Labour Presses Ahead with Council Tax Freeze Despite £2.3m Overspend as Financial Pressures Mount

The Labour Group which currently controls Hartlepool Borough Council insist they will be freezing household council tax bills for 2026/27, however the financial figures simply "don't add up"..

2nd Sep 2025

Hartlepool Borough Council is said to be bracing itself for another year of financial strain, with the latest budget monitoring report projecting a £2.375 million overspend for 2025/26.

The report, set to be presented to the Finance and Corporate Affairs Committee on the 8th September, warns that spiralling costs in children’s social care, rising inflation, and underperforming income streams are continuing to place immense pressure on the councils finances.

Children’s Services at Breaking Point

Children’s and Joint Commissioning Services are forecast to overspend by £4.49m despite reportedly receiving an additional £6.9m in this year’s budget. The main driver is said to be the soaring cost of external residential placements, with the top 25 cases alone costing around £240,000 every week. Some placements now exceed £10,000 per child per week, reflecting both the complexity of cases and the high fees charged by private providers.

The Council currently supports around 340 children in care – well above regional and national averages – and acknowledges that the situation is unsustainable. Plans are reportedly underway to open a new council-run children’s home in Autumn 2025, with further homes proposed over the next year, in the hope of reducing dependency on costly external placements.

Other Departmental Pressures

Adult and Community Based Services are expected to overspend by £800,000, driven by demographic pressures in social care and reduced income from services such as cemeteries, crematoria, and cultural venues.

Development, Neighbourhoods and Regulatory Services face a smaller but notable overspend of £145,000, linked to shortfalls in planning and licensing income, as well as higher concessionary transport costs.

By contrast, the councils Finance, IT & Digital and Legal, Governance & HR Departments are all set to deliver underspends, largely due to vacant posts and staffing savings.

Dedicated Schools Grant Deficit

A growing concern highlighted int he report is saids to be the Dedicated Schools Grant (DSG), particularly the High Needs Block, which supports children with special educational needs and disabilities (SEND). The 2025/26 budget already assumed a £4.257m overspend, but the latest forecast has widened this to £5.03m, fuelled by rising costs of individual pupil support and additional school-based provision.

The DSG deficit now reportedly stands at £4.932m, with national forecasts suggesting the High Needs Block could hit a £5bn deficit by 2026.

Housing Revenue and Reserves

The Councils Housing Revenue Account (HRA), which is responsible for the councils housing stock management is expected to merely to break even, where its claimed increased costs for damp and mould repairs are eating into resources. This is said to have been partly offset by higher rental income and reduced contributions to the Major Repairs Reserve, though the report warns this will weaken future resilience.

The Council’s usable reserves remain at just under £13m by 2029, with a sharp decline from the current £56m balance. Much of this reduction stems from heavy reliance on reserves to plug budget gaps casting a huge question over whether the Labour run council, who's poised to give locals a council tax freeze for the next financial year have the resources available to undertake such a task in the midst of whats claimed to be "significant financial pressures"....

A Bleak Outlook

The report stresses that urgent corrective action is required this year, including tighter vacancy controls, efficiency drives, and further savings. With inflation climbing and demand for children’s care still rising, the council’s financial position, according to its Chief Finance Officer James Magog "remains precarious".

Without additional government funding or a radical shift in demand pressures, Hartlepool faces the very real prospect of burning through its reserves in the coming years – leaving little buffer against future shocks, where it seems the national economic outlook has placed considerable question as to whether Labours Council Tax freeze for 2026/27 will come at the cost to locals the year after !