SPECIAL REPORT: Politicians and staff speak out as struggling local authority faces grim future
Wallasey Town Hall where Wirral Council sits(Image: Andrew Teebay Liverpool Echo)
As crisis-hit Wirral Council heads towards what bosses say is a ‘highly likely’ bankruptcy, tensions are rising and workers are scared for their jobs. People inside the creaking organisation are blaming each other for the beleaguered local authority’s current situation – with fears decision making could soon be taken out of local hands.
The next week will be absolutely crucial for Wirral Council and its future, as it looks to avoid issuing a Section 114 notice – declaring effective bankruptcy – and meaning no new spending commitments can be made. The council has pleaded with central government for a £40m bailout to avoid this grim eventuality.
Wirral is thought to be only the second council ever where auditors have requested an emergency meeting for councillors to discuss their recommendations amid the ongoing financial crisis. This crunch meeting will be held on January 14 followed by another key meeting the next day where senior councillors will decide whether to request the £40m bailout from the government for this year and next year. As part of this request, a review of council finances is currently underway.
For some, this feels like the local authority is back at square one. Previous requests for government support led to reviews of the council’s finances and governance in 2021 which criticised a prevailing culture in the organisation and even recommended the council consider selling off Wallasey and Birkenhead Town Halls.
At the time, one Kemi Badenoch MP, then-Minister of State for Equalities and Levelling Up Communities, said the council’s leadership had “not fully acknowledged or perhaps even understood the severity of the challenge”.
Three years later, auditors have made a number of recommendations off the back of the council’s 2023 to 2024 accounts urging councillors to make service cuts to manage its yawning budget gap, and make sure the council “has the necessary organisational grip” and adequate reports. Issues related to councillor oversight as well as the council’s finance department having enough resources were also raised.
This is raising concerns that Whitehall commissioners could be brought in to deal with the local authority’s problems, a result no local councillor or official would ever want to see.
Liverpool City Council saw commissioners appointed to oversee it for three years(Image: Liverpool Echo)
Across the Mersey, Liverpool Council saw commissioners installed three years ago following a political crisis that saw the city’s mayor arrested. The local government officers effectively took over the running of the city after a damning government inspection – departing last year.
Even just a few months ago, things were looking far more positive for Wirral. An independent assurance panel, appointed as a recommendation by the last government review, praised the council for feeling like a normal local authority and said it expected a balanced budget to be achieved for the next three years.
In October 2024, Jim McMahon, Minister of State for Local Government and English Devolution, noted “the council’s strong and committed leadership has delivered significant improvements since 2021, including improved cross party working on financial and other matters, creating a working environment in which officers can best serve the people of Wirral and deliver political priorities.”
However that same month, a budget report presented to the council’s Policy and Resources committee meeting said the council was due to go over budget by £21.5m this year as well as £36m for the next financial year. The local authority at the time said it expected to declare bankruptcy by 2026 but more recent reports suggest it is “highly likely” this could happen before this coming April without further government support.
The October report said the local authority faces nearly £67m in pressures with £26.7m caused by inflation and £19.9m caused by an ageing population. The council’s figures could get even worse if the government doesn’t take action over school budgets.
The government previously allowed up until 2026 for councils to keep its school budget deficit off its general revenue budget as schools struggle to deal with increased costs of special education needs and disabilities demand. For Wirral, this black hole could reach £41m by March next year and at least £208m by March 2030.
The view on what went wrong depends on who you speak to(Image: Colin Lane/Liverpool Echo)
Viewpoints on what has gone wrong depends on who you speak to. Some blame cuts to funding by previous governments and a lack of oversight from Westminster while others blame past financial decisions made locally and the use of reserves to prop up the budget.
This all means that the council currently has only around £13m in general reserves, an emergency back up fund which may now have to be used entirely to cover this year’s budget overspend without government support. This would leave the council with no way out if things go wrong again next year.
There is real concern from some that the government could look to make further interventions in Wirral, including appointing commissioners to come in and make sweeping decisions in the council. The situation was described to the ECHO as “armageddon” with a culture of secrecy in the organisation or as one councillor put it bluntly, “sh*t is hitting the fan at speed.”
‘It’s only just sinking in what it means’
It’s not just councillors raising alarm bells either. One staff member claimed the council had failed to make the transformative savings promised, adding that staff were “scared for their jobs” and the audit report “put the size of the mess into context.” It was suggested council housing, leisure and library services may be most significantly affected by job cuts as these are services that are not required by law.
The staff member said: “Senior officers are blaming elected members and elected members are blaming officers. It’s split both the main parties and I think it’s only just sinking in what it means,” adding: “It’s just a weave of cr*p internally. Those who can get their heads down are doing so.”
One councillor, who wished to remain anonymous, said the council “shouldn’t be at this point,” adding: “We are really devastated by this. We are really upset to be at this point hearing this after so many sacrifices in previous years. We really aren’t happy. I totally agree with the auditors.”
Wirral’s council leader Cllr Paul Stuart has been approached for an interview as well as Chief Executive Paul Satoor to answer questions about the situation. In a statement released by the council, Cllr Stuart said the local authority had developed a budget recovery action plan “implementing detailed and stringent measures to address the financial challenges.”
He said: “Years of underfunding and the rising costs and demand for social care services have outstripped available funding, necessitating major changes in operations, including some very difficult and unwanted decisions to ensure the council can provide its statutory services and look after and take care of our most vulnerable residents.”
In response to concerns raised in this article, a Wirral Council spokesperson said: “Options for addressing the current and forecast position will be brought forward in the coming weeks,” adding: “At this point no decisions have been made in respect of future budget options. This will be done by elected members through committees and finally full council.”
The UK Government also said councils “have suffered from short-term solutions” and was working with local authorities on reform. It said it had given Wirral Council a £31.9m increase in core spending power for next year’s budget.
Similar sentiments have been echoed across party lines about social care as the most recent budget reports highlighting children’s and adults’ services now make up 72% of the council’s entire budget. Auditors also highlighted social care costs as the main drivers of the council’s problems in their report.
Though the council plans to spend many millions on regeneration schemes or cycle lanes, many of these schemes are completely covered by grant funding which have to be used for specific purposes. This means the council can’t look to spend this money on other services or it would be in serious trouble.
Cllr Jeff Green said the situation was “truly remarkable” and criticised past Labour administrations(Image: Liverpool Echo)
Cllr Jeff Green, who leads the council’s Conservative opposition, said both the auditor’s recommendation to call the debate as well as requesting more emergency financial support was “truly remarkable” but believed the council’s work so far to improve was being undone by the huge unplanned rising costs in social care. He said the council would have to start looking at making difficult decisions including “reducing the workforce as well as transforming services to make it sustainable.”
In these circumstances, he said the council should have been able to fall back on its reserves for unexpected financial shocks but criticised previous Labour leaders for using these backup funds. A National Audit Office review of councils shows Wirral spent nearly £19m of unallocated reserves in two years from 2016 to 2018 and Cllr Green said £83.4m of reserves had been spent in the last ten years.
Cllr Green said: “They didn’t fix the roof when the sun was shining”, adding: “It’s one off money we then have to find again the following year. It’s a double whammy. It makes the situation even worse. We have got to replace that money the following year but we also do not have the money to replace it.”
He said the council was trying to work collectively to sort the issues with plans in place though he also called for openness of where the council is overspending. He said: “We need to have more rigorous, open, and transparent controls over that spending so when this spending does occur, we don’t say “oops, deary me we have overspent.”
‘A bit of a perfect storm’
Liberal Democrat councillor Stuart Kelly, who also sits on the council’s audit and risk management committee, said: “The government needs to step up and take on some of the cost burden of providing the level of care services that we need to,” adding: “Wirral isn’t the only council that teeters on the edge of bankruptcy.”
He said there had been some wishful thinking in the past about how quickly the council could transform, adding: “There was a hope that the current government would appreciate the pressure social care is under and take steps to properly fund it rather than kicking it down the road in the hope something will come up.”
However another Conservative Cllr Kathy Hodson said she felt like she didn’t get told much information and “member oversight isn’t as robust as it should be,” adding: “It’s almost as if we are being treated as a distraction from them doing their job, that I needed to be mindful of the use of officer time.”
She said she had the upmost respect for staff, adding: “A lot of officers work incredibly long hours and are incredibly dedicated in doing their job but in my view there has been insufficient oversight.”
Cllr Hodson believes the council had struggled to set a balanced budget in previous years but now faced “a bit of a perfect storm” with the potential for further debt from another bailout and the black hole in school budgets potentially hitting the council at a later date. This was despite positive steps she said the council had taken in procurement.
Cllr Hodson said: “It’s not sudden. In my view, it’s not a question of if. It’s only a question of when a Section 114 notice is issued,” adding: “I have seen the writing on the wall for a couple of years now. The transformational change hasn’t happened. I can’t say why that hasn’t happened because I am not privy to the information and that is the problem.”
Wirral Council said options for decisions would be brought forward in the coming weeks(Image: Andrew Teebay Liverpool Echo)
Another councillor argued the council couldn’t keep spending more money than it made and called for it to be more ambitious, adding: “The Wirral doesn’t have a thriving economy. What can we do about improving that economy? We talk about regeneration a lot but we do not talk about the economy do we?”
He said the government “are going to be asking “what are you doing?,”” adding: “It’s at least an independent panel and perhaps commissioners I do not know. The problem with this is if we lose our grip on it, the council is in danger of losing control of what it is fundamentally there to do.
“I hope for the best but I can’t envisage that they will keep bailing us out.”
The fear of impending commissioners was echoed by another councillor because it would mean decisions were made by people who didn’t know the area. They said: “It would be spreadsheet decision making rather than local councillors making them and we would have to pay for it. Council tax payers would have to foot the bill. That is the last thing we want”
A Ministry for Housing, Communities and Local Government spokesperson said: “We are injecting £69 billion of funding into council budgets across England to help them drive forward the government’s Plan for Change. The provisional Settlement for 2025-26 makes available £417 million for Wirral Metropolitan Borough Council, which is a £31.9 million increase in Core Spending Power from 2024-25.
“We know that councils have suffered from short-term solutions, which is why we are working hand in hand with councils to reform this outdated system and fix the foundations.”