Wolverhampton council braced for further cutbacks

WOLVERHAMPTON City Council faces the prospect of insolvency unless immediate action is taken to bolster the local authority’s position, councillors will be told.

Effective insolvency is the stark warning being delivered to councillors at a meeting of the authority’s cabinet today.

The report, prepared by assistant director for finance Mark Taylor, describes “the most challenging period that the council has ever faced”.

Taylor will tell councillors the authority needs to save a predicted £123m over the next five years or else face the real prospect of being unable to deliver services.
This figure has increased from the £98m last October and the authority said it was largely a direct result of the Government’s council funding settlements for the next two financial years.

Wolverhampton’s financial plight is in common with many other councils across the country.

Assuming the Government goes ahead with its intended funding reduction for Wolverhampton in 2015/2016, it would mean that subsidies given to Wolverhampton will have reduced by £147m – more than half (52%) – in real terms compared to 2010/2011.

The cabinet will be told that savings required over five years is £123m, £31million of which needs to be achieved this coming financial year, meaning further large scale budget cuts over and above those already announced.

Not achieving these savings risks the council becoming insolvent.

The council is already consulting on 165 savings proposals which it revealed in October, but these cuts will now need to be deeper and happen faster to cope with the worse than expected financial position.

Likely action by the council includes:
•    Immediately stopping all expenditure by council departments for the remainder of this financial year on everything which is not absolutely essential.
•    Accelerating the implementation of some of the 165 savings proposals – which are currently being consulted on and subject to the outcome of that consultation – to bring forward a minimum of £4mn to take effect in 2014/2015.
•    Identify a minimum of £5m of new savings proposals or an increase in the value of the existing savings proposals to take effect in 2014/2015.
•    Identify a minimum of £10m of new savings or increase in the value of the existing 165 savings proposals, subject to consultation, to take effect in 2015/2016.

It is also considering a change to the terms of its redundancy policy to statutory minimum.

Cllr Andrew Johnson, the council’s cabinet member for resources, said: “When the Government made this announcement just before Christmas, I warned that it put this council in a position where we could struggle to provide essential services such as caring for the elderly or emptying bins.

“Regrettably, now that our finance people have had time to analyse the impact of the Government’s announcement in detail, I have not changed my view.
“We are now realistically looking at the prospect of becoming insolvent unless we make very deep and very fast cuts to address this enormous budget deficit which has been forced upon us by Government.”

He said the report made for “very grim reading”.

“The fact is that we have already announced 165 savings proposals which we are consulting on now and it is fair to say many of them have not gone down well,” he said.

“The brutal truth is that this situation is going to get worse because these savings already identified don’t go anywhere close to addressing the huge deficit we face. So my message to the people of Wolverhampton is unfortunately a very tough one – more cuts are on the way.”