Sheffield Council facing a much smaller budget spending gap next year following current £31m crisis

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Sheffield City Council is facing spending pressures on its budget for the next financial year of only £1.7 million, compared with a massive £31.4m this year.

The news was delivered to a meeting of the council’s finance and performance policy committee yesterday (December 16). The forecast was delivered ahead of the announcement expected on Thursday (December 19) by Chancellor Rachel Reeves of her financial settlement on local councils for the year ahead, so figures may change.

Kerry Darlow, council assistant director for finance and business partnering, told the committee: “This £29m improvement is largely due to £22.4m savings and mitigation put forward by officers.

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“There are also increases to corporate funding following the Chancellor’s Autumn Statement and reductions in planned contributions to the leisure strategy that contribute a further £14m improvement.”

Sheffield Council Town Hall chamberSheffield Council Town Hall chamber
Sheffield Council Town Hall chamber

The main budgetary pressures facing the council are the expected increase of the real living wage, plus increased demand for services such as home to school transport for pupils with Special Educational Needs and Disabilities (SEND), services for children and adults with disabilities and more calls on the city multi-agency safeguarding hub.

Ms Darlow added that, whereas the government is expected to cover the cost of increased employers’ National Insurance contributions for council staff, council contractors will be looking to pass on the impact of the increase for their own workforces. She said that the increase will hit the social care and voluntary sectors particularly hard.

Contingency

She added that work will continue to close the £1.7m gap by February, ahead of the council budget-setting meeting in March 2025.

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This year the council has had to use using £26.1m budget contingency reserves, plus £7.9m housing benefit subsidy provision, to bridge the spending gap which was previously expected to be £34m. This means that its financial reserves have essentially run out.

Committee deputy chair Coun Mike Levery said: “Our reserve situation is not good – I think that’s an under-statement.” He asked what is proposed to remedy the situation.

Director of finance and commercial services Philip Gregory responded that a review is taking place. He added that the current reserves were planned to last for four years and that period has now ended.

Mr Gregory said: “What we’ve got to be careful of is not driving behaviour where an overspend is viewed to be okay and that finance will cover that off. We’ve sort of seen that over the last few years.

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“We’ve got to wean people off that idea because it is’t sustainable to continue like that mindset.”

Strategic

He said that the three-year Future Sheffield plan – which takes a more strategic view on sustainable spending on services in line with the council’s principles for what sort of city it wants to create – should start to deliver savings from 2026-7 onwards.

Mr Gregory said that work is taking place to ensure that the high costs of homeless and temporary accommodation are curbed by increasing the amount of council housing stock allocated, rather than using expensive B&Bs and hotels. A budget of £7.9m has been put in place.

He said that the council’s aim is to ensure that no family is in a hotel or B&B for longer than 42 days.

Extra funding is being built into the budget for home to school transport for SEND pupils, while measures are also being taken to cut costs and deliver savings.

Committee chair Coun Zahira Naz called for more community consultation on the budget “so people know where their money is spent and what happens in regard to the budget-setting process.”

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