Council finances in 'severe' trouble, warns report

An independent report into the finances at Worcestershire County Council has warned that it is facing "severe and escalating" pressure - and is not sustainable without another emergency government bailout.

It also cited concern over reserves being "critically low", and said the council had "repeatedly been unable" to deliver enough savings, warning of a "widening" black hole.

The assessment was triggered after the council secured £60m in emergency government support for this financial year.

Green councillor Matt Jenkins, the authority's leader, said: "We are not going to argue with the findings of the report - we are getting on with fixing the issues it identified."

The review warns that increasing demand in children's and adult social care is the biggest problem, and stated that the authority's "financial sustainability is the most significant area of concern".

The overall budget deficit is forecast at £84m in 2027-28, one of the biggest in England, with the report calling it "essential" that a "major transformation programme" is delivered to plug the burgeoning gap.

The review examined a time period when the authority was controlled by Reform UK, which axed jobs in areas like IT and HR to cut £9m from spending.

Jenkins added: "Decisions that should have been taken last year were not taken, and that has made the task more challenging.

"There is more (cuts) to come, and some of it will be difficult.

"It is our responsibility now, and we will deliver what is needed while protecting the people who depend most on this council."

Adam Kent, the deputy leader and cabinet member for finance, said "procrastination and delay" from Reform had been part of the problem.

"It's been a total financial car crash from the previous administration - we've now got a cabinet where everybody's got expertise and we're getting on with the task ahead of us," he said.

But Reform group leader Alan Amos said the former administration had inherited a council which was "bankrupt, with spending and borrowing out of control and reserves at a dangerously low level".

He added: "We will be monitoring and challenging everything they do, given that they opposed all our efforts to pass a balanced budget."

The report confirms the scale of the financial crisis engulfing the council, which has been building for several years.

The budget gap for this year rose to more than £70m, with the situation so troubling at one point that Reform was considering a council tax hike of 10%, before councillors settled on a 9% rise in return for an emergency government bailout of £59m.

But the situation has got even worse - the black hole stands at a record £84m for 2027-28, and is forecast to rise to more than £100 million for the following year.

By April 2028, the council will be dissolved, with two new unitary authorities on the way for Worcestershire.

But it will not feel like a fresh start at all, if these new councils launch loaded with debts from a previous authority.

As it stands, Worcestershire County is facing a challenge in even getting to April 2028 - and will need even more Exceptional Financial Support, a government mechanism to prop up distressed councils.

The external assurance review runs to 66 pages, and is the work of the Chartered Institute of Public Finance & Accountancy, with its assessment certainly hard-hitting.

It warns that "political tensions in Worcestershire have created a fragile environment for financial recovery", with councillors mired in past disagreements over council tax, savings and service redesigns.

It also described the reserves kitty of £23m - money stashed away for use in the event of any financial shocks - as being "critically low", so low that it works out at just 4.6% of the net budget.

Since May, the council has been controlled by a Green-Lib Dem-independent coalition. The report's conclusions suggest teamwork will now be more vital than ever across the political divide.

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