Sefton Council is dipping into reserves and pulling out emergency funds in a bid to fill a nearly £8m budget black hole.
Officers have warned the budget gap – which includes £4.3m of additional energy costs, over £2m extra on high cost children’s social care placements and nearly £1m more than anticipated to bus children out of the borough to learn – is pushing the council’s financial situation to the limit.
With “no flexibility left” in the council’s coffers, any further shortfalls will need to be met from existing budgets – according to a report released by Sefton Council last week.
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The financial update report was produced ahead of an overview and scrutiny committee meeting which was due to be held this week but has been postponed following the death of the Queen.
It states that a “significant worsening” of costs, particularly around children’s social care accommodation and energy, has left the council needing to draw from both its reserves and emergency funds in a bid to balance the budget.
Other pressures are coming from operational in-house services and a higher payroll bill, according to the report which totals £7.74m.
A remedial action plan has now been put in place by the council, which will draw down £1.7m in covid-related emergency funding and reduce the council’s general fund balances to the minimum of 5% of its budget – which will generate £2.9m. £3m of earmarked reserves will also be used to help plug the gap.
This still leaves a £50k shortfall according the report – with any additional pressures needing to be dealt with by reductions in the existing budgets for council services.
The report states: “In the event that further pressure is experienced, further remedial action will be required.
“However, as a result of using the options above, and those previously approved in June, there is no flexibility left for the use of existing reserves and general balances- as a result this pressure will need to be met from within the existing Council budget and delivery monitored carefully and reported to Cabinet.”
The report notes that while some of the shortfall is specific to Sefton, notably around the increased children’s social care costs, other pressures, including around energy bills and payroll, are affecting most councils around the country.
It states: “These costs were not reflected in the funding provided as part of the Local Government Finance Settlement for 2022/2023 and the Government has made it clear than no additional funding will be made available, meaning the Council needs to make remedial plans to meet these pressures.”
A meeting of the regulatory, compliance and corporate services overview and scrutiny committee which was due to meet tomorrow (Tuesday) to discuss the situation will now meet on Thursday September 22 instead due to the national period of mourning following the death of Queen Elizabeth II last week.
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