Sunderland City Council warning of tough decisions, more service cuts and another tax hike

The latest meeting of Sunderland City Council’s ruling cabinet heard the local authority is currently expecting to face a funding gap of £13.531million for 2025/26.

This includes an assumed council tax increase of 4.99% for next year, made up of an assumed 2.99% increase in core council tax and 2% for the adult social care precept.

The rise is subject to consultation and more news from government, before a decision is made by councillors in early 2025.

The final funding position for the council for 2025/2026 will not be known until the provisional local government finance settlement is announced later this month.

However in the meantime saving proposals totalling £9.974milllion have been developed to address the 2025/26 gap in line with the local authority’s future council transformation programme, which will be discussed in the new year.

Taking into account those proposals, there remains a budget gap of £3.557million in 2025/2026, with a further £44.482m required to be identified by the council over the period 2026/2027 to 2028/2029.

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Council leader Councillor Michael Mordey, speaking at the meeting (on Thursday, December 12), said: “The council will need to deliver further significant ongoing cuts in the next year and beyond.

“It is recognised that given the size of the gap, uncertainty of government funding and ongoing cost pressures that difficult decisions will need to be made to achieve a balanced budget.

“The scale of this gap over the four year medium term financial plan demonstrates the underfunding of local authorities and over a decade of cuts by the previous government.”

He added “whilst additional funding will be received by the council, further cost pressures continue to emerge”.

These include pay awards, employers’ National Insurance contributions and the impact of the National Living Wage and Real Living Wage increases on third party provider costs, alongside ongoing demand and increasing cost pressures within social care.

Labour’s Cllr Mordey continued: “There are still significant uncertainties relating to government funding, economic factors and future cost pressures on council services.”

The meeting heard how the Autumn Statement indicated core spending power for councils will increase “in real terms by 3.2% in 2025/26” and additional funding of £1.3billion will be allocated to local government.

Also announced were increases of £1billion for Special Educational Needs and Disabilities funding, £230million for homelessness and £86million for the Disabled Facilities Grant.

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The government has stated it intends to target funding towards areas with greater need and demand for services and less ability to raise income locally.

Council bosses added they hope this will benefit the local authority and result in additional cash for Sunderland.

Cllr Mordey also outlined how the government has set out its intentions to “consult on and review the way that local government is funded”.

He added: “This is long overdue given that there has been no reset of the business rate system since its introduction in 2013/14.

“The local government policy statement confirms that there will be a full package of funding reforms in 2026/27 and that this will be the start of the multi-year settlement.”

Consultation with residents and businesses about next year’s budget is being finalised and due to begin in the near future.