Rising costs and staff shortages are driving Hull Council into financial distress

Hull City Council is facing fatal financial pressures despite finding over £2.5m of mid-year savings after rising costs and staff shortages drove significant social care costs out of control. 

A financial monitoring report presented to the council’s governing cabinet on Monday detailed the worsening financial picture as of August 2022.   

‘At the previous formal round of monitoring, it was reported that, given the rising inflationary costs, service area pressures could not entirely be managed through mitigating service and corporate savings, resulting in a projected £2.3m net overspend,’ the report said. 

In response to this projected overspend, the council had identified £2.644m of new savings to take effect this financial year, on top of the £5.7m of cuts and savings already announced in the council’s 2022/23 budget.  

However, the council’s financial state has since worsened, meaning not only has the impact of those savings been erased, but the forecast overspend has more than doubled.

‘Since the position previously reported however, further pressures have come to light, mainly in relation to anticipated pay inflation, leisure income and children’s social care,’ the report said. ‘This has resulted in a net projected overspend of £5.620M.’

A predicted £2m cost overrun on agency social work staff, £905k in council-owned children’s homes and £700k on home-to-school transport primarily for children with special education needs has caused the East Yorkshire Council to spend more than expected.

In addition, the report discovered adult care services are forecasting a £2.125m overspend.

‘There have been significant pressures in the market with Homecare providers not able to pick up packages due to staff shortages which has a consequent impact on the hospital discharges,’ the report said. ‘The new Community Wellbeing contract is expected to reduce this issue over the coming months but is wholly dependent on the retention and recruitment of care workforce to meet current supply and expected winter pressures.’  

Hull’s 2022/23 budget included £886k of base savings relating to adult care services, but the report revealed that £656k of these are ‘at risk of non-delivery’ – nearly three quarters of the planned savings.

‘These relate to agency day opportunities where a new framework is being implemented and where an expected saving of £0.500m has not materialised,’ the report said. ‘While some reduction in hours have been negotiated, it has become evident that the service provides a significant respite offer that avoids carer breakdown and therefore avoids more costly forms of care.’

The overspends in children’s and adult services are partly mitigated by a better-than-expected position on council tax and business rates revenues and the government’s abolition of the National Insurance rise, which added to councils’ staff costs.

Hull is one of many councils forecasting sizeable overspends amid rising costs, staff shortages and a funding squeeze from central government that has lasted more than a decade. 

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