Budget Consultation 2026-27
We would like your views on our budget proposals for 2026/27.
Your council has faced significant budget pressures in recent years, due to an increasing demand for our services.
This problem has been made worse by the long delay in updating the national funding formula, which means the council has been underfunded for several years.
The Government has now launched its Fair Funding review of how much each council nationally receives and we anticipate your council will benefit from this in the future.
To balance the budget, we have made more than £20 million in savings in the past four years.
Despite this, our finances remain challenging and we anticipate a significant pressure on next year’s budget, due to the demand for our services.
There are financial pressures across our services, with the main issue being the cost of providing residential accommodation for children in our care, where the cost per place can be up to between £500,000 and £1 million per year.
We are not alone in facing this challenge – it is an issue for many councils nationally and the result of too few places available for a rising number of children in care.
We have a legal and moral duty to care for the most vulnerable in society and our staff will continue to provide children and young people with the best possible start in life.
Around 65% of our budget is spent on supporting vulnerable children and adults – these are among our services which we are legally obliged to provide.
We anticipate this proportion of spend on social care will continue to rise in the coming year, which means we have a relatively small and decreasing amount of money to spend on all the other services we provide every day of the year.
The other key consideration for our budget is the level of our reserves, which will be at an unsustainable level after ongoing budget pressures this year.
Operating with reserves at such a low level creates a significant risk from unforeseen costs and our ability to meet these.
Our budget is similar to a household budget – if our costs are more than our income and we have no savings to offset this, we will run out of money to provide services to you.
The Government’s assessment of funding available to councils assumes all councils apply the maximum increases of 3% for Council Tax and 2% for the Adult Social Care precept. Even then the funding available is still well short of keeping pace with our duty to spend on statutory services like social care.
We anticipate that even after applying the government assumed increases of 2.99% for Council Tax and 2% for the Adult Social Care precept, we will still have a significant pressure our budget next year.
Despite the challenges, we are confident that our council’s finances will be healthier in the future.
We anticipate significant Business Rates revenue from the development of the Teesworks site and the Government’s Fair Funding review is likely to see additional money go to councils, such as ours, which have areas of high deprivation.
We are also investing in our own homes for children in our care to offset the huge cost of placing young people in accommodation run by the private sector.
To reach the point where we can invest in our services once again, we must deal with the pressures on next year’s budget.
While the Fair Funding reforms are implemented over the next three years, the Government is providing an additional support scheme, which allows councils to borrow to bridge short-term budget gaps if they have a clear route to sustainability in the future.
This scheme would allow our council to offset the shortfall we anticipate for next year and bridge the gap between the issues we have at present and the arrival of additional revenues from Teesworks and the Fair Funding review.
Taking advantage of this scheme would protect our core services that the vulnerable and our wider communities depend on. It would also mean we are in the best possible position when the additional funding starts to flow.
We will continue to invest in our borough through regeneration schemes.
These schemes are funded through specific grants from the Government and the Tees Valley Combined Authority.
By law, these grants cannot be used for anything other than the purpose for which they were awarded – we cannot use them to fund our day-to-day services or to reduce Council Tax.
These grants help us improve our towns and villages and we could not fund these schemes without the one-off grants.
Examples of grant-funded projects are the improvements in Redcar, funded through the Redcar Town Deal, investments in Guisborough and Eston and the revamp of TunedIn! in Redcar.
The budget papers considered by Redcar and Cleveland Borough Council’s Cabinet are available via the link below: