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The council’s quarter 1 budget monitoring projection shows it could be facing a £29 million overspend by the end of the financial year.

Monday, 2 September 2024
Community

The overspend is attributable to many areas of unavoidable spending.

What’s behind the overspend?

The majority of the council’s budget challenge stems from more people needing help and support, but it costing more for the council to run these services.

For example the council faces:

  • A projected £7.6 million overspend across adult social care, due to more adults needing help as part of Warrington’s ageing population. £5.8 million of this is due to the council needing to deliver more care packages and care support for people
  • An overspend of around £11.7 million across children’s services. The vast majority of this overspend is for children in care, because there are more young people and children that need the council’s help and protection, but it’s more expensive than ever to get the right support in place
  • A £4 million budget pressure on providing help to people with special educational needs and disabilities (SEND)
  • A £1.8 million budget pressure caused by an overspend linked to providing accommodation for people at risk of homelessness

Managing the budget pressures

Cabinet member for corporate finance, Cllr Denis Matthews, said: “Unfortunately across the local government sector, on an almost daily basis, councils are publishing significant projected overspends.

“This is the result of growing demand for council services, which is adding additional cost onto council budgets.

“The current £29 million projected overspend in Warrington puts us in a very pressurised position. But it is not an inevitability - it is an estimate at this point, and we have time to bring it down by making carefully targeted interventions.

“Although the overspend projection in Warrington is ours to manage, we are far from alone in facing a difficult challenge this financial year. Total funding for councils in 2024-25 is around £13 billion less in real terms compared to 2010/11, but local authorities continue to be asked to deliver more.

“The pressures we face are acute, but I must stress - we are well managed, we know the scale of the problem and we are putting plans in place, to help us address the budget challenge we face.”

Warrington’s financial situation in context

In January 2024, independent research from Grant Thornton suggested 40% of councils could face “financial failure” over the next five years. The Local Government Association also stated their belief that due to a council funding gap of £6.2 billion, one in five councils may need to issue a section 114 notice – effectively declaring themselves “bankrupt” - this financial year or next due to a lack of funding.

Equally, out of the 20 councils in the region, Warrington is the second most poorly funded place per home, receiving £360 per home, compared to the regional average of £829 per home.

Cllr Matthews said: “Unfortunately, Warrington is fundamentally not as well funded as other councils in the region and indeed nationally. We do however have a good level of reserves at the moment which will help to provide a cushion this financial year.

“We also need to acknowledge that our commercial approach is continuing to help us manage our budget pressure. We have previously been able to take advantage of fixed, low interest rates when borrowing. This means we are locked in at low rates for the long-term. Our commercial approach is therefore not contributing to our overspend position – in fact, our projected overspend is despite the £23m per year that our commercial activity generates.

“There is a fundamental mismatch between what local authorities are expected to do and the resources they have to do it. This is pushing councils closer to Section 114s and resulting in significant cuts to local services.

“Only through multi-year settlements, fairer funding and long-term reform of the funding system across local government, can councils build the financial resilience that we need. We will keep doing all that we can to manage the pressures on our budget and work with government to resolve the national problem of council funding.”

More information:

The full quarter 1 budget monitoring report can be read as part of the Monday 9 September Cabinet meeting papers, from page 109.

2 September 2024