Wirral Council’s income under-forecast by 10% (£27.1m) each year
Council income has gone up every year since 2017
Working with hundreds of democratic co-operative businesses since 1993 has taught me to understand the stories told by the organisation’s income and expenditure accounts. And what processes are in place for all elected members to make decisions that are timely, informed and accountable.
I’ve written and spoken at full Council about Wirral Council’s reserves and actual net expenditure on Adults, Childrens and all other services. The evidence shows cuts to Council services are a political choice.
Applying similar business assessments to Wirral Council’s actual net income shows:
1. Total Council income was highest at £333m in 2010. This is non-specific income from council tax, business rates and government grants.
2. The cumulative loss to total council income since 2010 is £393.2m.
3. Total Council income has gone up every year since 2017.
4. Salaries and severance payments over £50,000 have steadily gone up from £12.7m to 210 officers in 2016-17 to £23.8m to 392 officers last year.
5. But in the same years, councillors and the public were presented with large budget gaps. For example £61m budget gap for 2018/19 and £45m for 2019/20.
6. Forecast income has been underestimated by an average of £27.1m each year since 2013, ie 10% under-forecast of actual income received.
7. For next year, 2022-23, the public are still being presented with a budget gap of £27m, even after the government announced grant is £12.6m more than expected.
8. Wirral Council published proposals to cut front line services on 7 Jan. There is no need, for example, to close Europa fun pool to save only £250,000 per year, nor for any compulsory redundancies.
Wirral Council’s actual income
Council income comes from three main sources – Council Tax, Business Rates and Government Grants.
Source: Wirral Council’s published accounts – Non-specific income table, Note 12.
This chart shows actual Council non-specific income, as shown in the audited accounts. The accounts are a strong source of evidence as accounts are externally audited and put together using the same method as other councils and previous years.
Non-specific income is revenue for almost any spending purpose, unlike specific fees (such as leisure centre tickets), charges (such as adult care) and some grants. Non-specific income is not ring-fenced and can be used for front line services and reserves. This article does not include income from capital grants nor capital receipts from asset sales.
We still being told that government grants (not total income) to Wirral Council has reduced by more than £200m since 2010. When asked, no evidence is provided by those who claim ‘over £200m’. Why?
The audited accounts since 2010 show Wirral received its lowest annual government grant in 2012-13 of £13.5m and highest in the following year of £123.9m. Conversely, business rates received were £145.2m and £72.9m respectively.
For the many, austerity, cuts and pay freezes are real. The cumulative loss to total council income since 2010 is £393.2m (calculated by adding up the difference from total income in 2010 of £330m and each years total income. ie 31.4+41.5+25.1+37.8+54.2+64.1+63.4+44.1+18.8+12.8=393.2).
But for the few, Council salaries and severance payments over £50,000 have steadily gone up from at least £12.7m paid to 210 officers in 2016-17 to £23.8m paid to 392 officers in 2020-21.
Total Council income has gone up every year since 2017
From a high of £330.0m in 2010-11, total Council income reached its lowest level of £268.9m in 2016-17.
Council income has gone up has gone up every year since 2017. For the current year ending March 2022, the predicted income figures was £330.4m (Source: page 6, Council budget paper 17.2.21). Actual income is known for most of the current year, and has been requested but not provided yet by the Directors of Finance.
Table: Wirral Council’s actual and forecast income
Financial Year / £m | Council Tax | Business Rates | Government grants not ringfenced and Other | Total actual non-specific income | Income change from previous year | Forecast Council income in Council papers | Predicted budget gap in news/ Council papers |
2008-09 | 124.0 | 129.4 | 54.3 | 307.7 |
|
|
|
2009-10 | 128.7 | 124.1 | 68.3 | 321.1 | 13.4 |
| |
2010-11r | 132.0 | 137.8 | 63.1 | 333.0 | 11.9 | ||
2011-12 | 132.5 | 121.3 | 47.8 | 301.6 | -31.4 |
| |
2012-13r | 132.8 | 145.2 | 13.5 | 291.5 | -10.4 | ||
2013-14 | 111.1 | 72.9 | 123.9 | 307.9 | 16.4 |
| |
2014-15 | 114.7 | 72.5 | 107.9 | 295.2 | -12.7 | ||
2015-16 | 117.3 | 74.7 | 86.9 | 278.8 | -17.2 |
| |
2016-17 | 122.5 | 76.9 | 69.5 | 268.9 | -9.9 | ||
2017-18r | 129.3 | 117.7 | 22.6 | 269.6 | 0.7 |
| |
2018-19r | 137.6 | 127.6 | 23.7 | 288.9 | 19.3 | ||
2019-20 | 142.5 | 120.3 | 51.5 | 314.2 | 25.3 | ||
2020-21 | 148.0 | 85.0 | 87.2 | 320.2 | 6.0 | ||
2021-22* | 156.6 | 138.8 | 35.5 |
| 10.2 | ||
2022-23 ** | 162.0 | 139.6 | 29.0 | 0.2 | -£27m |
Source of first 5 columns: Wirral Council’s published accounts – Non-specific income table, Note 12.
* Source: Council budget and MTFS paper 17.2.21 . Forecast for budget purposes. Actual income known and requested from but not yet provided by Directors of Finance.
** Source: Pre-Budget setting report 17.01.22 – Spreadsheet calculations available upon request
The whole truth or smoke and mirrors?
The table above shows the actual increase in Council income and forecast budget gaps, since 2010.
Given that Wirral Council income was going up and up from 2017, why were councillors and the public presented with large budget gaps? For example £61m budget gap for 2018/19 and £45m for 2019/20?
One column in the table above records forecast or predicted income published during the budget decision making process each year. In the run up to Budget Council decision making, total Council revenue income is forecast by senior finance officers and promoted by senior Councillor leadership. Each year, forecast income and forecast expenditure are used to calculate the budget gap to fill with cuts/savings. Actual total Council revenue is only revealed to the public in the accounts published around eighteen months later.
The last time the Council’s forecast income was accurate was 2009. Since then, income has been underestimated every year. From 2013/14 to 2020/21, forecast income has been underestimated by an average of £27.1m each year, which is 10% of actual income received (£216.7m forecast/£2,127.0m actual income).
In these circumstances, it is difficult for elected councillors to make informed political budget decisions. Are we being told the whole truth or are we being presented with smoke and mirrors?
Is it a confidence trick at best and shock doctrine at worst?
What about the budget for this year and next?
Council revenue reserves are at their highest ever amount at £114m. Council finances are so buoyant that in October 2021, even Conservative deputy mayor Jeff Green said “rather than scaring, or seeking to scare, the public into thinking the deficit is going to be £30m, the council should be honest with the public and set out a range of possibilities for what the situation could look like."
However, Wirral Conservatives like to present the financial situation both ways to their advantage. Local Tories claim Wirral Council has never had it so good under a generous Conservative government. They over-claim income received from Conservative government to Wirral Council by including ring-fenced grants such as covid support, which is directly passported onto local businesses. Their leader also claims “If the Council doesn’t take drastic action to correct its finances next year then it will effectively be bankrupt.”
Such shocking assertions have the effect of scaring and confusing councillors, workers and the public into accepting cuts that are not necessary. These assertions are not based on sound financial evidence. If the Council was in a truly dire financial situation, its independent external auditor should issue a Report in the Public Interest, but they have not. In dire financial circumstances, one would expect senior managers to lead by example and share the pain imposed on front line Council workers.
In December 2021, the government’s settlement for Wirral Council was announced at £12.6m higher than expected for next year (2022/23). Of this, £5.34m is expected for rises in wages and national insurance. The Council is paying for less children and adults to live in expensive residential care.
Yet, the public are being presented with a budget gap of £27m. Wirral Council published proposals to cut front line services on 7 January 2022. For example, compulsory redundancies and closing Europa fun pool to save only £250,000 per year.
But there is no need for these cuts. Such proposed ‘difficult decisions’ should be seen in the context above of Council income rising every year since 2017, £23.8m paid to 392 Council officers last year, and forecast income underestimated every year since 2010.
NB. The chart below extends the chart above, to include forecast income for the current year 2021-22. Almost all actual income is already known and the data will be updated as soon as requested figures have been provided by Directors of Finance.
The chart below also includes the forecast income for next year 2022-23. Going on previous consistent significant under-forecasting, Council income is likely to be underestimated.
03 January 2022