Council requests emergency funding to fix deficit

Solihull Council has applied for emergency government funding to plug a multimillion-pound budget deficit

Cash-strapped Solihull Council has applied for emergency government support as it attempts to fill a multimillion-pound hole in its budget.

The council has written to the government to apply for exceptional financial support, but "exceptional" council tax rises have been ruled out.

The council has already had to enforce strict spending controls in an attempt to reduce a forecast £6.8m deficit to the end of this financial year.

But the authority's chief executive Paul Johnson told the latest audit committee meeting: "We expect that figure unfortunately to have increased."

Councils can request exceptional financial support to be able to raise council tax above the government-approved cap of 4.99% without a public referendum.

Through this, Birmingham City Council was last year granted permission to raise council tax by 9.99% a year for two years.

But a Solihull Council spokesperson said: "We have not requested the ability to raise council tax above government-approved levels."

In the past financial year, 19 councils were given exceptional financial support from the Ministry for Housing, Communities and Local Government (MHLCG) in the form of capitalisation directions – meaning a council can use money otherwise ringfenced for capital resources to balance its day-to-day or revenue budget costs.

Details of what Solihull Council has asked MHLCG for have not yet been revealed publicly.

Current funding 'not sustainable'

Mr Johnson told the committee there were five main reasons for the "worsening" situation:

• Impact of business rates appeals and an increase in empty property relief being awarded, leading to a "significant reduction" in business rates income

• Increased cost of adult social care

• An ongoing increase in the cost of children's social care placements

• Increased cost of home to school transport for special educational needs and disabled children

• Increased cost of homelessness not being adequately funded through the housing subsidy system

Mr Johnson told the audit committee: "There will need to be two options for the budget, one assuming our application for exceptional support is successful, we will not be told until mid-late February, and one assuming that it isn't."

Leader of the authority's Green group Max McLoughlin said: "The financial situation is not significantly different to previous years, other than the wolf now being even closer to the door.

"What has changed is the government. At least now the controlling group is willing to admit funding from government is not sustainable."