Let's Talk Budget 2022
We work hard to provide over 600 services to residents and businesses across Sunderland but we continue to face very difficult funding decisions.
The majority of our funding as a council comes from government grants. The core government funding we receive has reduced in real terms since 2010/11.
Alongside this reduction in income, our costs continue to increase and pressures on our services grow. We also understand many of our residents are facing challenges through the cost of living crisis.
These sustained challenges we are facing mean we need to make some difficult decisions, now and in coming years. For the financial year 2023/24 we estimate a £30 million gap between the money we receive and what we need to spend to deliver these vital services. We have been using some of our reserves to lessen the impact of this funding gap. For 2023/24 we will use £9 million from our reserves, leaving a gap of £21 million.
We cannot meet those savings required without making some difficult decisions. In some cases, proposals we are considering this year will include changes to how we deliver some of our services.
It is vitally important that we hear from you, our residents, on what you think about our suggested approach. To help you answer the questions, we've provided more information about what our proposals include and the context below.
Costs are increasing
- Continued increases in demand on adult social care and increasing costs in both children's and adults social care mean we face further need in an area where we already spend the most. Upcoming social care funding reforms will also provide us more challenges in how we fund these changes in coming years
- Increases in inflation and interest rates mean it costs us more to provide services and to borrow money to invest in things like our regeneration programmes. In addition, the levels of government funding we receive is not increasing in line with inflation
- Increases in utility costs means it costs us substantially more to operate our buildings and venues, to maintain street lighting, and to fuel our vehicles including refuse and recycling vans
- Nationally agreed staff pay awards mean our staffing costs increase
To address these challenges, we need to try to increase our income at the same time as reducing our costs.
Increasing our income
Did you know: the council tax we collect only accounts for 15% of our total income
We understand many of you are also facing challenging decisions. One of the ways we can increase our income to meet some of these challenges is through raising council tax.
In their Autumn Statement, the government increased the referendum limit of 2.99% (including 1% for social care). This was a limit to the amount councils could increase council tax without a local referendum. There is an expectation that local authorities would increase council tax by 5% (including 2% for social care) in the absence of sufficient additional funding from the government.
We have made our proposals on the basis of an increase of council tax of 2.99%. This would mean that a household living in a Band A property would be paying 61p more per week whilst a household living in a Band D property would be paying 91p more per week. Even taking into account this increase, we would keep the lowest council tax rate for Band D in the North East.
Our proposals also consider other ways we could generate more income, including:
- Income from regeneration
- Income through Housing Benefit overpayment recovery
- Maximising external grant income
- Increases in income from building control and development control activities
Cost saving proposals
Because council tax is a small proportion of our income, this increase alone will not address the funding gap. We need to consider some difficult decisions in how we cut our spending at the same time as trying to maximise our income. In some cases, the proposals we are considering this year will include changes to how we deliver services and staffing.
We also have to take into account that some of our spend is outside of our control. This includes things like funding for maintained schools and housing benefit payments.
If we look at every £100 the council has to spend, half of this covers these services. This leaves £50 which the council can control for day to day services.
We want you to share your views on our proposals as well as letting us know if you have any other suggestions for cost savings that would make a significant impact on our funding challenge.
Some of our proposals include:
- Reshaping and changing the way we deliver our social care services, providing a saving of £1.5 million
- Reviewing the way we deliver our support services including reduction in staffing costs, providing a saving of £1.8 million
You can read the full detail of our approach in the Budget Planning Framework and Medium-Term Financial Plan
Thank you for sharing your views about our proposals. These views will be used to inform our final agreed approach to our budget for 2023/24.