Cash crisis sparks 'insolvency' warning for Wolves council

Emergency action is needed to prevent Wolverhampton City Council becoming officially broke within two years, finance chiefs have revealed.

Live updates

Council: 'Providing essential services will be a struggle'

Leaders at cash-strapped Wolverhampton City Council have warned that "essential services" such as waste collection and elderly care could suffer as they struggle to balance the books.

Cabinet member for resources, Councillor Andrew Johnson, said he had warned that if the government cut more from local council grants, it would mean a £147million reduction for the city since 2010.

Wolverhampton City Council is facing a budget crisis Credit: Gareth Fuller/PA

And he said following analysis by the council's own finance officers, his view had not changed - and warned frontline services could be in the firing line.

We are now realistically looking at the prospect of becoming insolvent unless we make very deep and very fast cuts to address this enormous budget deficit which has been forced upon us.

The report that will be presented to my cabinet colleagues tomorrow evening makes for very grim reading.

The fact is that we have already announced 165 savings proposals which we are consulting on now and it is fair to say many of them have not gone down well.

The brutal truth is that this situation is going to get worse.

The savings already identified don’t go anywhere close to addressing the deficit we face.

So my message to the people of Wolverhampton is unfortunately a very tough one – more cuts are on the way.

You simply cannot lose that much money without having a devastating effect on services and jobs.

Advertisement

All spending stopped at cash-strapped council

All spending which is not "absolutely essential" will be stopped at Wolverhampton City Council as finance chiefs struggle to cope with a growing cash flow crisis.

Councillors at tomorrow's cabinet meeting will be asked to approve a range of emergency measures as leaders warn the authority faces insolvency within two years if they cannot turn the situation around.

Other measures include:

  • Implement 165 savings proposals currently being consulted on sooner than expected
  • Find another £5million of savings on top of that already identified in 2014/15
  • "Faster and deeper" cuts than those previously proposed
  • Reducing the council's redundancy policy to the legal minimum

'Insolvency' warning for Wolverhampton council

Emergency action is needed to prevent Wolverhampton City Council going bankrupt within two years, it has emerged.

Finance chiefs at the local authority say they face "the most challenging period" in the council's history, with the amount of savings needed soaring to £128million over the next five years.

This is up from the £98m first reported in October.

The front of Wolverhampton Civic Centre Credit: ITV News Central

Assistant director for finance, Mark Taylor, has prepared a report to go before the cabinet tomorrow outlining the difficulties, which he says is a direct result of the government slashing its grants to councils.

The report states that if immediate action is not taken, the council is at risk of becoming "effectively insolvent" in 2015/16.

Back to top