Why every household in South Tyneside could be £875 worse off by 2020

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Residents across South Tyneside are being warned to brace themselves for further cuts as future council funding is set to be slashed by the Government.

Senior Labour councillors are set to discuss whether to accept a four-year financial settlement deal when they meet to debate the issue on Wednesday.

South Shields Town Hall

South Shields Town Hall

If agreed, it will see a 20 per cent reduction - equating to £15m - in core funding over the period which would mean, that by 2020, the council would have £875 less to spend per household.

But the move would also see them knowing the minimum amount they would receive in order to budget accordingly.

If the Cabinet knock back the offer, it could lead to an uncertain future when it comes to government handouts. The council have until October 14 in which to accept or decline the offer.

A report which will be presented to the council’s cabinet recommends the settlement should be approved.

“Any organisation losing such a significant amount of funding cannot afford to maintain the status quo. The Council is no different.”

Coun Ed Malcolm

Over the four years, the council expects funding will fall from £77m for the 2016-2017 financial year down to £62.5m by 2019-2020.

Coun Ed Malcolm, lead Member for resources and innovation said: “Let’s be clear, our acceptance of the settlement is certainly not an endorsement of it. Far from it, we will continue to fight for fair funding and do all that we can to try and protect frontline services for the people of the borough.”

Council officials say the local authority has been one of the hardest hit by the government’s austerity programme. Since 2010, after having funding slashed by 45 per cent, the local authority has had to find savings of more than £120m over the same period.

Coun Malcolm said: “Huge government grant cuts are set to continue which inevitably means we have less to spend on key council services. Any organisation losing such a significant amount of funding cannot afford to maintain the status quo. The Council is no different.

Coun Ed Malcolm

Coun Ed Malcolm

“At the end of the day the cuts for South Tyneside are going to take their toll and although we are doing our best to minimise the impact of them, the continuation of years of grant reductions will mean we have to think hard about which services we can and cannot continue to provide.

“The four year Government settlement figures represent a further reduction in funding to South Tyneside. On-going delivery of services to the residents of the borough will be challenging.”

The council currently has £35.4m in reserves, which includes £3m for emergency purposes and unforeseen liabilities; £10.1m to meet known significant financial risks including adult social care demand and costs, increased costs of looked after children and those not covered by specific earmarked reserves; £19.6m to meet possible shortfalls in the council’s revenue budget and £7.6m school reserves.

Coun Malcolm, added: “Unlike other public bodies Local Government cannot run a deficit. Reserves provide an important ‘safety net’ at times when the council is facing cost pressures (for example during emergency incidents such as flooding) but they are not there to ‘prop up’ the revenue account for day to day expenditure.

“You can’t spend reserves more than once, so it is vital that they are used for the right reasons. It would be short-sighted to simply use reserves instead of innovating. It would not provide a sustainable solution to the continuation of cuts to the core government grant. It is important for us to ensure that reserves are used prudently.”