Finance bosses look set to introduce a range of “sensible precautionary” measures to safeguard Dudley Council budgets amid growing pressures on local authorities’ spending across the country.

There are exemptions to protect essential services, but the council is proposing to introduce a recruitment freeze, stopping any new contracts, terminating agency and interim contracts and more.

The council is currently £10 million overspent and is eating into reserves. And while a section 114 notice has not been declared, council bosses say if the measures are not introduced at this early stage it will make balancing budgets extremely tough.

It comes as local authorities across the country face challenges to balance the books. Councillor Steve Clark, cabinet member for finance, said:

“These are very challenging economic times for local government and we have seen high profile cases of local authorities which have reached the stage where they cannot set sustainable budgets, where section 114 notices have been declared.

“These proposals are about taking a firmer grip on our finances and protecting our essential services for the future. We have to take sensible and precautionary measures now to protect services further down the line.

“Some of these measures are tough but we believe they are necessary.”

Dudley Council is historically a low spend council and also offers some of the lowest council tax rates in the country. In addition, figures show reserves look set to dip to £6million this year but forecasts show the balance is likely to run dry in the next one to two years if early precautionary measures are not introduced.

These challenges have been highlighted by the director of finance and legal and external auditors. They have been reinforced by a LGA independent review of the authority.

Initial feedback from the LGA peer challenge, made up of senior figures from other councils, did include a recommendation that the authority needed to take action on finances now to maintain control over budgets in the future.

The council will review recommendations from the peer challenge once full details are provided, but are also already acting quickly to establish an improvement board, with cross-party political membership as well as independent representatives to oversee the work. Councillor Patrick Harley, leader of Dudley Council, added:

“The external peer review was certainly timely when you consider the high-profile financial issues other authorities are having to respond to. We have always managed our budgets responsibly, juggling the financial restrictions we face with wanting to provide the best possible services to the people of the borough.

"It has been great to get a second view on our finances. It backs up much of what we already knew and by taking these few sensible precautionary options we can keep ourselves ahead of the curve.

“There will be scores of other authorities in a similar position to those who have gone bankrupt. We are not there but I cannot, and I will not, allow us to be in that position.

“We are grateful to the peer review team who, like all other councils, will have experienced financial pressures in their own local authorities and were able to offer useful insight. We have the right team in place to steer us into safer territory and along with the new improvement board we will be in a far better position to continue delivering quality services for people in this borough.”

Cabinet will discuss a report on the financial status of the authority at a meeting on October 25 and decide next steps.