Though controversial, the projects are funded by Wirral Council’s day to day budget
A 20mph speed limit on the Wirral(Image: Copyright Unknown)
I’ve been reporting now on Wirral Council for nearly two and a half years, sitting in council meetings every week, taking notes, and reporting on the latest decisions made by the local authority. In that time, I’ve regularly reported on the council’s often difficult budget decisions.
This includes the aftermath of the sweeping budget cuts passed by the local authority in 2022, the next round of budget discussions in 2023 where a number of key and highly valued services were on the line, as well as over the last year. This year began on a more positive note with an independent oversight panel that was overseeing the work of the council stepping down.
However by November, things were not looking good, with news of a £21m budget black hole this year and a £36m hole for next year. The council has had to request up to £20m from the government for this current financial year just to try and stay afloat.
Often when I write these articles, I see many comments suggesting the local authority should stop spending money on things like cycle lanes or new 20mph limits. It is probably confusing to see a headline one day saying the council is going to spend millions on something and then the next read that key services are on the line.
Would cutting these schemes actually save the council any money? Not really, is the short answer.
It is important to point out that the funding for such schemes does not come out of the normal council day to day budget which funds libraries, bin collections, road maintenance, litter and street cleaning, and many of the other services people associated with the local authority.
The funding for these schemes comes from grants given to the council to be used for that specific purpose. Often the cash is from the Liverpool City Region Combined Authority or central government. This is still taxpayers’ money but it can’t be used to sort out the day-to-day budget issues.
Funding for cycle lanes comes from active travel funding which must be spent on infrastructure to encourage walking and cycling. Grant funding for regeneration can be for specific projects or used to prepare land for development while funding for new 20mph limits was covered by external money too.
For example, the council couldn’t take some of the £51m it got to build the Hind Street Urban Village in Birkenhead to cover overspends in adult social care or prevent a library from closing. That money can only be spent on preparing the ground for new homes in that area.
If the council did use that money or any that is earmarked for certain projects to plug its budget gap, it would land itself in serious trouble. It would also likely mean the council wouldn’t get any future funding which is needed to get complex and difficult regeneration projects off the ground and avoid pressure to develop on the green belt.
There are some staffing costs that are associated with these projects which the council does pay for but even these are sometimes covered by external funding. A recent report on School Streets schemes said £213,260 of Liverpool City Region money would be used for some staff posts until March 2027 while regeneration grants have been used to cover staff costs there.
That doesn’t mean the council hasn’t made mistakes when it comes to managing its finances in the past. The Chartered Institute of Public Finance and Accountancy inspected the local authority in 2021 criticising the use of reserves, a failure to deliver on savings, unrealistic plans when it came to managing its budget, and a prevailing culture before the pandemic to avoid difficult financial decisions.
Questions could still be asked about why the council spent an extra £2m on funding for services to help clean up the Wirral in February when reports at the time indicated the council was due to go over budget by £7.79m for the last financial year. The final figure ended up being £10.7m.
However one could also argue things have changed, with sweeping budget cuts and changes passed in 2022 and 2023. An independent assurance panel appointed by the government also stepped down earlier in 2024 praising progress it believed the local authority had made.
Some might also point to the council’s new offices in Birkenhead, which are expected to cost it nearly £4m next year. While these are costs which the council is liable for if it can’t fill these buildings, these are currently being offset by profits the local authority received from its joint venture, the Wirral Growth Company.
This means that for now, these costs aren’t affecting the council’s main budget. In 2022, the council spent 58% of its budget on social care but this current year, 72% is now expected to be spent on adults and children’s services.
Out of the £21m budget black hole, a November council report said £6.5m of the overspend is linked to adult social care while just under £10m is linked to children’s services. This is 77% of the total overspend.
In adult social care, the council is seeing increasing numbers of people and more complex needs with 438 more people in care in March 2024 compared to the year before. 36 more elderly people are needing mental infirm support than the year before.
In children’s, costs have continued to go up despite the number of children being looked after coming down. This is because more children are being put in residential placements with an average cost of £5,045 a week but some are as high as £18,000.
One also has to look at the bigger picture with many councils across the country in similar positions, although Wirral has had to request emergency government funding for the second time in three years. As Wirral looks at potential bankruptcy, 12 local authorities have already issued Section 114 notices – meaning they have effectively run out of money – and one in four councils are expected to ask for bailouts in the next two years.
Like Wirral, these councils are also struggling to keep adults and children’s service costs down. These are services it has to provide legally and can see costs go up with demand, even if savings are made.
More councils could also declare bankruptcy school budget debts related to rising special education needs and disability demand can’t be sorted out. Councils across the country can keep this overspend off the books for now but this expires in 2026.
In Wirral, the overspend is currently expected to be £41m while it is expected to be £38m in Sefton by 2024 and £33m in Knowsley in 2025. The National Audit Office has warned 43% of councils will go bankrupt if they have to pay this budget black hole off with English councils possibly needing to find up to £4.9bn.
Following the announcement of council funding from April 2025, Cllr Louise Gittins, Chair of the Local Government Association, said: “Extra funding for councils next year will help councils meet some – but not all – of the pressures they face in adult and children’s social care, homelessness prevention and support for children and young people with special educational needs and disabilities. Councils of all types will continue to struggle to balance the books next year with many having to increase council tax bills to bring in desperately needed funding but still being forced to make further cuts to services.”