DUDLEY Council’s cabinet is set to agree a series of spending controls this week to help improve the authority’s grim financial position which has been revealed in a report.
Tory chiefs are set to implement radical financial controls including a recruitment freeze, no new contracts, no additional spending and the termination of fixed term contacts in the hope of finding millions of pounds of savings.
The proposals have been outlined in a report, due to be presented to cabinet tonight (Wednesday October 25).
It said adverse trading activity, the cost of agency staff and additional costs of adult and children’s care packages had added to financial pressures and the report warned cabinet members of “severe implications for the ongoing medium term financial strategy”.
A raft of potential savings have been identified but the report states: “The resulting forecast indicates a significant risk that the general fund reserve could be exhausted within the next one to two years, if action is not taken.”
The report adds: “In view of the position, it is proposed that cabinet approve the immediate introduction of spending controls to reduce the deficit in the current financial year and the ongoing impact on future years.
“It is proposed that these controls be reviewed after each financial year end, but remain in place at least until the council’s unringfenced reserves return to a level of 20 per cent of net revenue spend.
“The proposed controls are designed to minimise spending except where an exemption applies. The exemptions are designed to maintain essential services and the council’s ability to function.
“Where exemptions do not apply, it is inevitable that there will be an impact on the quality of services.”
The report says although the council’s position is adequate to set a lawful budget for 2023/24, reserves are low compared to other councils and it adds: “There could be a need to reduce spending plans and/or raise additional income in order to avoid imprudent reductions to the level of reserves.”
It says there is currently no requirement for a formal report under Section 114 of the Local Government Finance Act 1988 but there is a risk this would be required in the next one or two years if no action is taken to control expenditure.
Labour councillors have accused the council of losing its grip on the borough’s finances.
Councillor Pete Lowe, leader of Dudley Labour Group, said: "We are seeing first-hand the impact of years of reckless decisions made by Dudley's Tories. We have a social care crisis, a council housing crisis and now, very clearly, a financial crisis."
Councillor Shaukat Ali, Labour’s finance lead, added: "We know external auditors have identified significant weaknesses in the Tory-run council's ability to manage its finances.
"It's a disgrace that while they can spend hundreds of thousands of pounds of our money on a 'business trip' to Cannes - which has yet to deliver any tangible investment - they cannot balance the books back in Dudley."
The report said the risk that the authority may be unable to set or manage its budget and meet its statutory obligations has been given the highest possible rating.
Council leader Councillor Patrick Harley, however, rubbished claims by Labour that the authority faces a financial meltdown.
He said: “It’s ridiculous what they’re saying. That’s clearly not happening. We’ll have a surplus this year, we’ll have one next year and the year after that.
“It will eat into our reserves, but we have a robust plan to deal with it.
“There’s no chance of us ending up like Birmingham. We have options. A lot of councils don’t.”
He said spending pressures in children’s services and adult social care mean an extra £10million is needed in 2024-25 but he said: “It’s there in reserves but we won’t be able to do the same in the second and third years.
“Labour seem to think we can wave a magic wand.
“It’s because of our financial prudence that we haven’t slashed services and continued to invest.
“We have to make sure we have sustainability.
“We have choices we can make – and we will make the right choices to balance the books and still provide frontline services and look after taxpayers’ cash.”
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