Council warns of £10m gap amid pressure on services

Hartlepool Borough Council said it expected a budget deficit of £10m

Finance chiefs at a council have warned it is expected to face a near £10m budget gap next year.

Hartlepool Borough Council bosses said the deficit forecast for 2025-26 is predicted to be £9.99m, with the estimated three-year gap standing at £15.66m.

It comes amid a number of challenges, the council said, including the rising cost of children’s social care, inflation and staff pay awards.

However, finance officers praised "efforts made across the council" for helping to bring its overspend for the last year down to about £600,000, following initial estimates of £4.2m.

The main area contributing to the council’s budget pressures was a reported overspend of £4.95m in children’s and joint commissioning services, reports the Local Democracy Reporting Service.

The Labour-led council said this comes as the number of children in the local authority’s care needing residential placements continues to rise, as does the complexity of needs and placement fees.

The current average cost for a weekly placement is over £6,000, the council said, which has increased by more than 40% over the last three years.

The meeting of the finance and policy committee heard children’s social care was "a big issue" for local authorities in the North East, with Hartlepool’s spend increasing over the past three years from £25.3m to an estimated £35m in 2023-24.

James Magog, director of finance, IT and digital, said while this year's overspend was "disappointing", the council introduced "successful" measures to help keep the gap lower than first estimated.

He added: "I think the improvements reflect the efforts made across the council to address the budget position."

Actions included introducing non-essential spending restrictions alongside increased spend control measures and monitoring.

The meeting also heard the council benefited from increased treasury investment returns, a business rates levy distribution from government and a VAT refund, which supported the improved position.

The overspend will be covered from the council’s budget support fund reserve.