Council sets out proactive approach to budget planning

Sheffield Town Hall

Over the past 13 years, Sheffield, along with many other local authorities, has seen significant reductions in funding from central government. Alongside this, demand for services is rising.

As a Council we are taking a proactive cross-Party approach to ensure we manage this challenge in the best way possible for the people of Sheffield.

The Council’s Strategy and Resources Committee will meet on Thursday 7 September to consider – at a very early stage – the forecast for 2024/2025 and to explore a 3-4 year approach to financial planning.

Key points:

• In March the Council agreed across parties a balanced budget for 23/24 which required £47m of savings to be made and did not use any council reserves to balance.
• The Council is now considering next year’s budget and an updated set of financial predictions, for the medium-term, covering the period 2024-2028
• Over the coming 4 year period the Council has a forecast budget gap of £61.2m of which £18.1m is in 2024/25.
• The funding from government for Council services has reduced since 2010 which means the Council now receives 29% or £856 per resident less in real terms
• Sheffield City Council’s budget position is not an outlier – it reflects the position across local government
• Under the committee system we are sharing information like this early in the planning process – this means there is time to take significant steps to close the gap. Due to the national picture though, the position remains incredibly challenging.
• The 2023/2024 budget is already agreed and savings are being delivered.
• At next week’s meeting Strategy & Resources will also review performance against savings targets for the current year so far. There is currently a forecast overspend of £17.6m for 2023/2024, while this is not unusual at this stage in the year, Council teams will need to work hard to bring this overspend down through ongoing work on recovery plans and additional support to deliver budget implementation plans (BIPs).

Key areas of spend include:

• Education, Children and Families – The main expenditure here is placements, meaning children placed in care and the cost associated with this. It’s important that every child across the city has a warm, safe place to live, and this is something we are determined to deliver. There are limited places in the city and in some cases, the most complex children can cost a great deal more. Actions are being taken to ensure that the right costs for placements are being met by all elements including education and where possible health. High cost placements are also being reviewed.
• Adult Social Care - The pandemic still has a major impact on the financial picture, with the high cost of care packages put in place during this time having a significant impact carrying into 23/24. Work continues to reduce expenditure in this area, focussing on enablement of people out of care, day services, and reviewing high cost one to one support packages, whilst maximising income.
• Homelessness Support – The Government does not fully subsidise all housing benefit payments made by the Council even though it sets the rules that determine the amount the Council has to pay. In 2022/23, this rule cost the council £5.9m, the Council is essentially bridging the gap between the amount the accommodation costs to procure and the amount we are able to recover via housing benefits. We will always support people into accommodation, therefore this expenditure was wholly necessary.

Councillor Zahira Naz, Chair of the Finance Committee, said: “We and other councils have had our budgets hammered by cuts from central government over the last 13 years. In Sheffield we’ve been vocal about that and will continue calling on the Government to step up and provide fairer funding.

“Demand is rising as funding plunges – there are no easy decisions left to take.

“Despite this, we know we must act for the people of Sheffield. Yes, we have to make significant savings, but we’re also looking at our approach to budget planning over the next 3-4 years to get us on a steady and consistent footing.

“Let there be no doubt – this position is tough. But by tackling these issues early, transparently, and proactively and cross-party, we’re doing all we can to protect the services we know the people of Sheffield rely on.

“We can’t forget that following a damaging pandemic, we’re still stuck in the national cost of living crisis – as a Council we will continue to focus on supporting those who need it most.

“There is a mammoth task ahead of us, and every year it gets harder. But – whether it’s supporting our young people, tackling homelessness, hosting major events, or unveiling major regeneration in the city – we will continue to deliver for this incredible city.”

What are the next steps?

• The finance report goes to Strategy and Resources Committee on Thursday 7 September.
• Committee Chairs will plan for how to cost save within their committees and present these to Members.
• Proposals for the 2024-5 budget will be made available to the public
• Residents will be able to have their say on the budget proposals via consultation later in the Autumn.
• Following public consultation, the Council’s budget for 2024-5 will be discussed at Full Council at the end of the financial year.

You can read the full report here.