‘Substantial action’ needed to address £21 million council budget gap
Halfway through the financial year the council is facing a major budget gap according to a report due to be presented to the authority’s Policy and Resources Committee on November 6.
The Budget Monitoring report outlines how substantial challenges from significantly increased demands for social care across both adults and children’s services account for a majority of the financial pressure being faced.
The report comes as the new Government issued its first Budget, against a backdrop of falling inflation and lower interest rates than had been seen for several years.
Cllr Paul Stuart, Leader of Wirral Council, said:
Wirral Council is facing a significant financial challenge, with a projected budget gap of over £21 million by the end of the year. This situation reflects broader pressures across the public sector, particularly the increased demands for social care services for adults and children.
Despite these challenges, we are committed to ensuring that the Council balances its Budget this year and establishes a sustainable financial footing for the future. We are implementing various measures to address the budget gap and working closely with the Government to explore options for financial sustainability and potential short-term measures.
Our priority remains to meet the needs of all our residents while dealing with these financial difficulties. We are dedicated to making the necessary changes and taking action to secure the Council's financial stability and continue providing essential services to our community.
Current estimates indicate Wirral Council faces a serious financial position with a budget gap – overspend – of more than £21 million expected by the end of the year. The report to councillors says that “without substantial action” the authority will not be able to provide a balanced budget this year.
The Ministry of Housing, Communities & Local Government (MHCLG) have been made aware of the Council’s financial position.
The majority of the overspend is a due to increased demand and costs for social care services – a pressure which continues to be difficult to address. The main issues highlighted in the report to councillors include:
The Adult Care & Health directorate forecasts a combined overspend of £8.857million which is partially offset by an extra £1.309m of income. The overspend comes from areas including Older People Services – £4.826 million – largely due to the increasing number of clients and additional complexity of needs. Similarly, demand for Elderly Mentally Infirm (EMI) services and Mental Health and Disability Services continue to rise. The Directorate has an action plan in place to address the issues.
Children, Families & Education forecast an overspend of £9.996 million with significant concerns over children in residential placements and home to school transport. Despite an overall reduction in the numbers of “children looked after” (CLA), there are still substantial pressures from the placement costs, with £7.054m of the forecast overspend for the year in relation to placements.
Other areas of overspend include Finance which forecasts a budget gap of £2.897million while Neighbourhoods Services forecast an adverse variance of £2.331million, across areas including income shortfall on car parking charges, highways maintenance costs and leisure services.
Outlined in the report are steps already underway to address the main issues, including:
- Development of joint commissioning activities within Adults and Children’s, with panels reviewing high-cost placements,
- Development of a strategy to increase foster care provision and implementation of the findings from the Home to School Transport review,
- Task and finish groups to address issues within Leisure, Libraries and Highways and a review of the Housing Benefit subsidies
- Use of contingency funds, general fund balances and reallocating earmarked reserves, council wide spend freeze (started 9 September 2024) and maximising the use of capital receipts
- Work with MHCLG to identify options for financial sustainability and potential short-term measures to address the issue within the current year.
