Council declaring effective bankruptcy 'a real possibility'

Councillor Patrick Harley is the leader of Dudley Borough Council

Dudley Borough Council is facing "a real possibility" of declaring itself effectively bankrupt, its leader has revealed.

The authority will have a £12m shortfall in its budget this financial year, auditors have confirmed in a report, with an £11m deficit likely in 2024/25.

The news means that effective bankruptcy could be formalised through the issuing of a section 114 notice, Conservative leader Patrick Harley said.

The Labour opposition claim previous warnings about the council's financial health have "fallen on deaf ears".

But Mr Harley insisted: "The bells are ringing loud and clear. There are some really tough decisions to make."

A public consultation is open until 16 February for residents to share their views on how the authority could make financial savings.

In trying to plug the financial black hole, the council is proposing to increase council tax in the next financial year by 4.99%.

That would equate to a rise of £1.17 per week for the average Band B property.

The authority stated that 2% will be dedicated to funding adult social care, which is the largest contributing cost to the overspend.

The remaining 2.99% distributed to other services.

Mr Harley said: "For years, Dudley has been a relatively low council tax authority.

"We have to face the reality that not increasing council tax by the maximum that we can has harmed our long-term financial stability."

'Financial mismanagement'

He described adult social care as a "nettle".

"If the government, whether it is Conservative or Labour, does not grasp that nettle, then councils up and down the country will continue to issue 114 notices."

A review into the authority's finances in November showed an "unsustainable reliance on reserves" and warned that the authority's reserves had been "depleted to a level which is too low to ensure financial stability".

At the start of the 2022/2023 financial year the authority had £28.9m in reserves.

This figure reduced to £21.8m by April 2023 and is expected to have reduced to £14m at the end of March this year.

The authority warns the reserves could entirely run out this year.

Decision making was also questioned in the report and added there had been "inappropriate behaviour" between elected members of the council and employed officers as "indicating a cultural problem".

Labour councillor Shaukat Ali, shadow cabinet member for finance at the authority said he fears the council's Conservative leadership have ignored warnings of financial instability.

"All my calls have fallen on deaf ears. The council is heading towards bankruptcy and local people are going to feel the pain of this."

"It is the financial mismanagement of the council which has landed us at this stage. "

External recruitment suspended

Mr Harley denied this and insisted the rising cost of social care was the cause of the financial deficit - a factor all councils in England were facing.

In October, cost-saving measures were put forward by the council, which included freezing external recruitment and not extending contracts.

The public consultation survey lists a number of the council's responsibilities and asks local taxpayers to choose and order areas they feel the council to prioritise.

One proposal is to charge £36 for year-round garden waste collections.

Councillors will debate the charges in cabinet before the 2024/25 budget goes to full council for approval.