Wolverhampton City Council stops spending to 'prevent insolvency'

The authority claims that unless savings are made it could "go bankrupt"

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"Immediate action" needs to be taken at Wolverhampton City Council to stop it "becoming insolvent", leaders have said.

The Labour-run council approved plans on Wednesday to make £123m cuts over the next five years with the loss of 1,400 jobs.

It said the cuts were forced by a £147m fall in government funding by 2016.

Libraries campaigner Pru Coleman Campaigner Pru Coleman says she thinks libraries will eventually close

The Conservative group said the council's financial problems had stemmed from overspending in the past.

The authority said it had originally drawn up plans to save £98m by 2019 but it had now calculated the figure would be £123m.

Unless savings of £31m could be made before 2015 it would be down to its last £620,000 and "bankrupt shortly after", according to the authority.

Spending by all council departments for the rest of the financial year would be stopped unless it was "absolutely essential", the council said.

A freeze on recruitment is also being introduced for the next three months.

Library opening hours will be cut, with the library in Whitmore Reans taking a cut in its hours of 51 a week down to just 15.

'Moaning and whingeing'

Libraries campaigner Pru Coleman said: "Our libraries will have their opening hours absolutely slashed in some of the most deprived parts of the city.

"And we don't think this is the end of the cuts. We think libraries will eventually close."

Wolverhampton is not the first big city authority to raise the spectre of going bust. Birmingham City Council has said much the same thing for more than a year now.

It's become something of a "ritual dance" as councils struggle to draw up their budgets for the coming year.

Ministers continue the squeeze in the hope of maintaining the council tax freeze in particular, and of reducing the national deficit in general.

But there can be no doubt that the extra £25m savings imposed by ministers on Wolverhampton over and above the £98m already budgeted for over the next five years means cost-cutting decisions are bound to become even more difficult with every passing year.

One of Britain's leading experts on local government, Professor Tony Travers of the London School of Economics, has told the BBC he thinks it highly unlikely a local authority like Wolverhampton would actually be allowed to go bust.

For a start, they are under a legal obligation to balance the books. And in any case, its financial situation is a long way short of that of the American city of Detroit which ultimately declared itself broke.

Elias Mattu, cabinet member for leisure and communities, said the council had "very little choice" about the cuts.

"The council is financially in dire straits as a result of cuts by central government," he said.

"We are looking at making cuts to services across the board. I have never known times like this."

Andrew Johnson, cabinet member for resources, said: "We are now realistically looking at the prospect of becoming insolvent unless we make very deep and very fast cuts to address this enormous budget deficit which has been forced upon us by government.

"The fact is that we have already announced 165 savings proposals which we are consulting on now and it is fair to say many of them have not gone down well.

"The brutal truth is that this situation is going to get worse because these savings already identified don't go anywhere close to addressing the huge deficit we face."

Neville Patten, the leader of the Conservative group on the council, said the authority was "guilty of wasting a lot of money", which had contributed to its financial problems.

He said: "This council have spent willy-nilly on things like the Civic Centre instead of running like a business and spending sensibly and that's exacerbated the problem.

"Other councils who are facing the same cuts from government are doing much better than us because they're not just moaning and whingeing to the government - they're dealing with the problems head on."

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