Council could face shortfall of over £25m despite almost balancing budget for next year

Finance chiefs in Wolverhampton have managed to reduce a shortfall of £12.2m reported back in February down to just under a million for 2023-2024.

It means there will be no public services lost in the city with the deficit funded through use of the council's reserves, one-off grant use and other methods.

But despite reducing the shortfall for the next financial year, there is still an estimated budget deficit of £25.7m the authority could be facing by 2025-2026.

Councillor Obaida Ahmed, cabinet member for resources and digital city at Wolverhampton Council, presented an update on the city's finances at a cabinet meeting on Wednesday.

"The council has built up a strong track record over many years of managing its finances well and his consistently set a balanced budget. In February 2022, it was reported the council was faced with a forecast budget deficit of £12.6 million for 2023-2024 rising to £25.8m by 2025-2026.

"Work has been ongoing to identify proposals to to address this budget deficit. We've also reviewed our assumptions on Government funding and developed a number of scenarios – worst case, mid-case and best case, and we adjust our assumptions based on the mid-case and this will be kept under review.

"(The efficiencies identified) will go a long way in enabling the council to set a balanced budget for 2023-2024 with an updated forecasted deficit of just under £1m for 2023-2024 rising to £25.7m for 2025-2026."

Councillor Ian Brookfield, leader of the authority, said the deficit of just under £1m for next year put them in a position most authorities would "give their right arm for" .

"We're already seeing that due to the work undertaken that the budget setting next year is close to bringing in a balanced budget without loss of services to the residents of the city – how many authorities in the country will be saying that in six months' time? And so that's fantastic news," he said.

"Obviously, there's still some issues – inflation, as we all know, is running rampant under this Government and perhaps even more pain to come in the guise of interest rates in the new few weeks and months and what we will do is utilise our budget. Because if we have not get well run finances and budgets, we can't deliver services that the people of our city rely on and going through a cost of living crisis, we need to be there more than ever to be able to help."

Deputy leader Councillor Stephen Simkins said chiefs could only do "what we can" with the level of finances received from Government, as he took aim at the Conservative leadership election.

"What concerns me moving forward is that after the carnival show is finished in September and they chose a new leader of the Conservative Party, a de-facto Prime Minister – my personal opinion is we should have a general election but that's just me – is that there will be an emergency budget," he said.

"And as we see in the media daily, it's it's like a Russian roulette because there's tax breaks and tax cuts after tax cuts, and that for me is them gambling with our futures and that really is a major concern. So what really gives us a bit of heart is we're already preparing for what will be not just the winter of discontent or the summer of discontent, it will be the two years of discontent."

An update on the budget situation will be presented to the cabinet in October.