Wakefield Council faces budget gap of almost £85m over the next five years

A stark financial report warns that the local authority is dealing with one of the most serious financial challenges it has ever faced.

It comes after the council confirmed that its County Hall building will temporarily close to help tackle the huge financial challenge the Council is facing.

Senior councillors are being advised that cuts must to be made to avoid the Council’s financial stability being “jeopardised”.

A report, to be considered by Cabinet members at a meeting next week, says the expected budget gap for the period 2023/24 – 2027/28 is £84.9m.

The report, by chief financial officer Neil Warren, states: “The current economic climate and inflationary cost pressures are having a significant impact on the Council as well as residents and businesses within the district.

“Inflation started to rise during 2021 which was partly to do with the economy recovering from the Covid-19 pandemic and high levels of demand.

“Added to that there has been a very sharp rise in energy (oil and gas) prices and the war in Ukraine has led to further increases in prices of basic commodities such as energy, fuel and food. Inflation, at the end of July 2022, was at 10.1 per cent, significantly above the 2 per cent target.”

The financial challenge comes as Wakefield Council has to cope with a rise in demand for many of its key services, particularly adult and children’s social care services

Schools also face increasing pressure, with 12 of 55 schools across the district expected to end the financial year with a deficit.

The Medium Term Financial Strategy (MTFS) document adds: “The current and future financial environment for local authorities remains extremely challenging and maintaining a secure financial position is critical to enabling the Council to develop and implement budget plans in a managed way which minimises, as far as possible, the impact of funding cuts on the delivery of our priority services.

The report adds: “These are unprecedented times and the need for robust financial management has never been more important.”

It was reported last month that Wakefield Council is expected to overspend this year’s annual budget by more than £9m due to soaring energy prices and the cost of living crisis.

That figure is now expected to rise to around £11m, partly due to a decision to extend free off-street car parking aross the district.

Some budget gaps have been plugged by the local authority using its reserves, which is essentially the Council’s savings account.

In March this year, reserves totalled £68.3m.

Further planned use of reserves could reduce this to £33.1m by March next year.

The report states: “The current financial position, coupled with the identified budget gap is not sustainable from current levels of reserves.

“The Council will continue to keep the MTFS under review given the high degree of uncertainty surrounding the potential impact of central Government policy and Government funding reforms in relation to local government.”

Cabinet members will consider the report at a meeting on Tuesday (October 11).

A further financial report will be prepared for a meeting in January.

The report ends: “In light of the financial challenges presented, budget growth will not be an option.”