WARRINGTON Borough Council has published an updated budget report which is to be considered by Cabinet this evening (Wednesday) recommending a 7.48 pc council tax increase and borrowing up to £350m over 20 years with total potential repayments of £708m.
This report recommends to increase Council Tax by 7.48% from April 2026, subject to Full Council approval on March 2nd , and also highlights the outcome of the first part of a review of something known as minimum revenue provision (MRP).
MRP is essentially a ‘set aside’ amount of money that a council needs to make provision for, in relation to its capital borrowing for assets. This links directly to the Council’s significant commercial level of borrowing.
Council four-year budget gap now up to £179 million
The report shows that a potential further £42 million recurring pressure for this financial year has been identified due to MRP, which contributes to the Council’s overall in-year overspend. This takes the projected overspend this financial year to £87.029 million.
Alongside this in-year potential additional £42 million MRP pressure, the Council’s four-year budget gap from 2026/27-2029/30 now stands at £178.9 million.
As a result, the Council has had to significantly increase its exceptional financial support (EFS) ask, to around £354 million over this year and the next four years.
Cabinet member for finance, Cllr Denis Matthews, explained: “The MRP issue is linked to our failed commercial approach. It is specifically due to under-provision of MRP, which has been identified following an expert independent review, which is still ongoing.
“While we have put some money aside in previous years to account for MRP, the initial review of our approach is that our policy has been incorrect, and we have simply put nowhere near enough aside.”
The Council commissioned a review of its MRP policy as part of the response to the Best Value review and Ministerial Directions.
It is following this initial review report from an expert and independent assessor, that this issue has come to light. This forecasted additional budget pressure is significant and will be discussed by Cabinet on Wednesday evening, before being part of the overall budget-setting Full Council meeting on Monday 2 March.
Cllr Matthews added: “Our priority is to remain completely honest with residents about our situation, despite the challenging and changing nature of our budget difficulties.
“What is most important for the Council right now, is agreeing a legally-balanced budget on Monday 2 March. Subject to receiving EFS, we will be able to set a budget, and we will then work in earnest to deliver the savings we have put forward, and to identify further savings. Our Ministerial Envoys fully support this approach and are working hard, and providing huge support, in the face of this difficulty.
“Cabinet will now consider this latest report on Wednesday, before Full Council will debate and ultimately be asked to approve setting our budget.”
Additional MRP costs could reduce
Typically, the larger a council’s level of borrowing, the larger the MRP requirement. This means that, relative to the Council’s level of borrowing (currently at around £1.4 billion), if it continues to reduce this figure, it will ultimately be liable to pay reducing MRP amounts. If the Council sells its assets in a managed way, the additional MRP costs to reduce. However, as previously confirmed, this will be managed carefully in order to avoid a ‘fire sale’ of the Council’s assets.
Read the Council’s committee reports via warrington.gov.uk/committees
Meanwhile, Warrington’s Liberal Democrat Opposition Councillors, who previously supported much of the council’s investments have expressed grave concerns over the latest financial decision to borrow up to £350 million over the next 20 years. Designed to address the Council’s ongoing budget deficit, this comes at a steep cost to taxpayers, with an estimated repayment of as much as £708 million over two decades – more than double the amount borrowed.
Group Leader, Cllr Mark Browne says, “Council reports indicate that while national pressures on public finances, particularly in social care, contribute to this funding gap, local mismanagement by Labour has played a significant role. The Best Value Review identified the over-ambitious commercial investment strategy and weaknesses in budget control and governance over a significant period which have left the local authority in a precarious financial position.
The proposed loan is for up to £350m over 20 years with total potential repayments of £708m. If the full loan is taken up, the financial cost will result in an average annual payment of £35.4 million over the next 20 years which places a huge strain on the local authority’s budget. In the early years of the loan, most payments will go towards servicing interest, with principal repayments taking a larger share in the later years. This long-term repayment burden threatens to crowd out other vital services, as the Council will be locked into this debt for two decades. Are Warrington’s taxpayers paying more for a loan than they should be, and what steps were taken to properly explore other more cost-effective solutions?”
Deputy Leader Cllr Helen Speed adds, “The real issue at stake is not simply the massive repayment figure, but the long-term financial burden this decision places on residents. Local taxpayers will be paying for this debt through their council tax bills for two decades. Given the significant pressures already facing public services in Warrington, it is crucial that the Council explains why this strategy was adopted, rather than exploring alternatives that might have protected taxpayers from this costly borrowing.
The Lib Dems are calling for:
· A full and transparent public review of the Council’s scrutiny and governance procedures
· A clear explanation from the Council to the people of Warrington on why this loan was needed, and why the terms are so costly
· A commitment to exploring more affordable borrowing options to ensure Warrington residents are not locked into a 20 year repayment cycle for such an expensive loan.”
Finance Spokesperson, Cllr Ian Marks concluded, “The decision to borrow this huge sum is a gamble with the future of Warrington’s finances. With already over-stretched public services and the looming burden of this loan, the Lib Dems demand answers. This is not ‘free money’ for Warrington but is a costly commitment that will affect our town’s finances for generations to come. The uncertainty is made worse because we only found out last night at the Scrutiny Meeting that the amount to be borrowed is £130m more that the previously published figure. There are questions that the Labour-led Council must answer before it’s too late.”
