Council funding becoming 'beyond sustainable', warns former leader

Last week it was reported that St Helens Council posted a £2.2 million net overspend for 2018-19, with much of this down to increasing pressures on children’s services.

The developing young people’s budget, which manages children’s services, had an overspend of £4.3 million, largely down to residential costs for looked-after children and the associated costs for young people leaving care services.

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The council’s financial position was discussed in greater detail this week by the audit and financial monitoring overview and scrutiny panel.

Cllr Derek Long, who stepped down as leader following the local elections in May, said the position was not dissimilar to most other urban councils.

He said the overall running of the council is “tight”, when looked in the context of Northamptonshire, which was effectively declared bankrupt in 2018, and Somerset, which approved £28 million of cuts to avoid a similar fate.

Cllr Long, chairman of the panel, said St Helens was not alone in overspending on children’s services last year.

“It becomes enormously difficult for councils to address open-ended demand because by definition it’s open-ended,” Cllr Long said.

“It’s interesting that 25 out of 27 North West local authorities overspent on children’s services last year.

“On that basis we are facing an epidemic of challenge for children’s services across the country, across the Western world.

“That is not sustainable. That means that it’s government who needs to engage with us.”

Cllr Derek Long

Jon Ridgeon, business support manager for the council, said the the developing young people’s portfolio was “bolstered” with £10.2 million in additional one-off funding during the course of the financial year.

This was to offset the demand pressures on children’s services and in response to Ofsted’s damning findings of children’s services last August.

Mr Ridgeon said one-off funding was from a mixture of sources including earmarked reserves, which are set aside for specific schemes and priorities, and general fund reserves, which do not have such restrictions.

In total, general fund reserves, reduced from £21,308 to £17,807.

Labour’s Nova Charlton sought reassurances around the future sustainability of the council, but Mr Ridgeon said this was “subjective”.

Mr Ridgeon said the government is due to carry out several pieces of work around local government financing, including changes to business rates.

However, he said noises coming from government is that some of these issues may not be resolved in time for the budget-setting for 2020-21 because of the uncertainties around Brexit.

Mr Ridgeon said all of these factors have created a “fundamental uncertainty” around future budget setting.

Cllr Long said: “The bottom line is, central government’s gone AWOL from dealing with key issues which affect people in St Helens and across the country, and we can’t afford for them to continue to be absent without leave over these issues.

“It’s about looking after our young people, looking after our most vulnerable people.

“We can’t operate with that uncertainty and we shouldn’t have to.

“It’s a civilised society with a very strong economy and there’s no reason why we shouldn’t get these questions answered.

“And it’s appalling government hasn’t given us the answers.”

Cllr Nova Charlton

Mr Ridgeon was pressed further by Labour’s Michelle Sweeney on the council’s use of reserves.

He told members that from 2015-2019 the council’s reserves reduced by 16 per cent.

However, Mr Ridgeon aired caution with drawing comparison with other local authorities due to the differences between reserve levels.

Cllr Charlton warned that if the council continues to operate in this manner, eventually it will not be able to deliver a balanced budget.

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“All those statutory services we have to provide for vulnerable people, at some point our savings are going to run out,” Cllr Charlton said.

“I can’t put it any more simply. That is what I am concerned about.

“I know we’re working really hard and we are doing things in the correct manner, but no matter how hard we work to balance that budget, at some point we’re not going to be able to do it.”