Study predicts Northumberland County Council set to face £28.1m budget deficit

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North East councils are facing a financial black hole totalling almost £200m, amid fears that a £5bn nationwide shortfall presents a major threat to even basic services.

A study from the BBC’s Shared Data Unit has found the average council now faces a £33m predicted deficit by 2025/26 – a rise of 60% from £20m two years ago.

Among local authorities in the North East, Gateshead faces the biggest budget gap with a predicted £45.9m, followed by Newcastle on £44.3m.

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Northumberland has the third highest predicted shortfall of £28.1m.

County Hall in Morpeth.County Hall in Morpeth.
County Hall in Morpeth.

The seven councils across Tyne and Wear, Northumberland, and Durham have a combined shortfall of £196.5m.

Public services union Unison warned that councils “simply don’t have the funds to provide even statutory services” and some would not be able to offer the “legal minimum of care” next year, while the Local Government Association has pointed to inflation, the Living Wage and energy costs adding billions to town hall bills.

Together, the 190 authorities surveyed by the BBC said they would need to find £5.2bn to balance the books by April 2026 – even after making £2.5bn of cuts this year.

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The BBC said that councils plan to make an average £13.9m worth of savings this year, a rise from £10.2m in 2021/22, and are having to use a combined £1.1bn worth of reserves to balance the books.

Mike Short, Unison’s head of local government, warned that council finances are now “in the direst of states” and that local services “either vanish or are scaled down dramatically” as a result.

He added: “This is not a sustainable situation. Local authorities simply don’t have the funds to provide even statutory services.”

Coun Shaun Davies, chair of the Local Government Association, called on the Government to deliver a “long-term plan to sufficiently fund local services”, including multi-year funding settlements to provide greater certainty.

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A spokesperson for the Department for Levelling Up Housing, and Communities said: “No decision on funding levels for beyond 2024-25 in England will be taken until the next Spending Review, so these numbers are unsupported.

“Councils in England have benefitted from an increase in Core Spending Power of up to £5.1bn in 2023-24 compared to the previous year, with almost £60bn made available for local government overall.”