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.
Earlier this week, the council said that as a result of the lack of government funding, residents in Wokingham Borough get more than £400 less per household each year towards their services than if it was funded in the same way as the average unitary authority. This is £30million per year in total.
To combat this, the council is looking at ways it can reduce its costs while protecting adult and children’s services. It says the alternative is to face the government taking control of council finances as it has done in Thurrock, Woking and Croydon.
In recent weeks Southampton City Council, Guildford Borough Council, Hastings Borough Council, Birmingham City Council and Kent County Council have all been quoted as facing significant challenges which if not addressed may mean the financial position of the council is unsustainable.
Cllr Imogen Shepherd-Dubey, executive member for finance, said: “These are difficult decisions being made out of necessity – not by choice.
“The council cannot continue to operate as it has done in previous years and this is why we are having to make the decisions about grass cutting, public bin collections and school transport.
“Years and years of the Government choosing to underfund our area has left us with us having to make cost reductions.”
Speaking to Wokingham Today, Cllr Conway said the budget they inherited from the Conservatives in May 2022 already had a financial hole: he said they had agreed to take £2.3 million from general reserves to help balance the books.
“That automatically created an ongoing requirement to identify £2.3 millions that we could use to cover the cost in future years. That was a big gap in the budget,” he added.
“(Former council leader) John Halsall said the reserves were for a rainy day and it was raining. Well, if it was raining in February 2022, it’s been an absolute tropical storm since. We’ve seen inflation rise dramatically and a big rise in the demand for statutory services that we have to deliver.
“We’ve seen many of the assumptions made in the 2022 budget about income generation and saving be optimistic.”
Add in the Truss mini-budget last September as well… “It had a dramatic effect on council finances and it pushed up the rate of borrowing – interest rates rose dramatically. They had already been starting to slowly rise, but here was a marked increase.
“The impact of these high rates is that when we borrow for capital projects we’re having to pay more in terms of interest.”
Add in deficits to school budgets and the capital building programme, a £3 million overspend on the Winnersh Park and Ride and it was clear the new ruling party were facing challenges.
“That explains why there was no money put aside to cover bus subsidies from this September,” Cllr Conway said.
“I think we have behaved responsibly, we have taken really tough and unpopular decisions, to ensure the council’s finances remain on track. If we hadn’t, we would be inn a terrible, terrible mess.”
That includes trying to find £11.8 million, a sum Cllr Conway says is “eye-watering”.
“That’s really tough, and the biggest sum the council has ever faced in a single year”.
The situation is not unique to Wokingham, with Cllr Conway pointing out that Local Government Association figures suggest that councils across the country are, collectively, £3 billion short of what they need to keep services running.
The previous, Conservative run, administration ran its own shake-up of the council, known as 21st Century Council. This aimed to reduce staffing numbers and use the power of web-based resources to make it easier for residents to interact with the council while saving money.
It was, Cllr Conway felt, “a big mistake”.
“In many ways, we’re having to remedy the problems it created,” he said. “But successive administrations have been obliged to make savings. We’re at the stage where all the low-hanging fruit has gone, and it gets tougher and tougher each year.
“I don’t think any of us enter politics to preside over reductions in service or quite painful savings.”
Making savings is all very well, but what happens when it has an impact on every day services such as emptying bins. As we’ve seen in recent weeks, cover them up and people break into them and place their rubbish into the hole. And if the bins haven’t been emptied, waste is left next to or on it.
There is also the issue of school transport, raising car park fees, and … well, it’s a list.
“The situation is certainly tough. We’re doling everything we can, as responsibly as we can, and as compassionately as we can, to deal with the problem,” Cllr Conway said.
“This is tough, but we have got to succeed, because the price of failure is government commissioners coming in and slashing services that aren’t statutory, and raising council tax way above the government cap.
“We want to try and protect the people of the borough from that fate.”
Cllr Conway stressed the council was doing the best it could with the limited resources at its disposal to help residents as much as possible.
“Sometimes it is necessary to invest now in order to bring significant savings and reduction of financial pressures in the future,” he continued.
This strategy includes buying or building new care homes to help with the social care needs of the borough, as well as building up partnerships with the wider community, something Cllr Conway writes about on page 19.
This is all about trying to build for the future.
“The landscape is changing, council finances are likely to be under enormous pressure for the foreseeable future,” Cllr Conway said. “I can’t see things improving, so we have to think outside the box, we have to think about how we can modernise the way local government operates in a financially constrained world.
“I’m trying to build up partnerships with external bodies, within the borough and beyond. It is practical.”
He stressed this was not offloading responsibilities to others, but trying to address problems caused by the cost-of-living crisis.
“We have to think of new ways of doing things,” he said, adding this was about foundations for the future.
He also hoped that because the financial situation went to the very heart of the council’s operations, the entire council chamber would be able to come together to work on it.
“I renew my appeal to the opposition to work with us. We are in a position of real challenge. It is not made-up, it is real,” he said.
“The figures are all verified figures, nothing is inaccurate or exaggerated, but based on the council’s chief financial officer’s assessments.
“I think most people in the borough would want the opposition to help us tackle the challenges the council faces.”
