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25th Jan, 2022

Council finances 'fragile' as inflation adds pressure to coffers

Ross Crawford 13th Dec, 2021

REDDITCH Borough Council’s finances are ‘fragile’ with its reserves set to fall £700,000 below the minimum level of £1.5million by 2023/24.

That was the warning from finance chiefs in a report to the borough’s executive committee on Tuesday evening, December 7.

And with inflation expected to hit five per cent in the new year and a council tax rise likely to be limited to two per cent, the authority’s battered balance sheet is sure to come under more pressure.

No one was prepared to use the word ‘cuts’, but Councillor Mike Rouse (Con, Church Hill), whose portfolio covers finances, used the analogy of a ship in danger of running aground and “needing to lighten the financial pressures that weigh it down.”

“This report is in the spirit of transparency,” he said.

“Detailed reports will follow, but what this is, is an opportunity for all of us to see where we are heading.”

Councillors were also warned that the borough’s £15million Towns Fund windfall could actually pose a risk to its finances – as well as an opportunity – should the council have to spend extra to ‘move things along’ in the project.

The report highlighted some of the financial issues facing the council.

These included: The starting gap in its budget, the impact of Covid on making savings, inflation, rising gas and electricity prices, salary costs, fears of the demand for leisure services falling post-pandemic, and IT costs.

Like local authorities across the country Redditch is desperately waiting for the Government to decide what sort of settlement it will get to bolster its finances.

“The Government needs to provide us with more certainty and we need that settlement from Government as soon as possible,” said Coun Rouse.

“This council needs that planning certainty.”

In the meantime options to address the situation include: ‘Doing things differently, more efficiently, reducing costs, stop doing things, or do less, and looking at options to increase income’.

“We will work out how we are going to bridge the gap,” said Coun Rouse. “We have never strayed away from making difficult decisions.”

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