Council set to raise savings target by £25m after insolvency warning

A local authority is set to increase a five-year savings target announced only three months ago by a further £25m, amid a warning that immediate action was needed to avoid the council becoming “effectively insolvent” in 2015/16.

Wolverhampton City Council set a target of £98m in savings when it put forward 165 proposals in October.

However, its Cabinet will today receive a report from Assistant Director of Finance, Mark Taylor, recommending that this figure be increased to £123m.

The report said Wolverhampton had delivered savings in excess of £100m since 2009/10 and that, combined with the significant savings already proposed over the next five years, “the scope to deliver further savings is ever decreasing and as a result this will almost certainly be the most challenging period that the council has ever faced”.

Measures the report asked the Cabinet to approve include ceasing expenditure during the remainder of 2013/14 “on all but absolutely essential items, in order to limit the call on general balances”.

It also called for:

  • Acceleration of the implementation of some of the 165 savings proposals to bring forward a minimum of £4m into 2014/15;
  • Identification of 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;
  • Identification of a minimum of £10m of new savings or an increase in the value of the existing savings proposals, subject to consultation, to take effect in 2015/2016;
  • A report to be presented to the Cabinet to change the terms of the council's redundancy policy to the statutory minimum. “It should be noted that it cannot be guaranteed that the council will be able to allow employees to access a full pension between the ages of 55 and 60 after 31 March 2014”;
  • A review of the capital programme and treasury management strategy to identify further savings.

In a statement the council claimed: “Assuming the Government goes ahead with its intended funding reduction for Wolverhampton in 2015/2016, it would mean that the grant monies given to Wolverhampton will have reduced by £147m – which is more than half (52%) – in real terms compared to 2010/2011,” the council claimed.

It added that £31m in savings would be needed in the coming financial year.

“Not achieving this level of savings in the next financial year and in future years would force the council to exhaust its reserves and become insolvent,” the council said.

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 18 December announcement in detail, I have not changed my view.”

Cllr Johnson also claimed that Wolverhampton had been treated very unfairly compared to some councils in wealthier areas of the country.

However, Neville Patten, leader of the Conservative group on the council, told the BBC that the authority was "guilty of wasting a lot of money".

He said: "This council have spent willy-nilly on things like the Civic Centre instead of running like a business and spending sensibly and that's exacerbated the problem.

"Other councils who are facing the same cuts from government are doing much better than us because they're not just moaning and whingeing to the government – they're dealing with the problems head on.”