More details have been revealed about the worrying state of Wirral Council’s finances as the struggling local authority prepares to deal with a £49m budget gap next year.
The latest figures for the council’s budgets between July and September show that the council is on track to make at least £10m savings but rising costs and reduced income has left the council in a tough financial position.
Soaring costs mean the council’s revenue budget, which funds day-to day services and the running of the council, had an £11m deficit by September but the council has brought in a bunch of measures that it hopes will bring this down to zero.
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These include using social care reserves, Covid-related funding, and potentially using the council’s £3m contingency fund as well as incorporating any impacts into the budget for next year which will be set in February.
Rising costs in energy bills have contributed more than £1m to the council's costs while at the same time there has been a fall in leisure income of £1.7m with footfall now at 75% of what it was pre-pandemic.
Forecasted car parking income is also expected to drop by £1m, part of which was driven by a decision to drop controversial parking charges earlier this year.
On top of this, increases in the cost of children in care and waste collection have been more than £1m each. Estimates for pay increases are £3.4m higher than previous expectations and travel-related costs for those with special educational needs and disabilities has increased by £1.3m.
There has also been a significant drop in the council’s capital budget - which is used for specific projects - with most of that drop due to money being deferred to future years.
A treasury report showed that the council’s net debt has increased by £11m despite a more than £18m fall in borrowings as the value of investments fell by £30.5m. The council has been able to keep borrowing costs low in 2022 by using its own resources but borrowing may have to increase in future years as these reserves run out, something the council’s treasury wants to delay as long as possible.
This is all important as the council prepares to face a £49m projected deficit next year, an increase from the £14.1m predicted in February. They then agreed to make £13m in savings, libraries, golf courses, and public toilets were closed and further cuts were made across the council.
Wirral Council is required to produce a balanced budget every year by law and if it fails to do that, the government could intervene and take over some functions of the council. Wirral Council’s finances are already under scrutiny by the government as a condition of financial support in 2021 and 2022.
The financial position the council faces will become clearer by mid-December when the local authority receives a financial settlement from the government.
If the financial position worsens, the council may be forced into a position where it can only provide statuatory services, with other key areas like domestic violence support stripped away. This would be a position of effective bankruptcy for the local authority.
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