Salford council’s finances are under ‘significant pressure’, with a predicted £6.8m overspend by the end of the year.
Children’s services and temporary accommodation make up the bulk of the problem, with the council spending more to tackle a ‘crisis’ in housing and homelessness.
The overspend on temporary accommodation for adults is expected to hit the £1.9m mark, with a further £2.7m in housing benefit losses – money the council is unable to get back from the government from housing spending.
A report said the housing benefit overspend is ‘a direct result of the increased pressures on the city to provide temporary accommodation’.
It added: “As a local authority we pay housing benefit directly to the housing providers, and ‘subsidy loss’ is the gap between how much rent a housing provider charges to a local authority, and how much of it the local authority can claim back from DWP under housing benefit rules.
“In some cases, we cannot claim the full amount of rent back and must cover the remaining costs from our own budget.”
Other pressures include a £1m overspend on school transport for children with special educational needs and disabilities.
The council is planning to plug the total £6.8m black hole by using its reserves, and believes this will make sure it can set a balanced budget regardless of the pressures.
But the ‘financial gap’ is set to get worse in the next few years, and could reach as much as £38m by 2026/27.
Salford’s Labour cabinet noted the report, but councillors did not make any comments or ask questions about the overspend during a meeting at Swinton Civic Centre on August 27.
The council set its last budget in March, when it announced a shortfall of £5.9 million.
This was managed by making savings and increasing income, partly through a 5 percent council tax increase, making Band D households pay an extra £110.93 per year without the single person discount.
Salford Conservatives opposed the budget at the time, questioning mayor Paul Dennett over a decision to buy the remaining half of Salford Community Stadium while the council was struggling financially.
A deal which would see Salford City Council take complete control over the stadium is set to be rubber stamped at a town hall cabinet meeting next week.
This will see the council take on a £29.7m of debt, as well as £1.7m share equity held by the council in CosCos – the company which owns the stadium.
Mr Dennett said the debt is already in the council’s accounts as part-owners of the stadium, but the money can be recouped through the sale of development land around the area.
Coun Jack Youd from Salford City Council said: “The council monitors our budget and forecasts our outturn position, which is the projected spend by year end rather than our actual spend to date.
“We have spent more on temporary accommodation, due to the numbers of people who need housing and also an increase in cost of accommodation.
“There is always a gap between the actual cost of accommodation and what we claim back through Housing Benefit, but with more people needing help and costs increasing this financial gap has increased.
“Overall we are running a balanced budget which is in line with our forecast and if necessary we have sufficient in earmarked risk reserves to meet any shortfall at financial year end.”
