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Wirral Council's financial crisis deepens
Wirral Council must find at least £28m of further cost cuts if it is to avoid producing an illegal budget.
It’s been revealed that although the authority has now indentified £39m of savings, a series of historic “bad budgets” has created a massive shortfall.
The council’s chief executive also disclosed he has had to pour in £20m from reserves this financial year alone to prevent the council going bust leaving it unable to pay the workforce or provide public services.
Graham Burgess, who joined the authority last July, told the Globe today: “This has been the most difficult budget process I have ever been involved in during my 39 years of local government service.
“There is still a large budget gap to be filled but I am confident we can do it.”
Time is running out for the town hall to produce a legal budget which must be ready for scrutiny by March 5.
The problem has been caused by “bad budgets” approved by the council during the last three years or so.
The financial blunders included adding in assumed incomes from grants and taxes which never materialised and failure to act over more than £6m of bad debt, built up largely by the adult social services department.
These and other “one-off” budget deficits come to a staggering £38m.
The council has £22m in its reserves, a portion of which it will use to clear some of the shortfall.
But it must keep £10m to £12m in the bank to cover unforeseen emergencies.
That means up to £28m has yet to be found.
It is not clear at this point exactly how officers will overcome this multi-million pound problem.
But if they fail to do so, the director of finance – considered in law to be personally liable - would be forced to issue a rare “Section 114” notice immediately suspending ALL council expenditure.
The bombshell was revealed the day after the “What Really Matters” consultation came to a close.
More than 6,200 people took part in the exercise with their suggestions for which services should be reduced and which should be spared the axe.
Around 60% of the cuts will be made from “back office” expenditure but frontline services will be hit by £17m reductions.
Some 4% of the savings will be found from redundancies – it's possible up to 700 jobs could go - and from changes to terms and conditions in staff contracts.
Over the next three years the council will be obliged to reduce its expenditure by £109m.
Results of the consultation will be discussed by cabinet on February 7.
Detailed proposals for spending cutbacks will be outlined at a further meeting on February 18.
Final decisions will be made at annual Budget Council on March 5.