We expect to overspend by more than £22m this financial year, says Merseyside council
A worsening financial situation is developing at one local authority in Merseyside, which expects to overspend by more than £22m this financial year.
Sefton Council said it is facing a ‘challenging financial environment’, but maintains it has a plan to address it. At a cabinet meeting at Bootle Town Hall this morning (December 4), councillors discussed a financial management report which highlighted major pressures in demand led services such as children’s and adult social care.
Elected members were asked to recognise the financial risks associated with the delivery of the 2025/26 revenue budget. The council report confirmed the current forecast for children’s social care (CSC) shows a potential overspend of £16.461m and said its target of finding £6.2m in savings from the adult social care budget currently stands at £2.4m.
Further overspends were forecast for both staffing in CSC (£2.4m) and £2m over the communities budget, made up primarily on the costs of temporary accommodation for homeless people.
The report states: “Certain areas of accommodation and support packages are now forecast to overspend by £13.1m. A significant element of this relates to residential care where there have been additional placements in excess of those assumed when the budget was set in February 2025 (based on the position in January 2025). In addition, since January 2025 the average cost of placements has risen.
“In addition, the costs of packages for children with disabilities has increased, although specialist work continues to be undertaken to ensure health are making the appropriate contributions to the cost of care. These are the two main areas driving the initial forecast overspend.”
The report added: “Given the worsening position, it is proposed to temporarily utilise earmarked reserves in 2025/26, if required. However, additional mitigations will continue to be sought. Should any earmarked reserves need to be released then these will be replenished in 2026/27, funded by the council tax surplus referred to in Section 4.”
In September, the LDRS reported on the future of Sefton Council’s finances after it published details of a soaring spend on the high needs budget, leading to a debt increase of more than £40m in the last year. Like today, that financial assessment was attributed to significant and rising costs resulting from the ‘exponential’ demand for adult social care, children’s social care and home to school transport.
Back in February, the local authority said these costs had left it financially exposed, and placed it at ‘maximum financial risk.’
Adele Taylor, interim executive director of corporate services and commercial, presented the financial management report to Sefton Council’s cabinet, she said: “The report provides a detailed explanation of causes of any variations against approved budgets, as well as those service level actions being taken to manage our resources where possible.
“Pressures are being particularly experienced in demand led services, which has been a theme of this year, and actions remain in place to mitigate wherever possible, those pressures, but whilst ensuring we maintain quality and provision of services that we must deliver.”
The report concluded that based on current forecasts, the council is again faced with a challenging financial environment during 2025/26, as a result of service pressures. A revenue overspend of £22.679m is now forecast, which the local authority hopes to reduce to £11.909m following the implementation of ‘council-wide’ mitigations to support the budget position.