Councils in Worcester facing 'dire' region-wide cash crisis, claims union - The Worcester Observer

Councils in Worcester facing 'dire' region-wide cash crisis, claims union

Worcester Editorial 4th Oct, 2023   0

COUNCILS serving the Faithful City are at risk of being swept up by a ‘dire’ region-wide cash crisis, according to a new report by the UNISON union.

But while county chiefs backed the authority’s ‘strong track record’ of managing its finances, Worcester City Council declined to comment on the projected black hole it faces next year.

The shocking report described Worcestershire Council Council as ‘under pressure’ as it faces a projected £17.779million funding gap in 2024/25- the fourth largest in the West Midlands.

This comes after the authority reported a forecast overspend of £18.2million on a £400million net budget for this financial year at last Thursday’s cabinet meeting.

Worcester City Council’s projected 2024/25 black hole is quoted as £2.25million in the authority’s medium-term financial plan- down from a forecast £3.415million when the draft document was drawn up earlier this year.

In that plan, it said the underlying reason for its budget gap was increases in costs continued to outstrip income increases.

UNISON chiefs claimed over a decade of reduced government funding was among the reasons councils were ‘on the brink’.

It added councils across the West Midlands would have a more than £298million combined hole in their finances from April and called on Chancellor Jeremy Hunt to provide extra grant funding in the autumn statement before authorities are ‘no longer able to cope.’

The union’s report comes in the wake of Birmingham City Council issuing a Section 114 notice, declaring itself essentially bankrupt and putting other authorities on high alert.

The union gathered its data by sending a Freedom of Information request to all local councils for their 2024/25 funding shortfall figure.

For those who didn’t reply, which the union claimed Worcester City Council was amongst, information was gathered from medium-term financial plans or papers from budget-setting meetings.

Worcestershire leader Coun Simon Geraghty said the authority was experiencing similar pressures to others across the country, such as rising costs due to inflation and more people needing support.

He added the council would continue to work on plans to reduce its forecast overspend in addition to lobbying the Government for support.

The Department for Levelling Up, Housing and Communities dismissed the figures, claiming they didn’t take into account local authorities’ reserves, which rose ‘significantly’ over the pandemic.

A spokesperson said: “We stand ready to speak to any council that has concerns about its ability to manage its finances or faces pressures it has not planned for.

“Local authorities have seen an increase in Core Spending Power of up to £5.1billion or 9.4 per cent in cash terms on 2022/23, with almost £60 billion available for local government in England.”

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