WOKING Borough Council must implement further cost reductions to tackle a forecast shortfall of £9.5million if the 2024-25 budget is to balanced.

That is the message that will be presented to an Executive meeting of the council this evening, as part of an update on the council’s Medium Term Financial Strategy (MTFS).

“It would be reasonable to expect that initiatives to further constrain both revenue and capital expenditure will be brought forward as part of the process of balancing the budget in 2024-25,” notes the report.

A balanced budget was set for the forthcoming financial year, 2023-24, but only by drawing on £8.3million reserves.

“There are two distinct problems,” said Cllr Dale Roberts, finance portfolio holder for the ruling Liberal Democrats.

“The immediate ‘business as usual’ problem in which we have to find £9.5million of savings against a budget of £45million spend on services. This is not going to be easy and in itself represents a risk of issuing a section 114 notice.

“We have to close the gap on the £9.5million shortfall. We couldn’t realistically continue to use reserves at this rate, and doing so would take our usable reserves down to well below the £10million we have set as a minimum.

“The shortfall must be reduced primarily through reductions in spending rather than the continued use of reserves.

“Separately, any reasonable resolution of the MRP [Minimum Revenue Provision] issue is likely unaffordable and would therefore also result in a section 114.”

A section 114 notice is effectively the council being unable to balance its budget - in practice councils cannot go bankrupt - and requiring government assistance to continue functioning.

MRP is the amount a council sets aside for repayment of debt, but historically Woking council has not included MRP in its budget calculations.

A forecast council debt of £2.4billion for 2024-25 would require annual repayments in the region of £60million, which would swamp the budget were it to be included.

A recently completed review of Woking’s finances by a team from the Department of Levelling Up Housing and Communities (DLUHC) is likely to address the MRP issue, but no date has yet been announced for the report to be published.

“We are taking advice from specialists on what we should be doing in light of the review and that whatever we propose will need to be acceptable to DLUHC,” Cllr Roberts added.

A further review of the MTFS will be presented in July.