City leaders slam Government for 'mishandling the economy' as Sunderland faces £21million black hole amid 'crazy times'

At a meeting of Sunderland City Council’s cabinet on October 13, councillors were given reports on the council’s current financial position and future budget estimates.

As a result of national issues, including rising inflation, cabinet heard the local authority will face a challenging period in future.

This includes inflationary pressures impacting on capital projects, as well as rising energy costs, pay awards and increased pressure on social care services.

According to one report presented to the panel, a special £5.75million energy and inflation reserve is set to be exhausted by March due to rising utility costs and inflation.

The latest projected overspend figure for this year’s budget is £2.795million while current forecasts estimate a funding gap of £21.4million for the next financial year.

Over the next four years up to 2026/27, the council is facing a budget gap of around £61million.

Sunderland City Council chiefs previously said they would continue to lobby the Government to look at efficiencies to give residents a “fair deal” and protect frontline services.

However questions still remain over Government funding in the short-term, including confirmation of a local government financial settlement expected later this year.

According to senior councillors on Wearside, recent decisions from Central Government are to blame for making the financial situation worse for local authorities.

Councillor Louise Farthing, cabinet member for children, learning and skills, raised concerns about “drastic cuts” to the public sector and local services in future.

Cllr Farthing said: “We have never had such a difficult time when we have got the Bank of England doing one thing and the Government doing something else, it’s crazy times.

“Something will have to give […] because we can’t go on lurching from crisis to crisis which we are at the moment”.

Councillor Linda Williams, cabinet member for Vibrant City, raised concerns about rising energy costs “hitting every element of service” from councils and social care to hospitals.

“We have to have the Government take hold of this situation because if not, we’re going to have a country that will implode on itself,” she said.

“We’re all trying to hold the line of ‘we need to work together and provide what we can’, but actually I can see disaster just hitting us in the face.

“We do need the Government to listen, to make the right choices and to get us as a country into the right position”.

Councillor Paul Stewart, cabinet secretary, said financial forecasts were the best available given “volatility in the financial markets”, uncertainty around the cost of borrowing and inflation impacts.

The councillor described the national picture involving the Bank of England and then Chancellor Kwasi Kwarteng being like a “boxing match” with both “completely opposed to each other’s view” of ways to move forward.

Cllr Stewart added: “It’s a complete recipe for chaos in the economy and that’s what’s happening in the markets.”

Councillor Graeme Miller, leader of Sunderland City Council, said senior figures in the current Government had no mandate and were “mishandling the economy”.

But the Labour council leader added he had confidence in Sunderland City Council’s “strong” budget planning framework going forward.

“What we’re looking at as a medium term financial plan recognises all of this and whilst it does not make for great reading […] as a council, this is exactly what we need to be seeing, Cllr Miller said.

“I don’t have the negativity about that report, I take that element in full and say thank you, we know exactly where we are with all of this.

“We cannot control the Government, I see no reason to change the current Prime Minister for a new one given that there’s 18 months to go until a General Election, it would just involve even more market instability which would hurt the British people even more.

“Unless of course, the Conservative MPs are going to support us in a vote of no confidence in the Government and call for a General Election which would be lovely.

He added: “I’ve never known the need to change Government so strong ever […] it’s not a ‘Labour this Tory that’ thing, it’s just an incompetent Government.”

Councillor Paul Edgeworth, a Liberal Democrat councillor who attended the cabinet meeting, added: “Can I just apologise that Liz Truss was ever a Liberal Democrat”.

In coming months, Sunderland City Council will develop more detail about the next budget and consult with residents and businesses.