Sunderland City Council leaders open up about difficult decisions as spending cuts and tax rises loom

Sunderland City Council’s cabinet of senior Labour councillors, at a meeting this week, backed revenue budget proposals for the 2025/2026 financial year.

To help balance the books, the council said it would use £9 million of medium-term planning reserves, along with nearly £10 million (£9.974 million) of “cost savings” and efficiencies.

A report to cabinet said the cost savings included “reshaping how we deliver our social care services and reviewing how we deliver and staff our support service”.

Staffing reviews and managing vacant posts, reviews of some adult social care services, including the telecare service, a review of cultural services and fees and charges and an “alternative delivery model” for managing council business centres are just some of the measures proposed to help the council balance its books.

Budget plans also include proposals for a 4.49 per cent council tax rise for council services, including a two per cent adult social care levy from the Government, which is ringfenced for these services, and a 2.49 per cent increase to core council tax.

The core council tax hike will help fund more than 600 other day-to-day services across the city, including household waste collection and recycling, parks maintenance, street lighting, environmental enforcement and more.

Following backing from Sunderland City Council’s Labour cabinet on Thursday (February 6, 2025) at City Hall, the revenue budget will be debated and finalised at a crunch council meeting later this month.

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The 2025/26 Sunderland City Council budget marks the first time in more than a decade that the Labour Party has been in power nationally.

Councillor Michael Mordey, who became Labour leader of Sunderland City Council in spring 2024, said the council was still facing the “lagging impact” of austerity under the previous Government but noted the city council had seen an increase in core spending power for 2025/26.

The council leader also welcomed wider reforms for councils under the Labour Government, such as multi-year funding settlements aiding councils in financial planning and discussions around a “National Care Service”.

Cllr Mordey urged the Government to reform the local funding element of adult social care for councils, to “abolish” the social care precept and to “cover the real cost of social care on a needs basis”.

In the meantime, the council leader said Sunderland City Council had to face “difficult short-term decisions” including an increase in council tax from April, 2025.

This includes a proposed increase of 4.49 per cent for core council services, which is below the 4.99 per cent limit assumed by the Government.

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The increase for 2025/26 is expected to equate to an extra 99p a week for a Band A property, into which the majority of homes in Sunderland fall.

Cllr Mordey also said the increased council tax rate for an average Band D property (£1.48 extra a week) is expected to “remain the lowest in the region” and that the city council would continue to support residents via its council tax support scheme, “significantly protecting those with the lowest incomes from the rise”.

“The compound impact of the previous Government’s significant and disproportionate funding reductions over the last 15 years, combined with inflationary and social care pressures, means we are still once again faced with very difficult short-term decisions despite the increase in funding provided by Central Government,” Cllr Mordey added.

“The local government finance settlement published by the Government permitted a council tax rise of 4.99 per cent.

“Raising council tax remains a difficult decision for all councils, if we do not raise council tax we will need to cut services and reduce our investment into key priority areas.

“That would mean cuts to services to the most vulnerable in our communities and to the services which residents tell us are a high priority.

“The Labour Government is committed to reforming local government funding, directing resources to those areas with the greatest need and demand and areas that are least able to raise income locally.

“The local government finance settlement demonstrated this commitment by allocating more resources to councils like ourselves.

“But even with this initial funding, in order to prevent cuts to front-line services and enable essential investment in key priorities and minimise the use of reserves, an increase in council tax is necessary.

“This cabinet, like all previous Labour cabinets that have had the honour to lead our city, have always strived to keep council tax as low as possible.”

The city council currently raises around £16 of every £100 the council spends because most of the council’s income comes from Government grants.

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According to a report to senior councillors, Sunderland City Council’s spending plans have seen additional resources directed to both adult and children’s social care as inflation, provider costs and demand continue to rise.

Budget demands also include pressures on the temporary supported accommodation budget from those homeless or at risk of homelessness, as well as other demand and cost pressures across the council.

City leaders have welcomed Central Government reforms in future years which aim to provide “fairer funding” for local councils based on need, senior councillors have said.

Cllr Mordey added: “There are, at this stage, unfunded cost pressures and uncertainties on further inflationary costs and demand on council services in future years.

“In the December before the provisional statement, our projected three-year deficit from 15 years of Tory and Lib Dem austerity stood at £76.5 million.

“In seven months and after one settlement from the Labour Government, our three-year medium-term deficit now stands at £39 million, an improvement of £37.5 million.

“When the Labour Government said they were elected to fix the foundations of our economy they meant it and this settlement is proof of a Labour Government delivering in Government its promises.

“Looking forward, the Government has confirmed plans for a full package of funding reforms of local government in 2026/27 and this will be the start of a multi-year settlement.

“The funding reforms are intended to fundamentally improve the way the councils are funded but will also have emphasis on directing funding to where it is most needed based on an up-to-date assessment of need and local resources.

“Work will continue to identify a further suite of proposals to address the council’s remaining budget gap in future years, and we will actively engage with the Government through the funding reform process for a true fair funding agreement for local government.

“I believe that these [2025/26 council] budget proposals represent the most appropriate balance, taking all factors into account.”

All city councillors will be asked to vote on Sunderland City Council’s Labour Group proposals, including the proposed council tax rise, at a full council meeting later this month.

The final council tax proposals will also include confirmed ‘precepts’ linked to the region’s police and crime commissioner and fire and rescue service.

Residents living within the Hetton Town Council parish area would also see a precept added to their council tax bill, and all precepts are expected to be confirmed ahead of the city council budget meeting.

The city council budget meeting is expected to take place on Wednesday, February 19, at City Hall from 4pm and members of the public are welcome to attend.