'Significant weakness' - external auditors deliver damning verdict on Solihull Council's finances

The dire state of Solihull Council finances has been laid out by external auditors who have warned of a “significant weakness” . As previously reported by the Local Democracy Reporting Service (LDRS) the revenue forecast, to the end of the financial year (April 2025), is showing a hole in the Solihull Council’s finances of £6.8 million.

At the latest meeting of the authority’s audit committee, members heard from external auditors from Grant Thornton who reviewed the council's finances to the end of last financial year which ended in March. The figures showed Solihull Council ended that period with an overspend of £8.1 million, using £6.7 of corporate reserves to help balance this figure.

Delivering a damning verdict from their findings Jonathan Meek, from Grant Thornton, said: “Our work has identified a significant weakness in the council’s arrangements to securing value for money. The reason for concluding significant weakness is due to the continuing financial challenges faced, and the deterioration from previous reviews in terms of the financial sustainability of the council.

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“Delivering the budget for 2024/25 is reliant on the usage of just shy of £23 million of reserves. This, along with the projected use of reserves in the following years, would reduce the council’s reserves by more than 50 per cent.”

Mr Meek said among the reasons for the forecast overspend this financial year was the investment in children’s services; lower than anticipated business rates income and a pay offer higher than budgeted for. “The council is yet to agree the required savings to address this forecast deficit,” the auditor said.

“This, alongside the significant use of reserves, indicates a significant shift in the financial security of the council and is not a sustainable approach to deliver a financially sustainable council.” In its report Grant Thorton recommends the council "continues and accelerates its current package of activities to address the significant structural budget deficit and reach a sustainable financial position in the medium-term".

A freeze on non-essential spending and controls on staff recruitment are among the methods Solihull Council is already using to tackle the deficit. Andrew Felton, director of finances at the authority, said: “All (the methods) are potentially having an impact.

"We only put them in, in August. There are early indications there is some impact starting to be seen.

“There is a lot of spend, regardless of controls, locked in. It’s around the edges where we have choices, where it is non-essential, where we are starting to trim.

“How far that will take us back to a balanced position we will have to wait and see.” In a recent interview with the LDRS Ian Courts, the leader of Solihull Council, said: “It’s not realistic to say there is anything we could have done (to prevent this situation).

“We have duties as a local authority. We have to comply with them.Three quarters of our budget goes into adult and children’s services, an increasing proportion.

“People say ‘there must be lots you can do’. There comes a point where you can’t.” The meeting was held at the Civic Suite on Tuesday, (November 12).