Cuts could be made to frontline services at Westmorland and Furness Council after the authority was told insolvency was inevitable if financial savings were not made.
Jonathan Brook, the authority’s leader, told the Local Democracy Reporting Service that cuts to frontline services could happen unless things change.
He said cuts to council funding by the national government had a large impact on its finances.
Westmorland and Furness Council said it had its funding cut by the government earlier this year, equating to £400 per household.
A council report last week said that insolvency would be ‘inevitable’ without change, with £40 million of savings needed in the next three years.
If it does not find the savings, the council could be at risk of a S114 notice, a formal mechanism by which a council’s chief financial officer declares that spending is about to exceed available resources.
It is the closest thing in English local government law to a declaration of insolvency, though councils cannot technically go bankrupt.
Once issued, all new expenditure is immediately frozen, with the exception of spending on statutory services such as adult social care, children’s safeguarding, waste collection and highways. Councillors must then meet within 21 days to agree a course of action.
Cllr Brook said: “It is good to look at every aspect of council services in detail to see where we might make savings but we might need to make cuts because of the scale and nature of the deficit we face.
“We have prided ourselves thus far that through all the changes we have had to make over the years we haven’t seen any cuts to frontline services but unfortunately, unless things change, we are not going to be able to continue to hold that line.”
He said those savings could include ‘staff overheads’ and selling-off of surplus buildings such as Mansion House in Penrith.
Cllr Brook said the council was trying all avenues, citing the recent introduction of a green bins charge as an example with parking charges also being something that could raise income.
He added: “Obviously a section 114 is not something any council particularly wants to contemplate so it is something that we will be doing our absolute utmost to avoid happening.
“The report clearly has to indicate the severity of the challenge that we face, and that is what it is doing.”
The report which warned the council about the risk of insolvency was prepared for the corporate overview and scrutiny committee, which was held on Thursday, June 11.
Councillor Matt Brereton, deputy leader of the Conservatives on the council, attended the meeting.
He spoke to the Local Democracy Reporting Service about the risk of insolvency and about measures the council are taking to address the deficit.
Cllr Brereton said: “On one hand the transformation programme is incredibly complex and has a very good structure in place from a management perspective.”
But he said that frontline workers needed to have more influence on how that programme would be carried out.
He added: “We are potentially missing more effective and efficient ways to work.”
Cllr Brereton said councillors raised this issue at the meeting.
He added that the Conservative group were concerned about there not having been enough risk assessment on the possibility of cost-saving measures not saving as much money as they are meant to.
Cllr Brereton added: “I don’t think a S114 is possible at the moment. The council has streamlined senior management and used money from the reserves to cover costs of some of this.”
But he said the council was in a difficult position, following the changes to the funding structure made by the Government.
