Dudley Council urged to cut extra £2.5m to avoid bankruptcy

Despite restrictions on spending, councillors have pressed ahead with a new SEND school plan

A local authority may have to make more budget cuts than planned to avoid bankruptcy.

The auditor for Dudley Council has told bosses their reduced spending to cover a £12m deficit in 2024/25 may not be enough.

Despite proposed savings of £7.7m, the council may have to make further cuts to avoid declaring a section 114 order and becoming, in effect, bankrupt.

An additional £2.5m is needed to plug the gap, auditors have recommended.

Andrew Smith, from auditors Grant Thornton, told a meeting of the council cabinet on Thursday he is considering issuing a statutory recommendation under an act of parliament.

The recommendation would force the council to discuss in public within a month how it would find the extra savings.

Cabinet member for finance, councillor Steve Clark, warned the authority is at risk of having to declare itself bankrupt within the next 12 months.

'Funds will run out'

However, he remained confident they would be able to set a legal budget in March as planned.

Mr Clarke said: "We have a history of low tax and low reserves, as costs rise our funds will run out. The government expects us to use up reserves we do not have.

"We have increased reserves over the last four years up to £26m, had we not done that we would be in a worse position and the council would have already gone bankrupt."

The Conservative finance chief came under fire from his Labour opposite number who accused the administration of incompetence.

Councillor Shaukat Ali added: "Over the years budgets have been set but not delivered, we raised concerns last year about finances and the direction they were heading but we were not listened to."

Leader Patrick Harley said there are steps in place to avoid a 114 notice but, "it is not a quick fix".

Mr Harley added: "I have full confidence in our officer team from the deputy chief executive down."

Councillors went against the advice of finance officers and voted to override spending controls and press ahead with building a new special educational needs school in Brierley Hill.

The new facility would replace Pens Meadow special school where facilities were described by cabinet member for education, councillor Ruth Buttery, as "appalling".

This news was gathered by the Local Democracy Reporting Service which covers councils and other public service organisations.