Wirral Council may find it “impossible” to avoid bankruptcy in three years.
A council report on the local authority’s budget position ahead of a Policy and Resources committee meeting on 4 October said that in the financial year from April 2026 to 2027, current projections “would likely make it impossible to balance the budget at this point given the low level of reserves that are currently held.”
This is due to the latest assumptions around changes to social care provision as well as a current surplus provision for the Merseyside Pension Fund which is due to end that year.
The report also said growing demand for adult and child social care “cannot be sustained” without additional funding or reviews of government funding.
Wirral Council has also been part of a pilot since 2017 where 100% of rates generated by businesses is kept locally. The local authority has assumed this pilot will end in three years seeing reduced income for the council.
Over the next four financial years, Wirral Council is expected to have to find nearly £70m to balance its budget with £14.9m next year, £11.47m in 2025/26, £16.65m in 2026/27, and £26.46m in 2027/28.
Councils like Wirral are unable to borrow money to fund day-to-day services. This means each year it has to look at where it can cut services like libraries, street cleaning, and leisure centres as well as raising it through event programmes, investments, and increasing council tax.
Alongside raising money locally, councils also receive money from the government. However, the government has not announced what funding Wirral will get next year which usually comes around December.
The policy and resources report said, “The position around grants will not be known until the autumn when the settlement from government is announced. Assumptions have been made around the potential increase in the social care grant along with the announcements that have already been made around the new grants, such as the Market Sustainability Fund.
“The uncertainty around the level of funding that local authorities will receive makes medium and long-term financial planning almost impossible.
“There is a growing disparity between the resources available to local government and the demand pressures that the sector faces. The growing demand for social care for both Adults and Children’s services cannot be sustained over the MTFP (medium term financial plan) period without either additional funding or the long awaited review of local authority funding.
“The difference between the pressures facing the council in 2024/25 and the available resources will require a number of difficult decisions to be made around the level of support that can be provided and a continued focus on increasing efficiency and reducing costs. It will require the organisation to shrink overall in terms of the number of people employed and a reorganisation of how some services are provided.”
Previously Wirral Council was criticised by inspectors for its use of emergency reserves to balance the books. This has meant the council has little back up if these were needed in the future to address financial difficulties.
If Wirral is unable to balance its budget by itself in 2026, it will have to apply to the government for emergency funding and potentially file a Section 114 notice. Birmingham City Council is the latest local authority to issue this notice which effectively declares bankruptcy.
In 2021, the council received money from the government to help balance its budget subject to a review of its finances, a watchdog being brought in, and selling off buildings and land to pay the money back. According to the report, this £12m loan is expected to be paid back.
For the next financial year, Wirral Council expects to be able to balance its budget. Current savings proposed include cutting £5m from Adult Care and Health, £4.3m from its Children, Families, and Education department, £2.5m from neighbourhood services, and £1.9m from its regeneration department.
It is also on track to make £26m out of the £28m in cuts passed in the budget in March this year for the current financial year of 2023/24. The remaining £2m is expected to be achieved through temporary offsets.
Details of the savings have not been made public yet but councillors will undertake workshops through October to review the proposals. The report said, “The actual savings in development are linked to the proposed transformation activities. A number of these are cross cutting in nature and will not relate to just one specific directorate.
“The overall package of savings options being developed will incorporate both transformation proposals and service specific actions to reduce expenditure.”
A review of the Floral Pavilion in New Brighton will be part of this due to outstanding unachieved savings linked to the theatre. A recent tourism, communities and culture committee report said that it was currently £1.4m over budget.