WIRRAL Council is facing potential bankruptcy in two years as the cash-strapped local authority attempts to deal with a £21m budget black hole.

Job losses may be required at the struggling council as it tackles a crisis driven largely by increasing social care costs.

Two reports providing updates on the council’s budget this year and next year said the local authority is not in a sustainable position and uncertainty over council funding has made future planning “almost impossible.” The reports will be considered by councillors at a Policy and Resources committee meeting on November 6.

In their assessment of the budget, council officers warned of the need to make “very difficult decisions” around the level of council support and “a continued focus on increasing efficiency and reducing costs.” The report said this could involve job losses as the council will have to shrink the number of people employed with some services reorganised.

Wirral Council may also have to use its emergency reserves to plug its budget gap this year which is currently over £21m, while council departments are preparing plans to cut costs across the board. The council is also bringing in a new front door service to try and reduce adult social care costs.

The budget report for the current financial year from April 2024 to March 2025 says there is a £6.5m increase in costs for adult care and health while a nearly £10m increase in children’s services costs. The council’s finance department has gone over budget by £2.9m while neighbourhoods services is over by £2.3m.

The finance overspend relates to court costs and licensing fees as well as services providing benefits. In neighbourhoods, the overspend is in leisure services, parks and countryside maintenance, as well as shortfalls in highways maintenance and parking charges income.

The council is expected to have to find £85m to balance the books over five years including £36m in its 2025 budget. These totals include an expected Council Tax increase providing £33.3m over those five years. Worryingly, the council is still expecting to declare bankruptcy in 2026 under current circumstances.

Many councils are expected to be in a similar financial position. Although inflation has calmed, the report said rising costs were still a significant challenge for Wirral due to the size of some of its contracts.

The council report says the local authority faces nearly £67m in pressures with £26.7m caused by inflation and £19.9m caused by an ageing population. In 2026, the council is expected to face pressures of £36.9m in 2026, £24.4m in 2027, £23m in 2028, and £16.6m in 2029.

These figures do not include an estimated £41m black hole in schools funding that can currently be kept off the books – but this ability to override could expire for all councils in 2026. This means the council could face a sudden financial pressure of £78m that year to balance the books unless the government steps in.

As for funding, the council is expected to continue being able to keep Business Rates as part of a pilot scheme going forward which brings in around £7m and Council Tax is expected to go up nearly 5% next year. The council is also expecting social care grants to go up by 25%, similar to last year’s increase.

Wirral Council said the government had already been made aware of the its  financial position. The latest news comes just seven months after the government decided to stand down a watchdog panel which provided advice to the local authority on how to manage its budget.

Cllr Paul Stuart, Leader of Wirral Council, said: “Despite these challenges, we are committed to ensuring that the Council balances its Budget this year and establishes a sustainable financial footing for the future. We are implementing various measures to address the budget gap and working closely with the Government to explore options for financial sustainability and potential short-term measures.

“Our priority remains to meet the needs of all our residents while dealing with these financial difficulties. We are dedicated to making the necessary changes and taking action to secure the Council’s financial stability and continue providing essential services to our community.”