Merseyside council expected to request another government bailout despite already receiving £40m

The Local Government Association (LGA) said Wirral Council, which has already received nearly £40m in emergency support, needs to “break this cycle” or risk debt levels becoming “unhealthy”.

The latest update from the LGA, which supports councils, follows a review published earlier this year. At the time, the local authority’s then-chief executive Paul Satoor and then-leader Cllr Paul Stuart were heavily praised but there were warnings about the council’s financial crisis and councillors’ “inappropriate” behaviour.

The new October 1 report takes into account “a significant amount of change” in the council following leadership elections, a new political group, as well as the departure of the chief executive and another regeneration director. The LGA did praise Cllr Paula Basnett, who became leader in May, for engaging “meaningfully” to offers of support.

Despite progress in a number of areas following praise in a review in October 2024, the LGA said the biggest issue facing the council is its budget.

Next year, the local authority is facing a possible budget gap of £32.4m for its budget from April 2026 and a black hole of £67m over the three years after that. Savings put forward for next year only cover around £15m and another bailout request is expected, the third in recent years.

Council reports said the budget gap is being driven by rising social care costs, particularly among services for adults. Compared to 2023, there are more than 1,000 more people needing support while hospital discharges and more complex cases are driving costs up further.

It is the LGA’s view, similar to that of Wirral Council officers, that the council will need another bailout to balance its budget in 2026. If the government does not provide this, the LGA see it as “likely” the council will declare bankruptcy and issued a Section 114 notice.

This would be the third time the council has asked for a bailout with £27.5m given to the council earlier this year. With each bailout “placing further demand on the council”, the LGA said: “There is a need to break this cycle to avoid these applications creating a debt level which is an unhealthy ratio to the size of the council’s net budget.”

Bailouts in 2021 and 2025 have added nearly £40m to the council’s debt which will now need to be paid back from the budget for day to day services. The LGA said the council needed to address its dependency on bailouts and praised steps taken such as a budget action plan.

Relationships between officers and councillors are described as positive but the council was told the increasing number of political groups means more work will be needed to put Wirral first over individual interests. The LGA said: “Moving forward, it will be important that the council remains united and committed to placing these issues of financial stability at the fore of their planning and improvement work.”

Earlier this year, Cllr Basnett announced the creation of a budget task force to review the council’s entire budget which was supported by the LGA. The LGA said the true challenge was to now deliver any savings identified and calls for councillors and officers “to be brave”.

The LGA said councillors were working together better and praised Cllr Basnett for working with all five groups, adding there have been talks “regarding a willingness to reduce or remove services, and the political route map to do so”.

On regeneration, the LGA said Wirral “deserves recognition for the transparent approach that they are taking to surfacing these issues” but recent investigations carry the risk of denting public confidence. The report said the council needed “to integrate the improvement work of regeneration with wider challenges on finance, services, and governance, to avoid immediate pressures being overtaken by the council’s regeneration ambitions”.

Going forward, the LGA recommended financial stability needs to be prioritised going forward, a roadmap for how to improve created, engagement with elected members on a shift back to a cabinet system from 2027, and recommendations from recent regeneration reviews applied across the council.