OVERBUDGET Barnsley Council-run departments which have spent more than £20m than anticipated in the first two quarters of the year will result in tighter controls being placed on expenditure.

An accumulative shortfall of £21.3m was confirmed at Wednesday’s cabinet meeting, with overspends of £15.57m in the children’s services directorate, £3.5m in corporate, £1.83m in growth and sustainability and £1.72m in core services.

Only two other departments - adult social care and public health - were in the green, with underspends of £782,000 and £596,000 respectively.

The Local Government Association (LGA) estimates that councils in England face a £4bn funding gap over the next two years just to keep services running, and almost one in five council leaders think it is very or fairly likely that their chief finance officer will need to issue a Section 114 notice this year or next.

A Section 114 notice - which means a council cannot commit to any new spending commitments and is effectively bankruptcy - has been issued by both Nottingham and Birmingham’s local authorities.

Half of council bosses are not confident they will have enough funding to fulfil their legal duties next year, including providing statutory services, but Barnsley Council leader Sir Steve Houghton assured residents that the town’s better-placed than most and will not have to issue such a notice.

However, he warned of a ‘challenging’ picture, and blamed the government’s ‘broken’ finance system.

“The government needs to recognise the significant inflationary pressures that local authorities have had to deal,” he said.

“At the same time as inflationary pressure, councils are facing increasing demand for services.

“Pay increases are putting substantial pressure on budgets, and so the government must ensure that local authorities have the additional funding they need to fully fund these pay increases or risk impacting future service delivery.

“The funding system is completely broken - councils have worked miracles for the past 13 years, but there is nothing left.

“The government should provide additional in-year funding to relieve inflationary pressure, including for the pay deal this year.

“This additional funding should also be targeted toward children’s services, which is the greatest area of pressure for our members.

“We have a plan in place to balance our 2023/2024 budget.

“We’re estimating to spend £21.3m more than we set in our revenue budget, which funds day-to-day running costs.

“We did predict some of this.

“We knew it was going to be an increasingly challenging time due to the broken local government finance system - and set aside some money to help pay for the pressures faced.

“We’ll support this with increased officer scrutiny of all spending, including tighter controls on procurement and recruitment spend.

“We are awaiting the Chancellor’s settlement for local government by the end of December, which will give us a clearer picture of the scale of the challenge in the months ahead.

“Although we have a plan for this year and next, we are looking at a very difficult few years ahead, as the autumn statement predicted real-term funding cuts for local government over the medium term.”

The cabinet report suggested some improvements had been noted in the last quarter, but children’s services posted another £4.6m deficit in the three-month period.

It added: “The current forecast is for a year-end cost pressure in the region of £21.3m, an increase of £3.8m from the position reported at quarter one.

“A financial recovery plan to help mitigate pressures - with the intention of reducing the currently reported overspend by the end of 2023/24 - is being compiled.

“Future reports will provide cabinet with an update on progress against this plan.”