CUMBERLAND Council is facing 'significant' financial challenges, with a new report forecasting a revenue budget overspend of more than £28million by the end of the financial year.

In the council’s finance report for the first quarter, the new authority acknowledges the scale of the financial challenges ahead.

In the context of a total approved revenue budget of £303million, the £28million is made up of overspends in three key areas: £17.8million in the children and family wellbeing directorate, £5.5million in the business transformation and change, and £5million in adult social care and housing.

However, the council has also forecast mitigation in various areas - as well as £7million of 'exceptional financial support' from the Government - which it said could bring the revenue budget overspend down to £17.5million.

By far the largest projected overspend is within the children and family wellbeing directorate, which has a budget of around £65million.

Of its overspend, most is down to a £10million projected overspend in the Cared For Service. According to the report, a large proportion of this is the result of increased Cared for Children numbers. "Between July 2022 and June 2023," the report says, "the authority recorded an increase of 20 placements in external residential care.

"Meanwhile, during Q1 of 2023-24, cared for children numbers increased from 486 in April 2023 to 504 in June."

Elsewhere in the report, significant budget variances were also seen in the areas of commissioning and procurement and ICT, both suffering adverse outcomes due to a shortfall in projected incomes and staffing undervaluations respectively.

The HR/OD service (human resources and organisational development) area has recorded an overspend due, in part, to the cost of employing agency staff to cover vacancies.

And in terms of car parks, which sit within the resources directorate, the council is set to see an overspend of half a million pounds due to shortfalls in income compared to budget in relation to the multi-storey car park in Workington and Carlisle off-street car parks.

The report says this is generated by "the impact of changes in shopping habits and shift in working patterns towards home and hybrid working on demand for car parking spaces within the town centres".

Council response

Council leaders have been quick to apportion blame for the huge financial challenges to central government.

Councillor Barbara Cannon, Cumberland Council's executive member for financial planning and assets, said: “The combination of years of funding cuts from central government, rising costs, and surging service demand has created a formidable challenge for local authorities like ours. We are constantly pressed to do more with less.

"Our primary goal is to ensure every taxpayer's pound is spent wisely to deliver essential services across Cumberland.”

Councillor Mark Fryer, leader of Cumberland Council, added: “We know that we face significant challenges in the coming years. Some of which we can offset from the development of our transformation plan and implementation of the new operating model.

“But we simply have to acknowledge the need for public service reform in this country. We need a new deal for local government.

“After more than a decade of neglect and austerity, the Government has to wake up and address the future of council funding. The existing public sector funding formula doesn’t work for areas like ours and needs to be overhauled.

"Pressures, particularly on councils with social care responsibilities, are pushing many well-run councils to the brink of bankruptcy."

In terms of the capital budget, the authority is still 'reprofiling' the capital programme and expects to be able to forecast capital expenditure at the end of the second quarter.