Sheffield Council in “uncomfortable position” over £34m budget crisis
The authority is facing a predicted £34.3m budget gap for 2024-25
Sheffield Council’s £34m budget crisis continues to leave the city in “an uncomfortable position”, the head of finance has stressed.
Council director of finance and commercial services Philip Gregory told a meeting of the finance and performance policy committee yesterday (November 18) that government funding cuts have hit hard since 2010: “Sheffield has seen 28% less funding – that’s £858 per resident less.”
Mr Gregory said that demand for council services, including those needed by the most vulnerable citizens, continues to increase, particularly following Covid and the cost-of-living crisis. The cost of delivering many services has risen by more than the cost of inflation.
These three factors have jointly caused the predicted £34.3m budget gap for 2024-25, said Mr Gregory. He warned that using up almost all of the council’s reserves to cover this gap leaves little room for manoeuvre in future years.
He said that £40m of £43m savings identified when the budget was set will be delivered – a rate of over 95%, or 90% when additional grant income is stripped out.
“This is a serious position for the council to be in – officers are working hard to find ways to reduce costs or provide services in different ways to reduce this overspend and reduce these overspends occurring in future years.”
Mr Gregory said that identifying every measure to cut costs is important and stressed the Future Sheffield programme. He said that improvements to digital and customer services would be the first changes delivered.
“The programme will continue to identify ways for the council to deliver the right services in the best possible way, contributing to the economic growth of the city, achieving our City Goals and delivering the Council Plan priorities.”
He said the proposals will be discussed by the strategy and resources committee tomorrow (Wednesday, November 20).
“It’s not a comfortable financial position to be in,” said Mr Gregory, but action is being taken to make the council’s finances sustainable for the future.
Head of accounting Jane Wilby said that the main committee areas of overspending remain adult social care, education, children and families, housing and the finance and performance committee.
“In adult social care there’s £9.5m overspend, which is £0.6m worse than the previous quarter. The issues really are £7.1m within the purchasing budget, which funds the provision of care packages, with an additional £2m in staffing overspends.
“The reason for this is delays in the actions that are detailed in the recovery plan that was presented in January. The actions are that the service is now re-evaluating some of those proposals to offset the slippage, with particular attention to high-cost learning disability packages.
“In the education, children and families committee, the issues really are around home to school transport provision, where we’re reporting an overspend of £6.5m, and this year with an additional 103 placements from September 2024.
“There’s also another £2m shortfall in our integrated commissioning community budget, and in children with disabilities we’ve an increase in costs of £1.4m variance.”
She said that action aims to “shift the dial” on transport costs, with emphasis on promoting independent travel. This involves working with school special needs coordinators (SENCOs) and a trial of personal travel budgets.
A lower than hoped take-up of the trial means more work to engage people.
Ms Wilby said that the housing fund overspend of £5.6m is “predominantly on the temporary accommodation nightly paid where we were unable to fully cover the cost via our housing benefits from DWP (Department for Work and Pensions) and we’re subject to the shortfall.”
She said that the forecast that the council would support 300 single people and 90 families has dropped to 229 single people and 77 families. She anticipated a large shift by the end of the year.
“The actions in place that are causing that positive trend is really more resource and more support to stop at the front door really – that’s about staying with relatives as well and staying with friends and making sure there’s support in place where people don’t actually reach the temporary accommodation,” said Ms Wilby.
She said there has also been a lot of work in the council’s voids turnaround programme, designed to relet empty council homes as quickly as possible.
That has, however, seen a £7.4m overspend in the housing budget for maintenance and repair work. That includes £5m in sub-contractor costs and £2m in materials.
The finance committee overspend amounts to £6.1m where people in temporary accommodation need additional support. There is a push for more landlords to become registered providers so that support is not given by the council.
Details of the government’s financial settlement for the council are expected in December, she said. Borrowing costs have remained stable and investment income is higher than expected.
Coun Shaffaq Mohammed said that the situation looks “very sticky”.
He said that health and social care “had a plan that was passed in January, now we’re looking at it, thinking ‘well, we’re almost 10, 11 months down the line’.”
Coun Mohammed said that if budgets are set, they have to be adhered to. “If savings are proposed, then committees, if not this finance committee, will have to be really hard on people because otherwise all we’re doing is noting overspend but nothing’s changing, and we can’t get to that situation where Philip tells us something else other than we can get over the line this year.”
Coun Mike Levery said the council needs robust procurement procedures, pointing to two housing contracts that have failed. Finance manager Damian Watkinson said he believes that procedures are robust.
Coun Levery also stressed how important it is for as many children as possible to travel independently to school.
Strategic director of children’s services Meredith Dixon-Teasdale agreed and responded: “That needs to be a whole city approach to that, also making sure our transport service is fit for purpose to make sure that children can go to school in the best way possible, and we are looking at bringing through a range of different suggestions around that.”
She said that the home to school budget has remained the same but the number of children being transported has risen by 31%. She said the service is doing more for the same amount of money.
Executive director of neighbourhood services Ajman Ali said that the backlog of housing repairs is coming down and the level of customer satisfaction is higher. He said that extra contractors are being brought in to help cope with backlogs and the situation would stabilise further after that.
Mr Ali said that often staff going out to jobs have to do more work than expected because of low investment in maintaining council homes. “It’s a bit of a circular argument in one way – if we don’t invest long term that has an implication.”
He added: “I don’t think we are wasting money – we are spending money on people’s properties, that’s really important, and we are improving performance.”
Coun Martin Phipps said the council is in line to deliver most of savings and financial problems reflect outside pressures that are set to continue. He said next year’s budget might see a £30m gap.
He said that the government increase in employers’ National Insurance contributions could badly hit outside service suppliers, especially in social care.
Mr Gregory said the council is raising that issue with the government.
Coun Dianne Hurst pointed to the rising cost of homelessness when “there are homes standing empty all across the city”.
She added: “We know that the longer properties stand empty, the more its condition deteriorates and the more it is vulnerable to vandalism, and the more it is going to cost to put right.”
Mr Ali said that homelessness work is quite intensive and more properties are being allocated to homeless people in temporary accommodation. “The more of that we do, the less temporary accommodation we hold.”
Committee chair Coun Zahira Naz said: “We are not at risk of section 114 (effective bankruptcy) but we are in a very uncomfortable position right now, and I know there’s lots of work that’s happening behind the scenes.
“We will all be shortly involved in our groups in the budget-setting process, which is absolutely essential that we are able to set a balanced budget next year – it’s the law, we must adhere to that.”
She thanked finance teams and departmental directors for all the work they are doing.