of the Local Government Association (LGA), warned that the risk of financial failure across local government is “becoming systematic”, with the likes of Birmingham and Nottingham having already declared effective bankruptcy, as she joined calls for the new Government to provide councils with financial stability and funding reform, including the introduction of multi-year funding settlements.

Dr Carr-West added: “After nearly 15 years of incremental, massive savings, the easy stuff to cut went a long time ago. There are massive shortfalls and to put it bluntly, to make serious dents in the budgetary deficit, they will have to take from statutory services. It’s a really desperate situation, we know more than half of councils are dipping into their reserves year after year and councils are in a dire position. It’s a combination of a reduction in funding from central government and a massive increase in demand on services from an ageing population, working age adults with complex needs, safeguarding placements and the number of children with Education Health Care Plans and specialist educational needs going through the roof.

“Demand has risen while costs in those areas have also gone up and the whole situation is pushing councils to the brink financially - it is getting to the point where councils can only offer core statutory services and nothing else. It is miserable and they are making decisions now not on where is best to cut from, but where is least damaging. There is no good story here. If you are reliant on one of those services, the reality is that you will be getting less, whether it’s fewer hours of care delivered or more people told their children aren’t eligible for home to school transport or an EHCP.”

Labour’s local government minister, Jim McMahon, said: “This government inherited a crisis in local government and there’s no shying away from the scale. These deep-rooted problems won’t be fixed overnight, but we are committed to fixing the foundations, reforming and rebuilding the sector from the ground up to begin to get ahead of the underlying pressures for the benefit of councils and local communities.”

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