Dudley Council set to balance books, says leader

Councillor Patrick Harley said he was now confident the authority's finances were strong enough to stave off the threat of insolvency for at least two years.

But he said in years to come the council would need to become 'a much smaller organisation'.

The council's external auditor, Grant Thornton, said the council's finances were weak and it was in danger of becoming insolvent.

The auditor said Dudley Council was at risk of following a number of local authorities, including Birmingham Council, of having to make a declaration under Section 114 of the Local Government Act, which is effectively a statement of bankruptcy.

Councillor Harley said: "We won't be declaring Section 114. We are now able to set a balanced budget without needing to dip into our reserves.

"I'm now hopeful we may even be able to generate a surplus.

"We're still putting the finishing touches to the budget, but I'm getting more confident each week.

"We won't have to declare Section 114 for the next two years, giving us the time to restructure the council. It will have to become a much smaller organisation," he added.

The council has asked for permission to borrow up to £10 million to prop up next year's spending.

Usually, councils are not allowed to borrow cash to pay day-to-day bills,and bending the rules may come at a price – with demands for more cuts in spending. Cabinet members will be told another option could be to hike council tax. Dudley’s council tax charge is around 10 per cent lower than the average metropolitan authority, a situation which cuts spending power by £15.7 million a year.

Councils need approval from the Government for rises above five per cent without a local referendum.

Elected councillors would have the final say on a rise above five percent but Dudley has already applied for permission to set a bigger increase without a referendum in 2025.