Dudley Council’s Conservative leaders have been told they ignored early warnings of financial collapse and may need to bring in external help.

The dire message came from the authority’s Labour opposition who highlighted a report by auditors last July which warned reserves were so low there was only limited resilience to overspends.

The council now faces a £12m black hole in its finances which is being blamed on unexpected costs in adult and children’s social care during the autumn last year.

At a meeting of the council’s Overview and Scrutiny Committee on January 25, Labour’s finance spokesperson, Cllr Shaukat Ali said: “The council doesn’t listen to anyone, when you challenge it closes its ears and goes to sleep, that’s why this council is in such a mess.

“The audit committee report came in July last year, alarm bells were ringing but they did not take any action.”

In their July report auditors Grant Thornton, who charge Dudley £184,000 plus VAT, highlighted a number of issues which could add several million pounds to the council’s costs.

The auditors said: “Given the cost of living increases, these issues present a clear risk to the council’s financial position.”

The report also said the council pledged to make cuts of £7.8m but the authority had not delivered promised savings in either of the two previous years.

They concluded: “Given the continued reduction in reserves, the council has only limited financial resilience against overspends and other financial changes.”

Dudley’s cabinet member for finance, Cllr Steve Clark told the overview committee he had noted the concerns.

He added: “We have had a problem with adult social care, we have identified that problem, looked at what we can do about that and we are putting together a budget to make sure there is a legal budget for this year.”

Council leader, Cllr Patrick Harley joined the debate with a blistering attack on his political opponent.

He said: “You have had absolute nonsense and huffing and puffing from Councillor Ali.

“It’s really clear that if Cllr Ali was in charge of Dudley’s finances, libraries would have had a restructure last year and we would have probably lost two thirds of them.

“He would go further than Cllr Clark and reduce the roads maintenance budget, close more libraries, do more savage cuts to adult social care and that would make good reading for the external auditor but it would salami slice services.”

Cllr Harley added senior officers are working on a new operating model for the council which will put finances firmly in the black.

Labour’s councillor John Martin said: “We pay a lot of money for the auditors who every year seem to criticise us and our long term financial planning. 

“Overspends in adult and children’s are not new but we seem to be hit with these overspends quite frequently, so we must fix this problem and if we need additional capacity or expertise to do that then this local authority needs to consider that very carefully.”