Measures to curb the impact of inflation on council finances “are just treading water”, councillors were told.
Inflation has seen a significant rise over the last year putting pressure on people’s budgets but also raising the costs for councils to provide services across the country. Wirral Council is now facing a deficit of more than £49m based on the last projections and may have to ask for a government bailou t.
Risks caused by inflation are one of the biggest risks to the council according to a new council report.
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This is because some residents are unable to afford bills “leading to increased demand for council services.” At the same time, the council’s seen a fall in income as more people tighten their belts, for example, by cutting gym and sports memberships.
Despite support funds and measures brought in by the council including the UK Government’s Household Support Fund, the risk caused by rising costs has not decreased.
Cllr Simon Mountney, Chair of the Audit and Risk Management Committee, said: “Our risk is given a score of 20 but even after we’ve done all our activities, it’s still 20 so we’re not mitigating our risks by doing what we do. That seems a little bit disturbing.”
Helen Turner, risk continuity and compliance manager, said: “What I would say is that for several of these risks even if we did everything possible, there are a lot of external pressures, the environment is changing and we are just treading water to keep pace with things.
“We are flagging that this is serious and significant and we need to keep on top of it to maintain that position because if we stopped doing those things, it would get even worse.”
The council also said there were still areas of its finances that “pose a significant risk to its financial sustainability” but said they had “made really good progress.”
The council was criticised for its financial decisions in a September 2021 external report that said “the political and managerial environment over more than a decade has engendered a set of significant challenges to improvement.”
It then made progress and was praised for steps it took to address long standing financial issues. The council was able to produce a balanced budget for 2022 to 2023 earlier this year after making huge cuts and savings across the council.
The committee were also told that the council is in the process of recovering £219,000 from overpaid or incorrect payments of £223,000 as well as clawing back £104,000 related to the council tax single person discount.
Officers said there were still improvements to be made. Questions were also raised on why the council rated itself neutral on being good value for money and how often leadership were briefed on council finances.
Di Grisdale, Senior Finance Manager, said: “I am very conscious that we probably don’t bring the balance sheet to the senior leadership team as often as we should and don’t highlight things as often as we should.”
Officers said they hoped to do this more often but Shaer Halewood, Director of Resources, added: “It’s very much a moving target so we have to be very careful about how we present the balance sheet and what we want to get the leadership to look at.”
She added: “What we do is take elements such as the profit and loss accounts.”
On the council’s value for money, officers said: “There is work we are still doing. We are improving every single month, year. We’re making really good progress the last 12 and 18 months after having been in a really difficult situation.”
The council’s total assets for 2021 and 22 valued at £890m with £117m unusable and liabilities of more than £845m. This means the council only has a net asset position of £44m.
Councillors were analysing audits of council finances as well as potential risks to services and council security. During a meeting on October 26, councillors were told about attempts by China, North Korea, and Russia to gain access to the council’s servers.
Cllr Stuart Kelly asked: “What do they want? They’re not reporting a missing bin are they?.” Peter Moulton, head of ICT, said they were looking for vulnerabilities in the council to “potentially” freeze up IT systems.
Cllr Sue Powell-Wilde said: “They could actually stop business. They could hold the port to ransom. They could stop goods going in and coming out. Disruption would be the main aim.”
Councillors were also reassured that regeneration programmes will continue to go ahead with a report that said these will “bring significant rental income into the Council” in the future.
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