Sefton Council is facing a £20million hole in its finances, due to issues such as spiralling energy costs and rocketing children’s social care bills – as it waits to find out how high council workers’ pay will rise by this year.
The current offer to unions equates to around a 6.5% wage increase, which would cost Sefton over £4million extra this year. Negotiations are still ongoing and this figure could yet increase further.
It adds to a near £11million deficit in children’s social care spending and over £4.3million more needed to contend with rising fuel and energy costs.
The council is looking to plug the gap this year through emergency funding and council reserves as a short term fix.
But the rapidly rising bills mean that some significant Budget cuts may need to be made very soon, with an update being brought before the council this October ahead of any Budget cuts needed being implemented in April 2023.
In his report to councillors, Sefton Council Executive Director of Corporate Resources and Customer Services Stephan Van Arendsen said: “The approved Base Budget included a provision for the 202/23 pay award of 3%. This was in line with most other local authorities who had budgeted for between 2.5% and 3%.
“On 25 July 2022, the National Employers for local government services body made an offer to trade unions of a fixed increase of £1,925 (plus an additional day’s annual leave from April 2023). For Sefton, this equates to an increase in the pay bill of about 6.5% or an additional £4.100m above the amount included in the 2022/23 budget. It should be noted that this is the latest offer and has yet to be accepted by Trade Unions – any increase in the offer will therefore require additional resources to be identified.
“For energy costs, this is a national issue for local government. However the Government has made it clear that no additional funding will be made available.
“From the above it can be seen that additional pressures of about £20.2m are being experienced and this mainly reflects the pressure in Children’s Social Care and that experienced from energy costs and the additional pay award.”
Based on these issues, the Council’s Medium-Term Financial Plan (MTFP) will now be updated.
Stephan Van Arendsen wrote: “Based on this update, budget proposals will need to be developed for implementation from April 2023 (pending further Central Government advice on future funding levels) in order that the council maintains financial sustainability.
“This will not be easy with extremely tight financial constraints being in existence and demand for council services increasing continually (and councils being asked to carry out more functions). The annual comprehensive Medium-Term Financial Plan will be presented to Cabinet in October 2022.”