Sheffield Council: Cash-strapped Yorkshire authority plans to make savings of almost £50m

Recent spikes in inflation, the National Living Wage and energy costs have placed further pressure on council finances still feeling the effects of the loss of £15 billion in government funding nationally over the past decade.

A new investigation of 190 authorities by the BBC Shared Data Unit revealed Sheffield was ranked 14th for planning the highest amount of savings as a proportion of its total budget this year.

At 10.4 per cent, this was higher than most other core cities including Leeds (10.2 per cent), Liverpool (8.6 per cent), Bristol (5.4 per cent), Birmingham (5.3 per cent) and Manchester (2.1 per cent).

Sheffield Council leader Tom Hunt said: “It’s no secret that the government has hammered local government over the last 13 years.

“Across the country, councils have been left to pick up the pieces as national government funding has been withdrawn and deprived areas are getting a lower share of local government funding than they need. We urgently need a fairer funding settlement for councils from central government.”

In this year’s budget Sheffield Council approved £47.7 million in savings which will be made by things like redesigning services, reducing post-pandemic subsidies to leisure providers and reviewing care packages, to name just a few.

The council warned it will become “financially unsound” from 2024-25 onwards if it fails to make these savings.

Sheffield Council’s finances

The authority’s financial struggles in recent years have been well documented.

Coun Bryan Lodge, former co-chair of finance, said there were “no easy options left” for savings during the budget setting process last year.

He said: “It is almost like a Doomsday scenario. We’ve taken anything and everything over the past 10 years – where else do you go?”

In its budget for this year, the council said over the past 13 years it has delivered £475 million of savings to offset cuts to funding and other pressures.

“Savings have become increasingly difficult to deliver without wholesale closures of service on which Sheffield residents rely,” it said.

It has pushed some local authorities to the brink of collapse. Unison, the government union, warned there were councils that would not be able to offer the “legal minimum of care” next year.

The Shared Data Unit found the average council now faced a £33 million estimated deficit by 2025-26 – a rise of 60 per cent from £20 million two years ago.

Sheffield Council did not confirm what its predicted cumulative shortfall was for 2025-26.

Ryan Keyworth, then director of finance, said last year was the final time they would be able to put aside £25 million in reserves as it had been allocated already.

In the end the council received a better than expected settlement from the government last year which enabled it to close the budget gap without using reserves.

It now says its reserves remain “adequate” but it is trying to avoid using any more.

Councillor Mike Levery, deputy chair of the finance, said: “This financial year is no less challenging, and policy committees are working closely with officers to ensure that the necessary efficiency savings are delivered which ensures that we can set a balanced budget without using reserves for next year.”

Lobbying government

The authority said it continues to lobby government for more funding and “recognise the full impact of a decade of cuts”.

The authority has around 30 per cent or £856 per household less to spend in real terms when compared to 2010-11 – which is well above the national average of around 20 per cent, the council said in its budget.

Looking at the national picture, Dame Meg Hillier MP, chair of the Public Accounts Committee, said her committee found in 2021 that nationally local government income was £8.4 billion less than in 2010-11 in real terms.

She said: “There are only so many more savings that can be made to services relied upon by local communities, and it is alarming to see such a steep increase in councils chipping away at their own precious reserve funds.

“Multiple high-profile cases of councils reaching crisis point in recent months is the logical endpoint of that status quo. Both those cases and these findings should have the dashboard flashing red across the board for the government.”

Some councils such as Thurrock and Croydon were forced to go “cap in hand” to the government asking for exceptional emergency support. Sheffield said it had not requested this.

Mike Short, head of local government at Unison, said: “Council finances are in the direst of states. As the government tightens the squeeze on local budgets, services either vanish or are scaled down dramatically.

“This is not a sustainable situation. Local authorities simply don’t have the funds to provide even statutory services.”

He said councils have also struggled to retain and recruit staff.

“As staff leave, there’s no money to replace them, which piles on the pressure for those remaining,” he said. “In social work, staff shortages have led to excessive workloads, putting vulnerable families at risk.”

Will government step up support?

Mr Short said: “Decent, well-resourced public services are essential. They’re a driver of economic growth and the fabric holding communities together.

“Cuts are a false economy as the dreadful experiment with austerity has more than shown. It’s time for a fair funding settlement, both for now and future years.”

A spokesperson for the Department for Levelling Up, Housing and Communities, said no decision on funding levels for beyond 2024-15 in England have yet been made so predictions for future deficits were “unsupported”.

They said: “Councils in England have benefited from an increase in Core Spending Power of up to £5.1 billion in 2023-24 compared to the previous year, with almost £60 billion made available for local government overall.

“We are making up to £4.7 billion available for the adult social care system in England in 2024-25 and have also confirmed an uplift to the Revenue Support Grant, whilst setting out a core council tax referendum principle for 2024-25 of 3 per cent, plus a further 2 per cent for councils with adult social care responsibilities.”