Funding shortfall leaves North East councils on a precipice, says UNISON
Research shows a collective hole of £157.1m for the coming financial year
Councils across the North East have a collective hole in their finances amounting to £157.1m for the coming financial year, says UNISON research published today (Tuesday)
New figures, based on information from local authorities across the North East show council funding is in a dire state with massive cuts likely to essential services and jobs, says the union.
The national report, Councils on the Brink, warns that failure to rectify the growing problem soon risks ‘the widespread collapse of local government’.
Local authorities in the North East could be forced to sell land, buildings and other capital assets, as well as cut back vital community services like rubbish collection and recycling, libraries, public toilets and leisure centres even further, UNISON warns.
"Councils are teetering on the brink"
According to UNISON’s research, councils in the North East with the biggest predicted shortfalls for 2025/26 are Gateshead Council (£36m), Newcastle City Council (£23.8m) and Durham County Council (£16.8m).
The funding gap measures the difference between each council’s income and the amount needed to maintain promised service levels. But as the shortfall grows between the cash local authorities need and what they actually have to spend, crucial services and jobs are being slashed.
The challenging financial situation is already having a potentially catastrophic and far-reaching effect upon the North East, says UNISON.
For example, Middlesbrough Council has set aside £3.6m for future redundancies as it tries to save a further £21m by 2026/27.
Redcar and Cleveland Council has reviewed libraries and customer services centres which resulted in cuts affecting staff and services, including the closure of two libraries.
Durham County Council has undertaken a review of car parking which has seen prices rise and charges introduced on Sundays.
Without urgent government support, the union is warning that the combined funding shortfall across England, Scotland and Wales could balloon to £8.5bn by 2026/27, leaving many councils struggling to provide essential local services and protect jobs.
UNISON’s figures, based on freedom of information requests and councils’ own financial forecasts, paint a far bleaker picture than other estimates.
In England alone, the gap is expected to reach £3.4bn by 2025/26, significantly surpassing the £2.3bn projection published by the Local Government Association for English councils in June.
Years of austerity mean services have already been cut substantially, with widespread job losses and a reduction in vital support for some of the UK’s most deprived areas, says UNISON.
Many local authorities are now on the brink of financial collapse and the union says this new data suggests many more could soon follow suit.
Since 2018, eight councils – including Birmingham, Croydon and Thurrock – have issued section 114 notices, meaning they risk failing to meet the legal requirement to balance their books.
"Local authorities were clobbered"
UNISON's data also reveals the local authorities facing the biggest predicted funding gaps relative to their annual budgets. While unitary or county councils delivering vital adult care and children’s services remain under enormous pressure, the huge financial strain on many districts is even more apparent when measured this way.
At Gateshead Council, the estimated £36m funding gap for 2025/26 represents 11% of its £342m annual revenue budget. At Hartlepool Borough Council, the £10m predicted funding gap for 2025/26 represents £11.2% of its £89m revenue budget.
UNISON Northern regional secretary Clare Williams said:
“Councils are teetering on the brink of financial disaster. Countless essential services and very many vital jobs are at risk, with terrible consequences for communities across in the North East.
“After 14 years of ruthless austerity, the very fabric of local society is under threat. Councils are quite simply the linchpin of local areas, so when services go, many people are left vulnerable, with no one to pick up the pieces.
“Local authorities were clobbered by the previous Westminster government, whose harsh financial settlements left councils with no option but to sell off the family silver, auction off green spaces, close key community facilities and let thousands of workers go. Only swift and decisive action to stabilise local finances will do.
“Labour has inherited a mess, with essential services battered and bruised. The new government in Westminster understands the value of healthy public services and the role they can play in generating economic growth, in a way its predecessors simply didn’t. So as tough as the financial situation may be, ministers cannot ignore the terrible plight of authorities of every political persuasion.
“There’s an unquestionable need to turn the page on the destructive cuts of the past and invest in services and staff to help councils rebuild Britain.”