Wokingham Borough Council's executive councillors and its senior officers are determined to avoid the fate of other councils that have gone under in the current financial crisis. The cost of failure is high: the government appoints commissioners to run the council, and to balance the books they inflict deep cuts in services and have the authority to bring in a council tax increase double the level of the government's cap.
All councils are facing severe challenges. Inflation, high interest rates, and increasing demand, especially for Children’s and Adult Services, are putting their finances under unprecedented pressure.
In Wokingham's case, our historical underfunding by central government – we receive less core funding than any other comparable council, per head of population, in England -- only makes a difficult situation more challenging still. The government’s funding formula, based primarily on assessment of levels of deprivation, takes totally inadequate account of the costs of meeting our statutory obligations, especially in Children’s and Adult services.
But extremely challenging though the situation undoubtedly is, we have good reasons to distinguish ourselves from those councils – the list of them grows – that have had to declare effective insolvency. Our situation is not the same as theirs.
Thanks to the excellent work of our very experienced chief finance officer and his colleagues, the council has a much higher level of reserves of all types to tide us over in these difficult times than is the case with most councils. The last Conservative leader of the council said in February 2022, when setting the budget for the coming year, that the reserves were for a rainy day and now it was raining. He decided to use part of the council's reserves to support his budget. Now we face not just rain, but a storm of tropical proportions. But fortunately, we have the reserves to survive the storm. We will deploy them cautiously and in a prudent manner, ensuring that plenty is left to cover future challenges.
Another advantage we have is that our level of net indebtedness is lower than that of other councils. Our investments have generally been local and focused on supporting our retail centres; they have produced a rental income that has helped us to cover the cost of providing vital services. Over the last two years, furthermore, we have reduced the scale of the capital programme to reduce new liablities to debt.
A major factor in our favour is that we have a strong working relationship between senior officers and executive members, based on honesty and mutual respect. In most of those councils that have found themselves unable to cope, a breakdown in the relationship between senior councillors and officers has been a contributory cause.
The current executive, furthermore, has shown its willingness to take tough decisions to balance the books. External peer reviewers have praised that willingness to take tough decisions and seen it as a hallmark of a council that will have the resilience to get through the current financial crisis.
Perhaps most importantly of all, we are fortunate to have, at all levels of the organization, impressive and dedicated officers, whose hard work and sense of public service makes Wokingham such a strong council.
Much was achieved last year, in the most testing of financial circumstances. We eliminated an in-year deficit and ended the year with a small underspend. This year, the challenge is at least as great, if not greater. But we are determined to rise to that challenge and to produce a sound and balanced budget for the next financial year.
Stephen Conway - Council leader