Sheffield Council warns of £43m overspend in budget as “virtually unlimited spending” during pandemic stops

A grim financial report says social care is swallowing up Sheffield Council’s budget and the authority may struggle to balance the books without support from the Government.

By Lucy Ashton, Local Democracy Reporter
Wednesday, 15th September 2021, 11:25 am

The council is predicting an overspend on its revenue budget of £43.4m of which £30.9m – 71 per cent – is in adult and children’s social care.

A report warns: “Council services need to readjust quickly from the responsive, virtually unlimited spending which was necessary to mitigate the effects of the pandemic, to the new normal.

“The council withstood the immediate financial pressures created by the response to the pandemic.

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City centre.

“But the projected increases in care costs threaten the sustainability of the provision of council services in the scope and quality which they are provided today.”

The report says the council should consider “alternative models” to provide some services.

It’s looking to work closer with health organisations and Sheffield City Trust to identify “improvements” which will maintain service levels to the public while reducing costs.

Without Government support, the council will move very quickly – in the next 15 to 30 months – to a position where it cannot set a sustainable budget because its reserves have been exhausted.

Paul Schofield, head of accounting, said the pandemic was creating financial uncertainty, but the cost of social care was already a problem before Covid.

“Sheffield is not alone in facing additional financial pressures caused by the pandemic, councils nationwide are struggling to cope with the additional demands on services.

“The council does welcome the funding announced so far by the Government to manage the financial pressures it and other local authorities face.

“However, our initial projections show that more financial support is needed to support the care sector.

“This is not just to counter the trailing long term effects of the pandemic – such as the projected rise in children’s care from lower family disposable incomes post the cessation of the furlough scheme – but also to deal with the national demographic pressures in adult social care which were present before the impact of the pandemic.”

Finance chiefs say:

There needs to be an urgent prioritisation of resources

Additional savings need to be identified

Spending in certain departments needs to be reined in

Any reserves which can be realised need to be identified

The report adds: “There may be a need to cushion the potential impact of lower receipts from council tax and business rates created by the shifts in the national economy such as the decline in High Street retail or increased working from home which may depress office space demand.

“The council needs to deliver, much quicker than previously achieved, the transformative changes that are needed to re-balance its financial position and protect services in the medium term.

“This process will be challenging especially as there is a pressing need to regenerate the economy of the city and the wider region, and, restore life to pre-pandemic levels.”

The Executive will consider the report at a meeting on Wednesday, September 22.