Uncertainty over reforms to local government funding and the continuing impact of austerity have left Wigan finance chiefs relying worryingly on “assumptions and estimation”, according to a report.
Lead officers at the town hall have warned that the local authority may have to slash a further £26m from its post-2019 budgets; but then again that figure “will no doubt change”.
A report on savings forecasts, tabled for a meeting of the council’s executive, says that an unprecedented set of circumstances – including the aftermath of next March’s Brexit – are making financial predictions “extremely difficult”.
Produced by finance chiefs Paul McKevitt and Tony Clarke, the report states the council’s current medium-term financial plan (MTFP) “has proved to be the most difficult to formulate for many years.”
Wigan Council has won many plaudits, both from politicians and accountants, for the way it has handled making some of the biggest financial efficiency savings of any local authority in the country over the past decade without getting into straits such as those currently afflicting Tory-run Northamptonshire Council which has effectively been declared bankrupt.
In fact in July it was reported that Wigan had managed to record a small surplus on its tough savings target for last year due to forward planning.
Although the savings forecast is set to be updated later this year when central government provides further details of long-awaited funding reforms, a number of risks remain that may lead to a re-think.
Cabinet members will be told savings of £10.2m identified for 2019/20 have “plans already in place for their delivery,” but figures for 2020/21 and 2021/22 (£9.8m and £5.8m respectively) are only indicative.
The report highlights the council’s external auditors, Grant Thornton, concluded that “the council had proper arrangements in all significant respects to ensure it delivered value for money”.
But it also outlines to members the high profile financial struggles of Northants County Council and states that nearby Lancashire County Council’s “continuing reliance on reserves... was unsustainable”, according to auditors.
It reads: “Positive statements (from the council’s auditors) will provide members with assurance that the council continues to be managed in a positive balanced approach and has not utilised reserves or balances to support the budget strategy.”
The Government will introduce a new funding formula in 2020/21 with councils’ reliance on council tax and business rates increasing due to revenue support and public health grants being withdrawn, the report adds.
Wigan, along with counterpart town halls across Greater Manchester, are part of a pilot scheme that sees it keep 100 per cent of its business rate proceeds which is set to continue.
Increasing demand in both adult social care and children’s services are also identified among risks and pressures on future budgets.
The report concludes: “This three-year efficiency plan has outlined the difficulties in assessing with any certainty the future funding for the council.
“This lack of clarity in key areas means that the figures for the latter years of the forecast are purely indicative.”