Council issues stark warning over budget fears

Council issues stark warning over budget fears

Wigan Council has issued a stark warning to government, calling for them to #SaveLocalServices ahead of this week’s Autumn Statement.

Wigan Council, like many other local authorities, is facing an unprecedented challenge to its budget in what Leader, Councillor David Molyneux MBE, describes as “the catastrophic failure of government to properly fund local services”.

Despite cutting £170m from its budget during austerity, the council was preparing a balanced budget two years ago thanks to careful financial management. But the Covid-19 pandemic, followed by soaring inflation, increased demand and lack of funding has left a much more complex and less predictable problem than austerity, meaning the council will need to dip into its reserves.

Coun Molyneux explained: “For years people have questioned why we have kept reserves rather than spending them. The answer is for a rainy day and that rainy day is here.”

The council has never used reserves to prop up the budget, but in the 2021/22 financial plan £3m has been allocated from the savings pot to fund essential support to the local community. The latest position projects the council’s revenue budget has a deficit for 2022-23 of £32m.

More councils have filed Section 114 notices this year and others have reported significant concerns - leading the Local Government Association’s (LGA) to launch its #SaveLocalServices campaign calling on government to provide financial sustainability and certainty for councils ahead of the Medium-Term Fiscal Plan set to be announced on Thursday 17 November. Wigan Council has pledged its support to the campaign and will do everything it can to get the funding it needs for local residents.

According to the LGA, councils have seen a £15 billion real terms reduction in funding from government in the last decade, equating to almost 60p in every £1.

And now spiralling inflation increases to the National Living Wage and higher energy costs have added at least £2.4 billion in extra costs onto the budgets councils set in March this year.

If nothing changes, as well as financing these extra costs, councils are facing a funding gap of £3.4 billion in 2023/24 and £4.5 billion in 2024/25.

Councils Iike Wigan have worked hard to protect their budgets, but many now face the prospect of having to make severe cutbacks to vital services that communities rely on.

Coun Molyneux warns: “If we don’t get any additional support, what is clear is that as a council we cannot continue to deliver all that we currently do as we do it now, without risking the future financial health of the council.

“We have seen a huge rise in demand on services following the pandemic, especially in adults and children’s social care. Yet, despite this increase in demand the Government is failing to provide appropriate funding to meet this, forcing councils to make difficult choices about local services.

“In fact, the government’s response to the economic crisis has actually made matters worse and caused deep worry and concern in homes across our borough.”

In 2010 social care accounted for 50 per cent of the council’s budget, compared with 66 per cent today. The Covid-19 pandemic and the cost-of-living crisis has placed greater demand on adults and children’s social care. In children’s services a shortage of foster carers means councils have to pay large fees for emergency placements for children. The cost of agency staff due to a shortage of social workers is also adding to budget pressures across local government.

Like everyone, the council is dealing with high inflation, which at 10 per cent has drastically increased the cost of capital programmes. Day-to-day costs such as energy bills now cost £6m more each year and service costs an additional £35m.

In total the council faces cost increases of more than 10 per cent to its budget and has been warned not to expect any support from government unless Council Tax is used to bridge the gap.

Posted on Friday 18th November 2022

© Wigan Council