Sheffield Council ‘grappling’ with huge money woes but it still hopes to avoid bankruptcy
Sheffield Council has admitted it is facing “significant financial challenges” with an overspend of £34million this year but hopes bankruptcy can still be avoided.
The council’s strategy and resources policy committee will discuss a report on the update on the Q1 outturn position for Sheffield City Council’s revenue budget.
In it, officers warned the council was “grappling with significant financial challenges stemming from increased service demand, rising costs, and reduced funding”, resulting in a projected overspend of £34.3 million for the 2024/25 fiscal year.
This amount represents seven per cent of the net revenue budget and the overspend is spread across several key service areas, including housing and homelessness, adults and children’s social care and special educational needs home-to-school transport.
The report added while the council can avoid issuing a section 114 notice, effectively declaring bankruptcy, by using reserves to balance this year’s budget, the “financial outlook remains difficult”.
It said there was “limited scope for immediate government relief amidst growing pressures across the public sector, including the NHS, schools, and higher education institutions”.
In the document, officers said the final outturn position for the 2023/24 financial year reported a £15.6m overspend which was funded through the reserves – the remaining balance of said reserves is £27.6m.
However, the document reads: “Alongside a corporate provision made as part of the budget setting process of £7.9m in recognition of the subsidy loss issue, the council will be able to manage the budget for 2024/25.”
The council admitted that one-off funding and provisions helped mitigate many of the issues in the previous year (23/24) but it now “faces a more challenging financial landscape with fewer available offsets to reduce the overall budget variance”.
Sheffield Council added that inflation going down doesn’t necessarily mean its costs would fall.
The council identified an annual £4m budget to support transformation activity – and the “critical” scheme is called Future Sheffield. The council said it would “create a more sustainable and efficient operating model”.
The report said: “Allocations of funding have been made to support delivery of programmes in adult social care, housing, children’s services, ICT, HR, and organisational strategy to build upon the Future Sheffield programme.”
This document and the findings will be debated at 2pm next Thursday (August 29) at Sheffield Town Hall.