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Council in strong position, despite financial challenges ahead

by Gemma Melling

Knowsley Council’s Cabinet members heard on Wednesday that the Council continues to face a “challenging” financial climate – but is in a stronger position than many other local authorities, thanks to its record of sound financial management and long-term decision making.

The Council’s medium-term financial strategy report shows that Knowsley’s efforts to increase its Council Tax base in recent years have made a substantial contribution to the authority’s financial stability, having generated an additional £15.4m annually in permanent funding since 2013. The Council’s participation in a 100% Business Rates Retention Scheme since 2016 has also helped it retain an extra £7.5m per year.

But Cabinet members were warned that there was no room for complacency – and that the council must continue to exercise tight control over its financial management with further uncertainty ahead.

The report, presented to the Cabinet meeting on Wednesday, 21 February 2024, set out the background that will need to be taken into consideration when councillors meet to agree the budget for the year ahead at a meeting of the full council on 6 March, 2024. It sets out the forecasts for the next three years, including the latest information on the full range of Council budgets including service demand pressures, inflation, treasury management activity, and Government funding announcements.

Among the biggest challenges for the council is coping with the rising cost of Social Care, price and wage inflation and increased levels of demand for the key public services it provides.

And, although Knowsley has been allocated additional Government funding for Social Care of £8.8m for Knowsley in 2024/25, the medium-term report notes that the true additional cost of delivering Children’s Social Care, Adult Social Care and Home to School Transport in Knowsley for the coming year is more than twice that amount – in the region of £18.3m.

These kinds of pressures on the council’s finances could have created a £6m shortfall in funding for 2024/25. However, £5m of savings have been identified across the council to reduce that shortfall, but there is still a need to identify a further £1m of savings in order to balance the budget.

Looking ahead to setting the Council Tax for 2024/25, the report notes that the Government’s funding for Knowsley has been calculated with the assumption that the Council will increase the 2024/25 Council Tax by 2.99% in addition to a further Adult Social Care precept of 2%, resulting in a total increase of 4.99%.

If the Council chooses to increase Council Tax by less than this amount, it will increase its deficit and forego funding which the Government assumes is available when making its grant allocations. This would leave the Council facing greater deficits in future years and would make cuts to essential services unavoidable.

A meeting of full Council on Wednesday, 6 March at 6pm, will take a final decision on the council’s budget and Council Tax increase for the year ahead.