Multi-million pound savings are proposed in Dudley as council leaders vow to leave “no stone unturned” as they tackle the most severe funding shortfall in the authority’s history.

Under revised budget proposals, following a summit meeting of senior council bosses, the forecast black hole in funding has been slashed from £50million to just under £21million.

The reduction of the funding gap has been a result of innovative work in Dudley to drive out further savings. A proposed increase in council tax will also bring more money into council coffers, while ensuring Dudley residents continue to pay some of the lowest rates in the country, and a larger government settlement grant than had been previously forecast has also improved the picture.

Whilst setting out the improved picture of its budget, council finance managers have made it clear there is a still a huge challenge ahead to balance budgets in the coming years.

Councillor Pete Lowe, leader of the council, said:

“We have worked relentlessly and left no stone unturned in a bid to plug the funding gap we have faced due to government funding. We have reviewed our initial budget proposals and we are pleased to have made such good progress. Our transformation project to change the way the council delivers services will now pick up further pace as we continue to respond to the toughest financial position the council has ever experienced.”

A 2% inflationary increase had previously been set into the council’s budgets but under the revised budget proposals, managers will now be responsible and accountable for absorbing any inflationary pressures over the next four years. This, together with an improved management of social care contract procurement which will reduce the impact of the introduction of a national living wage is forecast to save around £13million.

On top of this, council bosses have welcomed an improved government settlement than had previously been forecast after local councillors lobbied Whitehall on a number of issues.

Councillor David Sparks, cabinet member for finance, said:

“It is always difficult to make forecasts on budgets prior to receiving the government settlement. We are pleased the government has listened to the concerns of Dudley Council and other local authorities across the country. The settlement, together with the fact that we have not sat on our hands but have instead found significant further savings, means the budget position is much improved on where we were a few months ago.”

The government’s provisional local government settlement, released just before Christmas, shows a slowing down of the reduction in revenue support grant to local councils which has improved Dudley’s position. More than £7million of additional funding has also been injected into the Better Care Fund while new government flexibility for council tax to be increased by 2% specifically for adult social care will also increase income to help plug the funding gap to provide care for the elderly.

In the budget report, savings of £8million are proposed for 2016/17, moving up to £18million by 2017/18 and £20million by 2018/19. But the report forecasts that there will still be a deficit of £23m by 2019/20 if additional savings are not found.

The budget report will go before a meeting of the council’s cabinet on January 18.