NORTH East councils are facing an estimated funding gap of more than £121.5 million in the next financial year according to research from a leading trade union.

Data published by UNISON on Tuesday (September 10) revealed that the councils that make up the North East combined authority – known as the LA7 – face a combined estimated deficit of £121.595 million between them. Across the wider North East, that figure rises to £157.1 million.

The figures were obtained using a combination of data gathered through Freedom of Information requests (FOIs) and an analysis of councils’ published financial strategy documents.

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In total, 171 out of 370 councils provided funding gap figures via emails, while others directed researchers to financial documents.

The union has called on the Government to take action to rectify the issue. It has warned that failing to do so “risks the widespread collapse of local Government”.

Gateshead Council has the largest predicted deficit at just under £36m, followed by Newcastle City Council (£23.8m) and Durham County Council (£16.8 m).

South Tyneside has the smallest deficit at £8.8 million, followed by North Tyneside (£9.7m) and Sunderland City Council (£11.6m). Northumberland County Council is in the middle with just under £15m.

The funding gap measures the difference between each council’s income and the amount needed to maintain promised service levels. Councils across the country are looking for further cuts to balance the books.

Since 2018, eight councils – including Birmingham, Croydon and Thurrock – have issued section 114 notices, meaning they risk failing to meet the legal requirement to balance their books.

UNISON fear that without Government support, councils could be forced to slash jobs, cut services and sell off assets such as land and buildings.

UNISON Northern regional secretary Clare Williams said: “Councils are teetering on the brink of financial disaster. Countless essential services and very many vital jobs are at risk, with terrible consequences for communities across in the North East.

“Only swift and decisive action to stabilise local finances will do. As tough as the financial situation may be, ministers cannot ignore the terrible plight of authorities of every political persuasion.

“There’s an unquestionable need to turn the page on the destructive cuts of the past and invest in services and staff to help councils rebuild Britain.”

UNISON is expecting the funding gap to reach £3.4 billion by 2025/26 – significantly more than predicted by the Local Government Association in June.

According to the IFS, councils’ overall core funding per person fell by 26 per cent in the 2010s. Labour’s manifesto pledged to provide “capacity and support” to councils, as well as giving local authorities multi-year funding settlements to allow for better financial planning.

Furthermore, competitive bidding processes – such as those seen during Levelling Up – will be scrapped and were branded “wasteful”.