Targeting support to make things fairer
Overview
All Councils must set the budget every year. Setting the budget is one of the most challenging but important tasks the Council has.
Every year, Council workers suggest budget ideas for the Council's ruling Cabinet to consider.
The borough's 20-year vision and goals guide our budget planning.
The ruling Cabinet check that we focus our resources and support on the residents and areas that need it most to reduce inequalities and make things fairer.
Our 20-year vision for South Tyneside is - A place where people live healthy, happy, and fulfilled lives.
We have five main goals to achieve this:
- Financially secure: Residents will have enough money for a good standard of living.
- Health and wellbeing: Residents will enjoy good mental and physical health throughout their lives.
- Connected to jobs: Residents will have access to good quality jobs and the skills to get them.
- Part of strong communities: Residents will live in clean, green, and safe communities.
- Targeting support to make things fairer: We will help those who need it most to reduce inequalities.
All budget ideas are reviewed, and the final choices are made by the ruling Cabinet.
These are then included in the financial plan presented in February each year.
Opposition parties can suggest their own budget ideas for the Council to consider.
The Medium-Term Financial Plan shows how we focus our resources on the biggest issues facing residents while continuing to provide everyday services, like:
- supporting those in need
- maintaining highways
- keeping parks and beaches clean
The Council's budgets
The Council has two main types of budgets:
- one for long-term investments (capital investment)
- one for everyday expenses (revenue)
Unlike other public bodies, local councils cannot spend more money than they have. They must balance their budgets.
If the government reduces funding, councils need to cut spending or increase income, like raising council tax and fees.
If councils can't balance their budgets, the government will step in and do it for them, which might not consider local needs or priorities.
How the Council uses capital funding
The Government sets strict rules on how capital funding can be used.
It can't be spent on everyday services but can be used for things like:
- maintaining roads
- public buildings
- schools
- leisure facilities
- building new projects like social housing
The Council focuses capital investment on projects that support the borough's 20-year vision and future needs. This make sure that future generations have the necessary facilities.
We have successfully managed to get millions in external funding, including £20 million for Holborn Riverside and £20 million for Jarrow.
The borough is also recognised as a Levelling Up Partnership Area.
Day-to-day running costs
Revenue spending covers the day-to-day running costs of Council services, such as:
- refuse collection and recycling
- highways, parking, and street cleaning
- environmental health
- parks, recreation, community facilities, and libraries
- schools, education, and pupil support
- care for vulnerable adults and older people
- children's social care, fostering, and adoption
- benefits advice and administration
- public health services like health visitors for new mothers and drug and alcohol treatment
- local transport services
More than 70% of the Council's discretionary budget, which is money we can choose how to spend, goes towards helping vulnerable adults and children.
Managing services and financial support costs
The money each Council has to spend depends on several factors, including:
- Government grant
- Council Tax base (South Tyneside has one of the lowest in the country)
- Council Tax level
- Number of new homes built
- Business Rate retention
- Attracting external funding for projects
- Fees and charges
Every year, the Council reviews the budget to make sure services are available while covering rising costs.
The Council tries to keep financial support available in many areas as possible, for the residents who need it the most.
The Council sets fees and charges carefully to help those in need and reduce inequalities.
We offer financial support when possible, but a large portion of our budget is dedicated to the growing costs of social care for vulnerable adults and children.
Some South Tyneside residents struggle financially, which is why the Council aims to keep costs low and continue financial support instead of charging full prices.
The new Council Tax support scheme from 2024 helps around 12,500 households pay less Council Tax, showing the Council's commitment to fairness.
Borrowing money
The Council borrows money very carefully and follows strict rules. We only borrow for big projects, not for everyday services.
In the past, we borrowed money at low, fixed interest rates to invest in long-term projects. These investments were made to create valuable assets, like buildings and infrastructure, that will benefit future generations.
South Tyneside has over £1.3 billion in assets and the second highest net asset value per person in Tyne and Wear.
Our Medium-Term Financial Plan makes sure that any borrowing is sensible, affordable, and sustainable.
Often, these investments generate income that helps cover the borrowing costs. For example, our leisure memberships have grown due to investments in our leisure facilities.
With higher interest rates now, we are borrowing less and using more external funding for big projects.
South Tyneside has successfully secured millions from the government for town centre investments, showing our growth potential.
How the Council manages debt
The Council expects that the percentage of the budget spent on debt will decrease from 18.2% in 2020/21 to 14.3% by 2029/30. This shows the Council's commitment to reducing borrowing and taking a careful approach.
We follow strict rules (the prudential code) to make sure any new borrowing is affordable. Each year, we review the borrowing for big projects.
In the past, we used borrowing to fund important projects such as:
- regeneration schemes
- housing
- leisure facilities
- schools
- highways
- footpaths
- transport schemes
These investments also helped increase the Council's income.
Having low-rate, long-term loans will benefit future leaders by putting them in a strong financial position.
How the Council uses it's savings (reserves)
Reserves are savings that the Council keeps for emergencies or unexpected costs. They act as a safety net when the Council faces financial pressures or budget changes.
Some of these reserves are set aside for future expenses.
We sometimes use these savings to balance our budget, but we need to keep a certain amount for known risks, planned projects, and unexpected emergencies.
If we use most of our savings, we may find it difficult if there are unexpected costs, like rising inflation. It also:
- doesn't solve our budget problems long-term
- could lead to future service cuts
- might result in the Government stepping in
How the Council is dealing with cost pressures
The Council faces big challenges, including:
- more people needing care and more complex care needs
- needing to save £29.8 million by 2030 to stay financially stable
- new laws and regulations
- issues with hiring and keeping staff
Like everyone else, the Council is dealing with rising costs and demand. Costs have at least doubled due to:
- inflation
- staffing
- cost of care
- contracts
- increased demand in adult and children's social care
- higher energy prices
The Council will need to save more money in the future.