TOWN Hall chiefs have warned that St Helens Council has "never faced a more challenging" funding position.

The challenges facing the authority have been highlighted in the revenue and capital outturn report for 2022-23.

It details the outturn position in relation to the revenue and capital budget for 2022-23, subject to audit and summarises the reserves and balances position.

The report also includes the treasury management outturn report for 2022-23.

The revenue and capital outturn report 2022-23 says that the revenue outturn position for 2022-23 is an overspend of £4.505m – which will reduce the council’s level of reserves at March 2023.

'Use of reserves not sustainable'

“It has previously been acknowledged that use of reserves to support the revenue budget is not sustainable,” it adds.

“The overall overspend for 2022-23 has been mitigated by variations within the corporate budgets.

“These variations are one-off in nature, the most significant variation being in relation to treasury management activity, where additional borrowing to fund capital expenditure was deferred and favourable bank rate movements increased market returns on investments.

“The net portfolio variation is an overspend of £10.295m. This includes variances attributable to the settlement of the 2022-23 Local Government Pay Award of £3.171m, as well as those relating to increased energy prices totalling £1.469m.

“The budget for 2022/23 included the planned delivery of £6.044m of budget savings. Savings totalling £3.525m which had not been achieved in 2021/22 were also brought forward into 2022/23.

“Of these savings, it was reported to Cabinet on February 22, 2023, that £3.842m were either forecast to be unachievable or there was a delay in full implementation, £2.429m of which had no identified mitigations. £2.144m of these related to the reduction of placement costs for children looked after within Children’s Services.”

Furthermore, the report states that the "aftershocks of the global pandemic continued to be felt" in 2022/23, for which some provision was made in the budget.

'Inflationary pressures'

It added: “It should be noted that there was no additional funding from government to support legacy Covid-19 pressures, which therefore needed to be managed within the Council’s overall budget.

“Inflationary pressures had an enormous impact in 2022/23, particularly on employee pay and energy costs. The rate of inflation relentlessly moved upwards throughout the year, reaching a 40-year high of 11.1 per cent in October 2022. This was driven by a combination of demand for consumer goods, labour market shortages, the war in Ukraine and rising energy prices.

“Whilst the rate of inflation has decreased and is forecast to continue on a downward trajectory, these pressures are likely to continue to be felt in 2023/24 and beyond.

“The financial environment within which the council operates presents severe challenges. The council has never faced a more challenging funding position, after more than a decade of austerity and cuts in government funding.

"Given the current inflationary and wider economic environment, the crisis engulfing social care amid continually increasing demand, and the legacy of the global pandemic, 2023/24 is likely to be another financially difficult year.

“These pressures, coupled with the requirement to deliver £12.353m of savings in 2023/24, will require robust financial management.”