Wirral Council may have to sell libraries, leisure centres, town halls and more in order to escape the massive money problems laid bare in an independent report.
The local authority requested exceptional financial support of more than £10m from the government in order to try to balance its budget, which has led to an independent inspection of the teetering local authority.
That inspection, carried out by the Chartered Institute of Public Finance and Accountancy, has now been published and it makes for grim reading - both in terms of its assessment of the management of the council and what it advises should happen next.
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The report includes strong criticism of elected councillors and officers, stating that the 'prevailing culture' at the council prior to the pandemic has been to avoid difficult financial decisions, meaning the council's emergency reserves have been dramatically reduced in recent years.
The report said one aspect of the problem was clearly political and that the policy of holding elections in three out of every four years encouraged political point scoring, rather than tough decision making.
Therefore, the report recommends that Wirral Council moves to a system where elections only take place once every four years.
The document also questioned the authority’s long-term financial plans.
Looking at Wirral Council's financial strategy, the report stated: "The plans rely on considerable savings of some £80m up to 2025-26 and the council has failed to deliver over 25% of its savings in the last two years.
"Reserves have reduced in recent years and are lower than similar councils, which means that any failure to deliver savings will impact quickly on the council’s ability to set a legal balanced budget."
It adds that without a 'more robust and realistic' plan for how the council will make savings, which is supported by councillors, the council could face being subject to what is known as a Section 114 notice - which would mean the council was effectively bankrupt.
One issue with the local authority is its high level of spending according to the report.
The document read: “Overall council spending is high compared to similar unitary authorities.
“This is particularly the case for cultural and related leisure services, where spending in Wirral per head is the highest of the 15 other statistical neighbour councils and has increased significantly since 2015-16.
“The high level of spending on non statutory services (such as leisure centres and golf courses) reflects the reluctance amongst members to accept the need to have to make difficult decisions in order to secure financial sustainability and a reticence amongst officers to change this culture.”
This is why the document calls for Wirral Council to look at selling some of the borough's much-loved assets.
The report continued: "The council needs to develop a long-term plan for the assets that it holds and how it will maintain them without having to put further pressure on council borrowing.
"This means that the council will need to develop a more realistic asset disposal strategy, focusing on reducing the number of libraries, leisure centres, golf clubs, and public conveniences."
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It added: "The focus for future asset disposals should be Wallasey [and] Birkenhead Town Halls in addition to Pilgrim Street.
“In total the sale of the sites could generate a significant capital receipt, reduce revenue spend by £685k, and avoid capital maintenance spend of £14.03m over a 10-year period.”
As well as calls for major money raising plans and a move to four-yearly elections, the Wirral report also calls for more training, briefings and information for councillors on local government finance.
Another key area of concern was the council’s move to a ‘committee system’, which came in last year.
The decision involved scrapping the authority’s cabinet, a group of 10 Labour councillors who had responsibility for areas such as finance and adult social care, and bringing in a committee system in which power is shared more equally between Wirral’s 66 councillors.
The document read: “[The new system] has clearly improved member engagement but poses a further risk to the improvement journey because of its immaturity, its over elaborate design, and the administrative burden it's placing on officers.
“The number of committees and requirements to ensure appropriate briefing of all the five political groups in the lead up to each meeting is posing a significant resource burden on the council.”
Writing to Wirral Council's Labour leader Janette Williamson, Kemi Badenock MP, a minister in the Department for Levelling Up, Housing and Communities (DLUHC), suggested that if steps were not taken to deal with the problems shown in the report, the £10.7m support package would not be guaranteed.
Ms Badenoch said: “I would ask that you set out in writing, within the next month, the steps you are taking in the immediate and longer term to respond to the review and implement its recommendations.
“Any faltering in this area would be of considerable concern and could lead to a reconsideration as to whether a different approach might be appropriate to secure the improvements that are necessary.
“Your response to the review findings will help to inform my final decision on capitalisation with respect to the financial year 2021/22 and any associated conditions.”
Paul Satoor, chief executive of Wirral Council, said: "Wirral Council welcomes the indication from DLUHC (Department for Levelling Up, Housing and Communities) that the request for exceptional financial support is progressing. As part of the request for this additional support from government, independent assurance reviews have been undertaken.
“We will take time to fully digest the findings and recommendations made in these reviews.
“We are grateful to DLUHC for their ongoing commitment to supporting the council through this process."
Responding to the shock report, the Labour leader of Wirral Council, Janette Williamson, said: "We welcome the report and will take the time to consider the recommendations and set out our response.
“The report states that the council is on ‘an improvement journey’ and we welcome that acknowledgment.
“It comes after 11 years of Conservative austerity, coupled with the Covid crisis, which have seen our communities hit hard by national cuts.”
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Cllr Williamson said the authority had tried to keep as many facilities open as possible and that selling things off is a solution which only works once.
But Wirral's Tory leader Tom Anderson blamed Labour for a "decade of failure of the council's political culture".
He said: "It is a damning indictment of Labour’s inability to manage Wirral Council’s finances responsibly and prudently.
“Despite repeated warnings from Conservative councillors and external auditors, Labour’s reckless policy of raiding the council’s reserves to fund vanity projects including the Hoylake Golf Resort, the Vue Cinema and the Community Bank, has finally caught up with the Labour administration.
"Scrapping the one-party cabinet has laid bare the poor financial mismanagement of the previous decade. While other councils were making the necessary changes Wirral was left in the slow lane.
"I would hope, even at this late stage, that all parties will now work to ensure best value for the Council Tax payer while protecting the services that we exist to provide."
