North East councils face “dire” cash crisis totalling more than £133m, says UNISON

Councils across the North East have a hole in their finances exceeding £133m collectively for the coming financial year, making it extremely likely they will have to make huge cuts in essential services and jobs, says a report published today (Friday) by UNISON.

The figures, based on financial information gathered from local authorities across the North East show the true scale of the dire state of local government funding, says the union.

Many authorities will be forced to consider selling land and buildings, as well as slash services for the vulnerable and vital community resources such as waste collection, libraries and leisure centres, UNISON warns.

The biggest funding gap in the region is at Gateshead Council, which is almost £30m short of its spending needs for next year, followed by Newcastle City Council with a gap of £23m.

Other authorities with severe cash shortfalls, according to UNISON’s research, include Middlesbrough Council on £14m and South Tyneside Council which is short some £12m.

The UNISON research, Councils Under Pressure, shows there are five councils at least £10m short of their planned spending requirements.

The record combined shortfall totals over £133m across the twelve councils in the North East for 2024/25. It means the local authorities will be forced to rely on virtually non-existent cash reserves. All are likely to have to make cuts to services and their workforces, says UNISON.

Regardless of their overall political control, the future is bleak for councils with increased energy costs, a decade and more of reduced government funding and inflation all worsening their financial position, the union adds.

The huge scale of the budget shortfall across local government means a growing number of councils are teetering on the brink, UNISON warns.

This precarious state of council budgets couldn’t come at a worse time with thousands of families ever more reliant on community services due to cost of living pressures, adds UNISON.

The shortfalls increase the risk that many authorities will consider raising their council tax as high as possible next time, says the union.

Most councils are responding to the crisis by cutting services and activities, such as Gateshead Council which closed Gateshead Leisure Centre and Birtley Swimming Centre in July this year.

UNISON says Jeremy Hunt must provide extra grant funding in the autumn statement to help weather the immediate challenges or local authorities and their communities will no longer be able to cope.

Work must also be done at pace to reform how councils are funded to tackle the huge reduction in central government resources since 2010, urges the union.

UNISON Northern regional secretary Clare Williams said: “Communities rely on their local authorities for all manner of essential services, such as waste collection, social care, road repairs and parks and other open spaces.

“But councils are on their knees. Ministers seem to care very little about public services and local government has been hit hard over very many years.

“Essential services can’t run on thin air. Staff levels have already been cut to the bone in desperate attempts to balance the books.

“Yet more service cuts and job losses are sadly inevitable across the country unless the government intervenes with the lifeline of significant extra funding. Not just for those on the brink, but to councils everywhere.”

– UNISON sent a Freedom of Information request to all 371 local councils in England, Scotland and Wales for their 2024/25 funding shortfall figure. A total of 181 responded with the relevant data. For most of the remainder, the information was gathered from medium-term financial plans or papers from budget-setting meetings. Further details about the research can be found here with details of individual councils to be found here.
– Funding figures are from the latest data available on 27 September 2023.