No reduction in homelessness funding in new city council budget

In November, Newcastle City Council set out a series of proposals to save more than £15m in the next year, as part of its Medium-Term Financial Plan.

Over the next three years they need to save £59.8m to balance the books in the face of reductions in funding, soaring inflation and increased demand on services.

They proposed to do that through a 2.99% increase in council tax, a 2% increase in the government’s Adult Social Care Precept and a number of efficiency savings.

A seven-week public consultation exercise has concluded and final proposals are set to be approved by Cabinet next week, ahead of a full council meeting in March.

Cllr Paul Frew, Cabinet Member for Resources and Cabinet Secretary, said the Government funding settlements had left councils facing “difficult decisions” in balancing the budget.

He said: “Councils in England face a funding gap of £4 billion over the next two years and in Newcastle we need to save nearly £60 million in the next three years.

“We have faced 14 years of cuts but, despite inflationary pressures and increasing demand, no additional Government funding has been forthcoming.

“Funding increases promised by Government already include maximum increases in council tax and social care precepts. That means hard-working families have to pay the price.

“These are difficult proposals because increasing financial pressure on councils everywhere means our finances cannot stretch as far as we’d wish.

“Our priority will always be to ensure that we can continue to deliver our statutory duties and provide vital frontline services that our communities rely upon.

“We will continue to capitalise on any grant funding available to us to invest in our city and its people, to deliver services you can be proud of.”

Next year the council is forecast to spend £281.2m on day-to-day services and £155m on capital projects such as roads, houses, schools and other assets that support the economy and create employment opportunities. Money for capital projects cannot legally be spent on services.

Inflation continues to have a significant impact on the council’s finances. For example, the cost of pay, social care and contracted services has created a £25.7m cost pressure.

Another £11.2m cost pressure from increased demand for services has pushed the council’s total cost pressures to £31.3m.

The council’s Medium-Term Financial Plan for 2024-2025 to 2026-27 proposed to save £15.2 million in the next year by:

• Saving £6.1m through improving organisational efficiency
• Saving £2.2m by promoting independence and community resilience
• Saving £2.7m by reducing services where it is safe to do so
• Generating additional income of £4.2m

A proposal to review homelessness provision across the city has been included in the budget with the council looking to take a whole-city approach to the issue.

They have made clear they want to invest in a longer-term vision to tackle root causes of homelessness and focus on public health, recovery services and housing.

Following the public consultation, the saving attached to the proposal has been removed from the budget.

Cllr Frew said removing the saving would allow the authority to achieve a more holistic approach to homelessness and seek best value for the council.

He said: “There has been some fantastic partnership work across the city in recent years to tackle homelessness in Newcastle. We are incredibly proud of our achievements.

“But we were aware that much of the money being spent in this area was being spent to tackle the symptom of a wider problem, rather than the root cause.

“We still want to review our homelessness provision in the city and believe the transfer of Your Homes Newcastle presents a real opportunity for the authority.

“The move will ensure the authority has control of its housing stock and can integrate housing provision alongside other front-line service.

“Despite the removal of the savings target from the 2024/25 budget we will still be looking to review this provision and officers will still be able to seek best value for the Council.”

Following an approval by the Newcastle City Council Cabinet on Monday, February 19th, the final MTFP will be put forward for approval at a meeting of full council on Wednesday, March 6, 2024.