Potential £8.7m overspend flagged at Middlesbrough Council

A potential multi-million pound overspend has been flagged at Middlesbrough Council.

However, work is to be undertaken to reduce this figure between now and the conclusion of the financial year at the end of March 2027.

Labour Councillor Nicky Walker, the council’s executive member for finance, said – if no action is successfully taken – the forecast would see an overspend of £8.7m, which equates to 4.34% of the overall £200m council revenue budget. She clarified that it is not expected that this would be the final figure at the end of 2026/27, adding: “I can’t remember a year where it ever has remained the same.”

The update is a routine quarterly forecast of the year-end outturn. Documents presented to the committee, which included a slightly lower figure, added: “This should not be viewed as the anticipated year-end outturn as further work will be undertaken to mitigate the current forecast pressure.” The last financial year concluded with a £1.8m overspend by the council,a much reduced figure on what wasforecast at this time in 2025.

Cllr Walker said that, as usual, the “most significant pressures” are within the children’s care directorate, which account for £8.4m of the overall pressure. There are different forecast overspends in other directorates, such as in adult social care and environment, however, the total £8.7m figure outlined by Cllr Walker also takes into account forecast underspends and the use of central budgets, which means the final forecast is a lower number than simply adding up all potential overspends.

Cllr Walker said the forecast pressure in the area of children’s care was due to agency staffing, emergency resource workers, an increased number of children looked for, and the high cost of external placements.

She said that in recent years, the number of children looked after hadn’t fluctuated greatly, but over the last 12 months, there has been an increase from 493 children in June 2025 to 541 in June 2026, stressing that complexity of the placements is a key factor. She said that “improved practice” can bring financial benefits in the department, but such benefits are not expected immediately, so savings won’t be seen in-year.

Speaking to her fellow Labour councillors who form Middlesbrough’s Executive, on Wednesday, September 2, Cllr Walker said: “There remains an ongoing need for strong financial discipline.” Papers add: “Work will be ongoing to address these pressures and directors will continue to actively manage forecast budget pressures through the council’s integrated performance and financial management framework.”

As for the level of council reserves, papers say: “The current forecast overspend if not addressed will impact on the level of usable unrestricted revenue reserves and would impact on progress towards achieving the council’s preferred financial resilience targets as set out in the reserves policy. This reinforces the need for immediate action to reduce forecast overspends and protect reserves.”