Councils facing shortfalls despite spending cuts

Both councils have reduced spending in a bid to bring down their overspends

Two councils that have reduced their forecast overspend for the year have warned that they are still expecting a shortfall.

Cheshire East Council (CEC) and Cheshire West and Chester Council (CWAC) have forecast spending over their allocated budgets for 2023/24.

CEC said its predicted overspend had fallen from £18.7m to £13m, while CWAC said its figure had fallen from £9.6m to £6.1m.

Both authorities said rising costs of adult social care and children’s services had impacted their spending.

Cheshire West and Chester Council has reduced its shortfall

In a report, CWAC said spending in adult and children’s services was “unsustainable”.

It said there was an “unprecedented” demand for mental health support, with a 15% increase in the number of clients, and older people care had seen a 12% rise in nursing placements, along with short-term placements and respite increasing “significantly”.

The council introduced measures including only appointing staff and agency workers if “absolutely necessary”, reviewing spending of more than £5,000 and a redundancy scheme.

It currently has £26.9m in its general reserve fund but said if its overspend was “not mitigated”, the reduction in its reserve would impact the council’s financial resilience and see a need for future savings to increase its reserves again.

Cheshire East Council has agreed to close its headquarters to save money

A CEC report also cited issues with children’s and adult services leading to rising costs, while the council previously warned the cancellation of HS2 was a "significant shock" to its finances.

It said costs of children’s placements were increasing and the spend on school transport was rising, due to increasing numbers of pupils needing the services, driver shortages and fuel costs.

The council has reduced spending and not filled vacancies to bring costs down.

CEC, which currently has reserves of £14.1m, said an overspend of £13m would “nearly eradicate” its general reserve fund and impact its ability to produce a balanced budget for the next financial year.

Councils across the country have been facing financial challenges, with a number of local authorities issuing a section 114 order, which effectively declares bankruptcy.

In December, the government announced England's councils would have £64bn to spend in 2024/25, assuming they all increase council tax by the maximum amount.

Ministers have argued that represented a 6.5% rise on the previous year and would account for rises in inflation.