Budget 2026/27
- Overview
- Our current financial position
- What a balanced budget is
- Our medium term financial strategy
- Reserves
- Council budgets - what we spend money on
We operate in the context of financial and economic restraints which impact on the funding that is available for us to run our services. We face increasing demands for services, particularly in social care, and although the Government has revised and refined the funding allocation the pot available for all of Local Government is still smaller than it was a decade ago.
Our budget for 2026/27 is focused on delivering our Corporate Plan pledges to help Gateshead thrive.
View the cabinet meeting agenda and reports (opens new window)
Our current financial position
Like all councils, we've faced increasing pressure on much needed services and limited budgets. We are currently proposing a net budget in the region of £337m.
Our Medium Term Financial Strategy (MTFS) estimates show that we will be required in future to make very difficult decisions and possibly implement new ways of working or re look at our service delivery model in order to achieve a balanced budget at the end of the MTFS period.
Did you know that
- 90% of properties in Gateshead are in Council Tax bands A to C
- Council Tax makes up 40% of our net revenue budget
What a balanced budget is
Every council must have a balanced budget which means expenditure cannot be more than the council's income for the forthcoming financial year.
Our Medium Term Financial Strategy
The Medium Term Financial Strategy (MTFS) estimates the additional costs and pressures that the council is facing due to inflation, demand, and policy changes. The difference between estimated income and estimated expenditure leads to the " funding gap".
Like many households and businesses we also face increased costs for things such as energy and rising salaries for our own staff and for those who deliver services on our behalf such as care workers.
Reserves
Reserves (like savings) are held by us for many important reasons. Some of these are ringfenced for a specific reason, and cannot be used to support the general budget. They can also only be used once so are not a sustainable way to fund services.
In March 2025 we held £16.3m in our general fund reserve for unforeseen expenditure - we must keep 3% of our net budget as a minimum level.
In addition, we held £67.3m earmarked reserves - set aside for specific purposes. The proposed 2026/27 budget will use of £4m of earmarked reserves.
Council budgets - what we spend money on
Our revenue and capital budget reports are agreed at Council in February each year. This sets out the Council Tax levels and the capital programme of activity for the coming year. By law, we must set a balanced budget by 11 March.
Revenue budget
The revenue budget is the term used to describe the amount that a local council spends on its day-to-day running of services. This includes wages and salaries, property and transport, running costs, repairs and maintenance, utilities and payments to suppliers. It is the same as day to day bills and costs that need to be paid to manage a household.
Gross budget is the total budgeted cost before any budgeted income is considered.
The net budget is the budgeted cost of the service after all the service specific income has been taken off such as trading income, service level agreements, fees and charges and service specific grants.
How our revenue budget is funded
- fees and charges
- grants and contributions
- government funding
- council tax
- business rates and
- interest from investments
Capital spend
Capital spending is money spent on creating or improving assets where the benefits last more than 12 months. This often includes spending on things such as land and buildings or vehicles and equipment, which can be used over a long period. For example, if you purchase a house, this is your capital expenditure. This kind of spend is different to revenue spend, which covers day-to-day items to run services such as staffing and purchase of services, so it is budgeted for separately. Your daily outgoings such a purchasing food is the equivalent of revenue expenditure whereas an extension to a property for example is the equivalent of capital expenditure.
The capital programme is reviewed and approved annually by Council.
Priority is given to schemes which support the achievement of the council priorities, generate revenue savings or economic growth, maintain council assets or are a statutory requirement.
How our Capital expenditure is funded
- Prudential borrowing - This is the main source of available funding and allows the Council to borrow from the Public Works Loans Board (PWLB) or market loans to fund the capital programme. Borrowing must be affordable so we have to be sure that we can pay back any borrowing including the principal and interest.
- Government grants - Grants can be made available to fund certain capital expenditure usually transport or school related. In most cases grant will part fund the project but will not provide ongoing revenue support.
- Capital receipts - These are the proceeds from the sale of council land, buildings and council houses greater than £10,000.
- External funding - Grants and other contributions may be awarded as part of annual settlements to support general capital expenditure, following applications for external funding to support specific schemes or through private sector contributions.
- Major Repairs Reserve (MRR) - This funds capital expenditure within the Housing Revenue Account and is ring-fenced for capital purposes.
How we spend your Council Tax
The average Council Tax in Gateshead is £1,521. Here is an overview of how that is spent:
- adult services - £642
- children's social care - £326
- cleaner, greener environment - £147
- good health and wellbeing - £126
- transport and sustainable energy - £97
- housing - £56
- enhanced skills, education and accessible childcare - £55
- thriving communities - £33
- leisure - £24
- business and economic growth - £15
