Council’s Worsening Financial Position Raises Doubts Over Labour’s Proposed Council Tax Freeze
- teessidetoday
- Nov 17
- 4 min read
The report, set to go before councillors next week will reveal the financial position at Hartlepool Borough Council has 'worsened', throwing a spanner in the works for the Labour run councils proposed Council Tax Freeze for local residents.
17th November 2025
Hartlepool Borough Council’s latest Quarter 2 Budget Monitoring Report for 2025/26 paints a stark picture of a local council under severe financial strain — one that may soon collide with the Labour administration’s headline plan to approve a council tax freeze for Hartlepool residents.
According to the official report, Hartlepool Borough Council is reportedly forecasting a £3.260 million overspend for the current financial year. But this figure masks an even deeper imbalance: with the 2025/26 budget only balanced by using £1 million of financial reserves, meaning the real underlying overspend is more like £4.260 million.
With Labour councillors publicly signalling their intention to freeze council tax for local residents in 2026/27, the financial realities underneath mean the proposal's , whilst proving to be politically popular — could in reality be fiscally hazardous.
Children’s and Adults’ Social Care Costs Spiralling
The single largest source of financial pressure continues to be HBC's Children’s Services, where costs are described as “of a serious concern” with a projected £5.520 million overspend — a worsening of more than £1 million since Quarter 1.
In addition to the overspend, its claimed the councils seen a rise in children in care from 345 to 352 in just one quarter, with external residential placements said to be costing around £230,000 per week — equivalent to £12 million per year, with Six of those placements now costing locals over £10,000 per week each...
Adult Social Care Costs is also said to be worsening, with HBC now forecasting a £1.49 million overspend driven by rising demand and increasing costs of care packages.
Financial Reserves Will Plunge Over the Next Three Years...
The report shows that the Council’s usable reserves — effectively its financial safety net — are projected to collapse from £56.3 million to just £13.1 million by 2029 pushing the local council into territory seen only by those councils teetering on the brink of effective bankruptcy, known as a Section 114 Notice.
Most worrying is the spiralling Dedicated Schools Grant (DSG) deficit, reportedly driven by overspends in the High Needs Block for SEND provision, where its claimed the DSG deficit was reported to be £4.9 million at March 2025 & is Forecast to hit £9.6 million by March 2026, with a projected £18.4 million by 2027/28..
Section 114 is around the corner...
Worse still, The report openly warns that without Government intervention, the Council would likely need Exceptional Financial Support shortly, or face issuing a Section 114 notice — the local government equivalent of bankruptcy.
Income Pressures Mount as Costs Rise
The financial picture is further worsened by whats reported to be:
Falling income in key departments such as Planning, Facilities Management and Public Protection.
Higher than expected costs in Highways, Streetlighting and Concessionary Fares.
A £250,000 Business Rates hit from the collapse of the company Venator Materials.
Reduced school buy-backs for catering and cleaning.
Even the Housing Revenue Account is said to be under pressure, reportedly due to rising damp and mould repairs, with the budget only being balanced by reducing contributions to the Major Repairs Reserve — undermining the future resilience of the council housing stock.
Is a Council Tax Freeze Realistic?
The Labour administration has been positioning itself in favour of a council tax freeze — a move that's politically attractive during a cost-of-living crisis & especially as Labour faces ongoing electoral threats from Reform UK. But the Council’s own financial report makes clear that:
Hartlepool Borough Council is already overspending by over £4 million a year.
It's using reserves to balance its books, but reserves are falling sharply.
Demand-led services are escalating out of control.
The DSG deficit has the potential to bankrupt the council as early as 2028.
The Councils Medium Term Financial Plan already assumes £2.5 million of growth for Children’s Services next year, leaving little room for any lost council tax revenue.
A council tax freeze would potentially widen the budget gap even further — and unless the Government dramatically increases funding, Hartlepool would be forced to make cuts, dip further into reserves, or both, escalating the chances of Section 114 Bankruptcy even quicker than the current 2028 projection.
In simple terms: freezing council tax now could leave Hartlepool in a position where it cannot legally set a balanced budget in the near future.
Conclusion: Financial Reality vs Political Promises
Hartlepool Borough Council is at a financial crossroads. On one hand, the Labour group has campaigned heavily to offer residents a council tax freeze — a welcome gesture during difficult economic times. On the other hand, the Council’s own financial documents show Rising overspends, Plummeting reserves, the threat of Section 114 in 2028, as well as Increasing demand-led financial pressures that cannot be contained..
If a council tax freeze is pushed through in this context, it may win short-term praise from locals— but risks driving Hartlepool ever closer to financial collapse in the medium term.
For a town already struggling with high deprivation, rising demand, and structural under-funding, the next year will be crucial.
The political question is therefore
simple:
Will Labour choose the popular option, or the financially responsible one?
