Newcastle City Council has proposed a 4.99% increase in council tax rates in April and plans to axe 75 jobs in an effort to balance the local authority’s budget.
The council intends to save £3.9m in unnecessary costs, amid huge pressures on the local authorities’ finances. This comes as the council has warned that it needs to find over £40m in cost savings over the next three years. The planned cost savings include capping the spend on agency staff, as well as plans for staff to use AI to improve productivity.
Council leader, Karen Kilgour, was unhappy with the Chancellor’s autumn budget: “I spoke publicly after the Chancellor’s Autumn Budget about my disappointment that our council will not benefit more from the Government’s new funding formulas. We have a long history of prudent financial management here in Newcastle that means our city is not in as bad a financial position as many other areas.”
Despite the tax rise and cost savings, the council projects a £35m overspend for the 2026/2027 financial year. The projected overspend is largely a consequence of inflationary increases in social care, estimated at over £30m.
The financial stress on local authorities is second only to that of the central government. The central government’s budget deficit was 5.2% of GDP in 2025, this was the UK’s thirteenth largest since 1948.