WOKINGHAM Borough Council needs to find a “staggering” £11.8 million worth of savings if it is to balance its books this year.
Council leader Stephen Conway made the comments during a meeting of its ruling executive committee on Thursday, July 27, saying the local authority was facing a grave situation.
“(It is caused by) high inflation, combined with increasing demand for statutory provision, especially in children’s services, is creating enormous pressure on the council’s finances. It’s made worse by the rise in interest rates, which is added to the cost of servicing our borrowed capital projects.”
While inflation had fallen slightly, it still posed a “significant challenge” to Wokingham and it is this, coupled with the lack of a grant from central government, that is adding to the pressures.
“We will continue to put the financial sustainability of the Council, on which many people in the borough depend, as our top priority this year,” he added.
Speaking later in the meeting, Cllr Imogen Shepherd-Dubey, the executive member for finance, said “(A financial report) highlights the serious situation this council finds itself in. We can see we have a significant challenge coming from rising inflation.
“Our current potential revenue overspend this year is approximately £2.9 million.”
Other problems could include the annual pay awards, which have yet to be agreed and will be impacted by rising inflation.
“This is the reason why we are having to make significant changes to our services. It is why we are no longer able to fund the things we used to be able to do … this is why we have had to raise car parking fees, reduce litter bins and the non-statutory (school) transport costs.
“It is certainly not something any of us wanted to be doing as councillors, but it is unprecedented inflation that is forcing us to into this difficult situation which we have to manage.
“Councils are not allowed to go bankrupt and central government has to step in if this is likely.”
She said that Southampton, Guildford, Birmingham, Kent and Hastings were among those who have said they are facing an unsustainable future.
“Go that route would mean our services would be cut to the absolute bare minimum,” she continued saying that could see council tax rise by 10%.
Despite the work officers had done, Cllr Shepherd-Dubey warned that the council would fall below the recommended level of reserves in its general funds.
“The only place we can go to make up budget shortfalls is to make savings from within the council, and bases which are feasibly charged.
“With many of our residents feeling the pinch, we have to be open with everyone and explain what is going on, and why this council just cannot carry on as we were.
“It is estimated the council will be required to make budget reductions of approximately £20 million over the next three years and all executive decisions should be made in this context.”
Cllr Ian Shenton said he was torn over whether to vote in favour of the financial reports, but said he had to because of what the alternative would mean to statutory duties, something he felt many residents had little grasp on.
“Typically, with this financially illiterate government, these statutory duties are handed down, either underfunded or completely unfunded,” he said. “The ever-increasing burden of statutory duties is absorbing an ever-increasing share of the council tax cake.”
He also said the government had a policy of a “deliberate impoverishment of WBC and some similar councils that are supposedly better off, by stripping away our revenue support grant. So, our spending power is dramatically below what it was 10 years ago…
“The net result is we are forced to cut in non-statutory areas.”
Cllr Shenton continued: “You might ask why the previous administration did not react to this, but instead continued with such largesse such as unbudgeted food caddy liners, for which we have never seen a business case.
“They even signed off long-term grounds maintenance contract with built-in inflationary price escalators, even though they knew their own government was intent on smashing the council spending power.
“They did not call out this dishonest, corrupt and incompetent government because it is their party, the one to which they pay their subscriptions and donations, and they pretend they are somehow financially competent.
“I will vote for this, but it’s about time our residents were told the real cause of these cuts is the financial incompetence that is inherent in today’s Conservative Party.”
Cllr Prue Bray also spoke, sharing problems that overspending in Children’s Services was causing – saying they were “battling away to see where we can prevent those costs escalating”.
The budget for council school transport was £5 million, but there was a prediction of a 17% overspend mostly caused by inflation, but there was also a shortage of drivers.
Another factor was a “worrying upward trend” in the cost of placements ofr children with complex needs.
“We have fewer children who need such placements, but the average cost has gone up by 88%. This means we are paying £5,000 every week more for eight children than we were paying for 14 last year.
“That’s about £250,000.”
She added: “We are in the same boat as many other local authorities, and it is simply not going to be sustainable if we can’t get the cost of payments down.
“We have seen outsourcing promoted as the way to save and be efficient. Now we’re reaping the consequences of that by not having any control over the costs and being at the mercy of people trying to make a profit out of vulnerable children.”
