Let's Talk Budget 2023

The majority of our funding comes from government grants. The core government funding we receive has reduced by over 27% 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 continued 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 2024/25, after taking into account an assumed council tax increase in line with the Government's assumptions for local authority funding, we estimate a £17 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 2024/2025 we plan to use £9 million from our reserves, leaving a gap of £8.042 million. Over the next four years we would see a total gap of over £50 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. We need to ensure we continue to create a city where everyone can live, work and play, while understanding what your priorities are to help us deliver changes and see lasting impact and improvements.

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 areas where we already spend the most.  We also know that Sunderland has an ageing population that will continue to put strain on the adult social care services we offer, where we already spend more than a quarter of our budget
• 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
• Previous substantial increases in utility costs means it costs us significantly more to operate our buildings and venues, to maintain street lighting, and to fuel our vehicles including refuse and recycling trucks
• Nationally agreed staff pay awards and increases in the national and real living wages mean our staffing costs increase as do the costs of services which we commission

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 16.5% 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.

The Government has indicated that the limit for Council Tax increases for 2024/2025 will be 4.99 per cent - composed of 2.99 per cent core Council Tax for helping fund day-to-day services and 2% for the Adult Social Care Precept. There is an expectation from the Government that local authorities would increase Council Tax by 4.99% (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 4.99%. This would mean that a household living in a Band A property would be paying £1.05p more per week whilst a household living in a Band D property would be paying £1.57p more per week. For households in receipt of council tax support these increases would be much lower. 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:

• Maximising Trading and Commercial Activity Income
• Review of Fees and Charges - Licencing and Notices
• Review of Charging Policies
• 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 savings of nearly £2 million;
• Reviewing the way we deliver our Services including Service operating models;
• Moving to more efficient ways of working allowing for business practice improvements; and
• Realignment of current budgets to support activity levels , negating the need for additional funding

You can read the full detail of our approach in the Budget Planning Framework and Medium-Term Financial Plan