1. Money coming in and money going out
Wirral Council’s budget is like a large unruly household - with money reliably coming in and going out, some savings in the bank and loans to repay from previous years.
We know there is at least £330 million coming in - from council tax, business rates and government grants. Voters on the Wirral make political choices to elect councillors to make decisions about what to spend this income on.
About two thirds of the income is spent on statutory services the Council must provide by law such as for vulnerable adults, children at risk or in care, Planning, public and environmental health. The rest of the spending choices are clearly political decisions.
At the end of March, there are forecast to be £64.8m reserves, in the bank. Of which, £13.6m are unrestricted general fund balances 'for a rainy day' and £51.2m are earmarked reserves. At least £5m of reserves have not been used in three or four years and are probably no longer needed.
It is entirely possible to balance the budget without £2.6m cuts to much-needed services: Woodchurch leisure centre, Europa fun pool, a dozen libraries, climate funding, increasing fees for recycling, youth services, golf courses, the Floral and more. Elected councillors are considering proposals to cut these services. None of these cuts are necessary nor acceptable.
2. Another budget is possible
As well as money in the bank, there is enough money coming in to pay for these services – if other political decisions are made. (Spreadsheet available upon request.)
Some reserves in the bank are ‘for a rainy day’. Well unless you live under a rock, you can see its pouring down on the Woodchurch, in Bromborough, Birkenhead, Leasowe, Liscard and in many other communities across the Wirral. Gas bills are rising, Universal Credit has been cut, wage rises are well below inflation, poverty and inequalities are killing people. People need Council services as much as ever.
For some services like golf courses, libraries and leisure, there may be better solutions forthcoming than run down, cut and privatise - such as Community Asset Transfer. But proposals from not-for-profit organisations would take more time to develop as well as seeking informed consent from most directly affected workers. Meanwhile these services should continue as ongoing concerns without cuts – continuing to provide for health, wellbeing and educational needs of children and adults on the Wirral.
Wirral, like every Council, must employ a Director of Finance with the power to say which proposals make a legal balanced budget or not. Many proposals put forward by Council managers to bridge the £18.3m forecast budget gap are acceptable savings or restructuring without compulsory redundancies.
3. Where might there be £2.6m to save all our threatened services?
i. Proposed budget surplus
The forecast income and expenditure published paper for Council's Policy & Resources committee results in a surplus of £440,000.
ii. One-off reserves
Children’s services are utilising £467k of covid funding reserve. If its OK for Children’s Dept to use existing reserves, one off proposals for £500k leisure demand next year could also be further funded by covid reserves.
Through the recent budget process, at least £2.5m has already been released for general fund balances from some earmarked reserves – so maybe other reserves could be released for one-off costs too. ‘Probably no longer needed’ reserves could be replaced in future budgets with a pressure/growth as and when needed. For example, £600k waste levy for the year after (2023-24) could be funded from existing earmarked reserves or treated as a pressure next year, as usual.
iii. More revenue savings
There are other savings from recalculating contingency reserve (£260k) and ward member budgets (£66k). Funding (£200k) could be released if 200 managers earning over £50k voluntarily took 5 days unpaid leave - although take up is speculation this stage, so can't be part of a legal budget.
iv. Repayments for second loan
Wirral Council asked for £20m of exceptional financial support loans from government last year and this year. As things turned out, the full amount was not required and only £6.5m was borrowed last year with £6.4m now forecast to borrow this year. In my opinion, it would be irresponsible for Wirral Council to take out this second £6.4m loan for covid costs. This funding could be replaced by, for example, covid reserves in the bank, at least £5m of other useable reserves, additional asset disposals and/or further underspending when known. Peterborough and Nottingham Councils have made a political choice to not draw down their second loans.
Capital and interest repayments on a loan of £6.4m would take £420,000 away from frontline services every year for 20 years.
These savings above total £2.5m.
v. Generate more income
Council workforce trade unions believe Woodchurch leisure centre, Europa fun pool, golf courses and the Floral could generate more income to at least break even.
vi. Over-prudent reserves on top of reserves
In addition, £1.4m could be saved by halving the proposed new contingency reserve. Wirral Council’s budget papers and accounts show a track record of income under-forecast by average of 10% in recent years. In other words, more income for services arrives during the year. Even if it doesn’t, this extra contingency is unnecessarily over-prudent on top of at least £51.2m contingency funds in earmarked reserves and £13.6m general fund balances.
4. What about government imposed commissioners?
If, for whatever reason this £6.4m second capitalisation loan does not arrive, the Council would not have commissioners imposed nor is it facing bankruptcy so long as a balanced budget is set and general fund balances are at a level acceptable to the external auditor. There are at least £20m useable reserves, according to the auditor. More than ten months after the last year end, the auditor has not used any of their statutory powers nor issued a Public Interest Report.
5. What about the unaccountable independent panel?
The panel can make recommends to the Secretary of State and to Wirral Council, which will be gladly received and taken into account. The panel are not elected by Wirral residents nor accountable to them.
