Budget: significant service cuts ahead as Sheffield Council battles to avoid going bust

Ryan Keyworth, director of finance and commercial services at the council, made the comments in a discussion at the latest meeting of the strategy and resources committee which had been brought forward by months due to the dire situation the authority is in.

He said: “We have prioritised investment in social care over many years now.

“It is now difficult if not impossible for us to continue that trend without significant cuts or curtailment and the stopping of existing services.”

Where cuts could be made

Advice from officers about where savings could be made is expected to be provided to committees soon.

For example of where cuts could be made, last month it was revealed there will be £5 million of cuts to the housing repairs service despite a long backlog of overdue jobs and under-performance.

Speaking about savings the council needs to make across the authority during a meeting where this was discussed, Mr Keyworth said: “After 10 years or more of cash constraints at this authority all the easy stuff, to the extent there ever was any easy stuff, has been done long ago.

“We have a job as an organisation to bring our costs back in line with our income.”

The council already forecast an overspend of £19 million for 2022/23 just a month into the financial year.

“Without significant mitigation there is a very real risk that the council will not be able to set a balanced budget for 2023/24,” officers said in a report.

Overspending on social care

Mr Keyworth said social care spending, among other things, has led to a forecast funding gap of about £53 million for the council’s coming financial year.

He added: “We are obviously not alone as a large metropolitan local authority facing a difficult financial position but we did look like an outlier towards the end of 2021/22. Our overspend was bigger than most of our comparable authorities, in fact all of them.

“We spend more on social care, both children and adults, than you would expect us to, given our relative deprivation as an authority.”

In a report he said the council spends 56 percent of its gross expenditure, excluding education, on social care which is above the core cities average of 51 percent.

How it is trying to cope

He said analysis stated the council’s financial position is highly dependent on the support it receives from government.

“A relatively small gesture from government in financial terms can make an enormous difference to Sheffield Council,” he said.

But there was currently no information to give the authority a clue as to what they will receive so it is taking a prudent approach.

Mr Keyworth told councillors: “I’d much rather come to you much later in the process with some opportunity to take difficult savings off the table as opposed to asking for more savings very late in the process.”

Due to the reduction in government funding, there is an increasing reliance on council tax and local taxation is estimated to increase by a total £60.2 million over the next four years. Officers recommended that council tax continues increasing by two percent every year and the adult social care precept increases by one percent each year.

Adding to the pressure, reserves are running very low, there is now only £16 million left to support medium-term planning which will not be enough to set a budget for 2023/24, Mr Keyworth said.

He said each committee will need to take responsibility for savings in their area so overall the council has a balanced budget proposal by October.

He added: “I want committees to reflect very deeply on the services they provide in this first round of the budget looking at fees and charges, scope and nature of services that are provided, the quality of services, the extent to which those services are mandatory and the extent to which services that we provide are optional.”

Not kicking problems up the road

During the meeting, councillor Richard Williams, chair of the communities, parks and leisure committee, questioned what the council was doing to ensure that if preventative measures are cut, they will not cause more expensive problems in the future.

He said: “My experience is when you cut services early on it has longer term likelihood of increasing costs. A child who isn’t supported when they are young quite often needs a lot more support when they are an adult. Within the review which is going to take place this summer, is there any mechanism to predict what a cut to child services would add to the budget down the track?”

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Mr Keyworth said: “There is an enormous amount of work going on looking at exactly those things.

“Nobody wants to cut preventive services that just push the problem down the road. That is in nobody’s interest let alone the child. It’s not even in the budget’s long term interest. Preventing a child from going into care is almost certainly going to be cheaper than looking after a child when they get older.

“What we have got to try to do is strike the right balance.”